Portugal Colonial - McDonald's eyes big expansion, plans CosMc's small-chain pilot

The fast-food behemoth, which had 40,275 restaurants at the end of 2022, will seek to effectively grow its network of namesake sites by about one quarter in what it called the speediest expansion in the brand history.

For CosMc's -- which McDonald's executives had teased in July -- the company plans an initial store in Chicago in 2024 and nine others in Texas. The venture harks back to an animated orange figure with six arms that was seen in McDonald's marketing between 1986 and 1992.

The company's website described CosMc's as "inspired by nostalgia" and offering such drinks as S'mores Cold Brew and Sour Tango Lemonade, along with sandwiches and baked goods.

Speciality beverages and coffee are a fast-growing $100 billion category and "a space that we believe we have the right to win," Chief Executive Chris Kempczinski said at an investor day.

McDonald's, which spread quickly in mid-century America, is already the biggest chain in the fast-food universe, slightly ahead of Starbucks and Subway, two other global brands.

To carry out the expansion, the company plans about $2.5 billion in capital expenditures in 2024 and will add $300 million to $500 million each year thereafter through 2027.

Manu Steijaert, chief customer officer, said the pace of the current expansion greatly exceeds the previous ramp-up from 30,000 to 40,000 restaurants, which took 18 years.

"Hopefully you can feel the confidence we have in McDonald's' development potential over the next four years and beyond," Steijaert said.

Sales in recent years have been boosted by some new offerings, such as the popular "McCrispy" chicken sandwich.

The chain has also benefited from greater online ordering since the Covid-19 pandemic, while its reputation for affordability has kept it busy with customer traffic during a period of elevated inflation.

The chain projected nearly two percent revenue growth in 2024.

L.Carrico--PC