McDonald's CosMc's Failed. The Drinks Didn't.

McDonald's doesn't often build a brand just to kill it. But when the company shuttered CosMc's in May 2025, after less than two years of operation, the official post-mortem landed differently than most chain closures. The beverages had worked. The brand hadn't.

That distinction is now reshaping McDonald's beverage strategy for 2026 and beyond. A 500-plus location test of CosMc's-inspired drinks is already underway inside McDonald's restaurants, and a national rollout under the McCafe banner is planned for later this year. It is the biggest expansion of McDonald's beverage menu in years and positions the chain directly against Starbucks, Dutch Bros, and the increasingly crowded beverage-forward fast casual space.

For operators and investors tracking McDonald's, the CosMc's story is worth understanding carefully. It is not simply a failed concept. It is a $40-billion chain running a controlled experiment, absorbing the data, and scaling what worked.

Why CosMc's Existed in the First Place

McDonald's launched CosMc's in late 2023 as a standalone drive-thru beverage concept. The format was compact, focused almost entirely on specialty drinks: layered sodas, refreshers, cold brews, customizable beverages with add-ins and flavors that skewed toward younger consumers. The concept borrowed heavily from what Dutch Bros had built and what Starbucks increasingly owned in the afternoon daypart.

The logic was sound. Beverages carry significantly higher margins than food. A cold brew or crafted soda costs a fraction of a Whopper's input cost but can sell at comparable or higher prices. Starbucks has demonstrated for two decades that the trade in premium beverages is sticky, occasion-driven, and defensible. McDonald's was testing whether it could build a dedicated platform for that trade.

The answer, as a standalone brand, was no. CosMc's locations struggled to generate the traffic volumes needed to justify dedicated real estate and buildout costs. The concept faced the classic new-brand problem: awareness takes years to build, and awareness-building is expensive. McDonald's already had awareness. What it did not have was a reason for afternoon beverage-seekers to choose its locations over Dutch Bros or a Starbucks order-ahead.

Closing CosMc's in May 2025 was the right call, operationally. But McDonald's global chief restaurant experience officer put it plainly: "results exceeded expectations for the entirety of the program." That line was not corporate spin. It was a signal about what the data actually showed.

What the Data Showed

CosMc's was structured as a test kitchen with a drive-thru attached. Every drink sold generated customer preference data. Operators learned which flavor combinations resonated, what price points the market would bear, how add-ins affected ticket size, and what the workflow requirements looked like during peak hours. They ran this experiment across multiple markets, with real customers, at commercial scale.

That kind of data is worth far more than a focus group or a test kitchen result. Customers ordering a Sprite Berry Blast at 2:30pm are expressing a real preference with real dollars. When the same drink sold consistently well across diverse markets, that is a signal McDonald's could build a rollout strategy around.

The six drinks now in the 500-plus location test reflect that distillation. The lineup organizes into three categories:

Coffee: Creamy Vanilla Cold Brew and Toasted Vanilla Frappe. Both skew toward the afternoon daypart where Starbucks traffic concentrates and where McDonald's has historically underperformed.

Crafted Sodas: Sprite Berry Blast and Sprite Lunar Splash. The crafted soda category has been the highest-growth segment in non-alcoholic beverages over the past three years. Dutch Bros built an entire identity around it. McDonald's is arriving late but with 14,000 domestic locations as distribution muscle.

Refreshers: Popping Tropic Refresher and Strawberry Watermelon Refresher. These compete directly with Starbucks Refreshers and with the growing summer-daypart traffic that drive-thru chains have been fighting over.

Alongside those six drinks, McDonald's is adding an energy drink component in collaboration with Red Bull. That partnership targets a distinct customer segment: younger consumers who want caffeine but not coffee, and who currently drive to a Dutch Bros or a convenience store rather than to McDonald's.

The McCafe Repositioning

McCafe is 25 years old. It launched in Australia in 1993, expanded globally through the 2000s, and became McDonald's flagship premium beverage play in the US through the 2010s. The brand built real awareness, particularly around coffee.

But McCafe had stagnated. Its menu had not kept pace with where consumer beverage preferences were moving. Cold brew, specialty sodas, and refreshers had become categories unto themselves, and McCafe had not credibly entered them. The result was that McDonald's was leaving afternoon daypart dollars on the table.

The CosMc's drinks are now the instrument McDonald's intends to use to change that. By routing the CosMc's-tested lineup through McCafe rather than trying to maintain a separate brand, McDonald's solves the awareness problem that killed CosMc's as a standalone. McCafe already exists in the customer's mental map. The job is to add new reasons to engage with it.

This is a different strategic posture than building a spinoff. It is also faster and cheaper. Rolling a new beverage lineup into existing McDonald's locations requires training, equipment in some cases, and supply chain coordination. It does not require leases, buildouts, or multi-year brand awareness campaigns. The unit economics of the integration model are clearly superior.

The Competitive Stakes

McDonald's is not entering an empty market. Starbucks remains the dominant force in specialty beverages, though its 2025 performance showed that the company has its own traffic and conversion challenges. Brian Niccol's turnaround plan for Starbucks is built on simplifying the menu and improving throughput, not on abandoning the afternoon daypart. McDonald's will be fighting for that daypart directly.

Dutch Bros is the more aggressive competitive threat in terms of growth trajectory. The chain ended 2025 with approximately 950 locations and has guided toward 160-plus net new openings annually through the late 2020s. Its entire model centers on the high-engagement, high-customization beverage experience that younger consumers prefer. Dutch Bros' same-store sales growth has consistently outperformed the broader QSR category. McDonald's is, in effect, building a product answer to what Dutch Bros represents.

The difference is scale. Dutch Bros will have perhaps 1,200 locations by end of 2026. McDonald's has 14,000 domestic locations and plans to open 8,000-plus new locations globally through its current expansion cycle. If McCafe's refreshed lineup drives even a modest lift in afternoon transactions per location, the aggregate revenue impact is enormous. A one-dollar increase in average check per location per day across 14,000 domestic restaurants is $5.1 billion annually.

That math explains why McDonald's is treating this as a strategic priority rather than a menu refresh.

What Operators Need to Understand

For franchisees, the rollout carries real operational implications. Crafted beverages are not operationally simple. They require more labor touch than a fountain drink. Add-ins, layered construction, and customization options all add complexity to the line. During peak lunch hours, that complexity competes for crew attention with food orders.

McDonald's has designed its beverage expansion with this tension in mind. The CosMc's test gave the company real operational data about workflow and labor requirements, not just customer preference data. The current 500-location test presumably includes franchisee feedback on the operational load.

The Red Bull energy drink partnership is worth watching specifically for that reason. Energy drinks are operationally simple. They are pours, not builds. Adding Red Bull to the McCafe menu gives locations a high-margin, low-labor beverage option that can capture the energy drink consumer without adding significant workflow complexity. That is a smart operational hedge.

Equipment investment will be a factor for some locations. Cold brew requires specific equipment and preparation. Refreshers need dispensing infrastructure. Franchisees entering the rollout will want clarity on what capital investment the new lineup requires and what the projected payback period looks like based on the test market results.

The Broader Playbook

The CosMc's arc illustrates something important about how McDonald's runs its innovation process when it is working well. The company built a dedicated test environment, generated real commercial data across 18 months, made a clean decision to shut down the underperforming element, and preserved the insights that proved out.

That is disciplined product development. A lot of chains run tests that produce ambiguous data and then either scale prematurely or kill everything. McDonald's separated the brand question from the product question, answered each independently, and is now acting on what it learned.

The 2026 national McCafe rollout will be a genuine indicator of whether that process produced a durable competitive asset. If the CosMc's-tested beverages drive incremental afternoon traffic at scale, McDonald's will have done something genuinely difficult: converted a failed brand launch into a category entry. If the rollout underperforms, the company will have spent roughly two years and an undisclosed but significant sum to produce a modest McCafe menu update.

The base case, given the 500-location test performance and the "exceeded expectations" characterization from leadership, points toward a real competitive move. Starbucks and Dutch Bros both have reason to take it seriously.

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