Fast-food giant McDonald’s is gearing up to pilot a fresh restaurant concept, called “CosMc’s,” whose name derives from a lesser-known McDonald’s character — a robotic alien. As CEO Chris Kempczinski said in a call with analysts discussing the firm’s Q2 financial results, “CosMc’s is a small format concept with all the DNA of McDonald’s but its own unique personality.” The testing of CosMc’s in a select few locations is set to commence next year.
In the past, McDonald’s has tried out smaller restaurant models like McDonald’s Express. Whether CosMc’s will mirror these earlier ventures remains to be seen. But recently, the company has struck gold with its character-based marketing. A prime example is Grimace, whose limited-edition purple shake triggered a TikTok frenzy.
The introduction of the shake to celebrate Grimace’s birthday led to an unforeseen viral sensation on TikTok. Users depicted themselves trying the dessert drink and reacting with mock horror or pretending to collapse. This bizarrely humorous trend inspired others to purchase the shakes, primarily for creating similar videos. The grim appeal of Grimace sparked a surge in second-quarter sales.
Kempczinski noted, “This quarter, the theme is — well, if I’m being honest, the theme was Grimace,” acknowledging that the viral trend significantly impacted McDonald’s current marketing success. He added that these effective marketing campaigns have resulted in improved food quality scores, stating, “The more customers love our brand, the more they love our food.”
Domestically, McDonald’s locations that have been open for at least 13 months witnessed a 10.3 percent increase in sales in the quarter ending on June 30, thanks partly to Grimace’s birthday event and the accompanying promotional meal and shake that launched on June 12. Globally, the company saw a 11.7 percent jump in sales at restaurants that have been open for at least a year, largely attributable to growth in China. The quarter’s total sales rose by 14 percent.
The Grimace birthday campaign “quickly became one of our most socially engaging campaigns of all time,” stated CFO Ian Borden during the same call. He referred to it as an authentic display of the brand’s strength in organically reaching its fans in creative ways. This campaign significantly contributed to the solid double-digit comparable sales growth in the US during the quarter.
However, the Grimace-themed promotion in early June was not solely about the shake. McDonald’s also introduced the Grimace Birthday Meal, featuring McNuggets or a Big Mac and fries. Additionally, McDonald’s rolled out a video game and Grimace merchandise to commemorate the occasion.
Looking forward, McDonald’s is set to experiment with various types of locations, including the new CosMc’s concept and other possibilities for compact-format stores.
Kempczinski acknowledged that the company’s current US presence mirrors the demographics from two to three decades ago. Hence, there are several undeveloped areas, providing ample opportunities for expansion, especially with smaller format stores that require less on-premise dining space due to the rising popularity of delivery services. This plan is particularly strategic given the current consumer spending anxieties.
While Kempczinski acknowledges consumers’ concerns, he remains confident about McDonald’s position in the market. “But our business, and particularly I think our value positioning in the market, has put us into a good position to be able to weather that.” Evidence of this success can be seen in customers choosing McDonald’s over full-service or fast-casual dining options.