While the beginning of May typically signals the expectation of the hot summer ahead, it has not put a smile on McDonald’s face. The fast food giant continues to battle one issue after another. As reflected in its first-quarter fiscal 2025 earnings report, McDonald’s recorded its worst performance since the pandemic, with tumbling sales and slower customer traffic dragging company stocks down.
U.S. comparable sales dropped 3.6%, while global comparable sales dipped 1%. Systemwide sales decreased 1%, which underwhelmed Wall Street and shook investor confidence. The numbers don’t lie: customers aren’t visiting like they used to, and McDonald’s needs a turnaround for the ages.
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CosMc’s: A new hope in a competitive market
Despite the poor performance, McDonald’s may have found a silver lining—its rapidly growing coffee and beverage business. Although not traditionally thought of as a coffee chain, McDonald’s reports that it has about 10% of the U.S. coffee market. But the company wants more.
To enhance its share and try out new concepts, McDonald’s launched CosMc’s in 2023—a spin-off, space-themed café focusing on specialty drinks. CosMc’s menu features a wide range of drinks like frappés, lemonades, iced teas, and energy drinks, and some signature items like McMuffins, sandwiches, hash brown bites, and desserts.
Social media buzz and customer feedback fuel growth
CosMc’s was a viral sensation before it even opened. Social media buzz about the brand from people helped stoke demand. McDonald’s has now opened five CosMc locations—one in Illinois and four in Texas. The goal wasn’t so much to sell more drinks—it was to glean valuable insights and test what works in a fast-moving, trend-driven environment.
The new brand also gave McDonald’s the ability to learn about customer preferences in real time and see how things could shift operations. The data collected is now shaping the next phase of the company’s innovation strategy.
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Big menu changes coming to McDonald’s
Based on the lessons of CosMc’s, McDonald’s will launch a new line of beverages in some of the conventional McDonald’s outlets later this year. The beverages will be directly influenced by the success of CosMc’s beverages.
The move is part of a string of efforts to rekindle customer demand. In March, McDonald’s launched a new “Restaurant Experience Team” and formed three global “Category Management” teams dedicated to beef, chicken, and beverages/desserts. The move signals a more specialized approach to menu development and competitive positioning.
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A make-or-break moment
McDonald’s hopes that aggressive innovation, especially in beverages, can jumpstart growth and bring customers back. As the fast-food landscape grows more competitive, CosMc’s and its influence on McDonald’s core menu are perhaps the company’s best chance to bounce back from its worst quarter in years.
The company has reached a point of no return: either continue evolving or lose even more ground to the competition. Can CosMc’s be the spark McDonald’s needs to stop the hemorrhaging?
