Why McDonald’s ‘otherworldly’ spin-off restaurant failed to launch

CosMc’s, the glimmering, retro, space-agey concept restaurant from McDonald’s, is no more. 

In 2023, McDonald’s announced the spin-off—billed as the next frontier for the fast-food chain to test its most “otherworldly” specialty beverage ideas—to a deluge of marketing fanfare. CosMc’s was a drive-through-only concept with a pared-down menu of neon-colored drinks and a few snack items. The first CosMc’s restaurants opened with lines around the block before the sun was even up. Now, less than two years later, McDonald’s is jettisoning the stores back into the ether. 

According to a press release published late last week, McDonald’s plans to shut down all five of its CosMc’s locations (one in Illinois and four in Texas) in late June, as well as delete the restaurant’s associated app. In the coming months, CosMc’s-inspired flavors will be landing in hundreds of U.S. McDonald’s locations as part of a wider beverage test. The announcement comes in the wake of McDonald’s first-quarter 2025 financial report on May 1, which revealed that the chain’s sales dropped at the beginning of the year, marking its second consecutive quarter of declines.

Experts say there are a few main reasons why CosMc’s didn’t work out as a stand-alone concept—but that doesn’t necessarily mean the spin-off was a failure for McDonald’s. 

Bubble tea, energy drinks, functional soda, oh my!

From the beginning, it was fairly clear what McDonald’s hoped to gain from CosMc’s: an entry point into the speciality beverage category (dominated by players like Starbucks, Dutch Bros., and Dunkin’) that’s been on the rise in recent years. 

As Gen Z has become increasingly interested in beverages like bubble tea, functional soda, and colorful energy drinks, other quick-service restaurants (QSRs) have moved to catch up. In 2024, Starbucks experimented with adding bubble tea to its menu; Dunkin’ introduced an energy drink lineup; and even Taco Bell opened its own beverage-only spin-off called Live Más Café. Meanwhile, McDonald’s beverage offerings have remained largely limited to its soda machines and McCafé coffee menu (which, interestingly, also originated as an Australian spin-off concept).

CosMc’s was McDonald’s answer to this gap in its offerings—a space to, as the restaurant put it at the time, perform a “limited test” of “otherworldly beverage creations” at a safe distance from its main restaurants. Within CosMc’s blue-and-yellow beverage test kitchen, the chain was free to trial-run concepts like “Tropical Spiceade” and “Island Pick-Me-Up Punch” to a smaller audience of consumers. On the company’s first-quarter 2025 earnings report, CEO Chris Kempczinski called this strategy “quarantining the complexity in a stand-alone concept.”

According to Matt Michaluk, executive creative director at the branding agency JKR, CosMc’s made sense as a viable innovation for McDonald’s.

“With an increasing share of occasions within QSR now solely drinks-only missions, and the diversification of menus by the big coffee chains, this should be a competitive yet fertile ground for growth,” Michaluk says. 

In spite of that promise, he says, there are three reasons CosMc’s fizzled out as a stand-alone: brand contradiction, absence of experience, and decline of hype. To start, Michaluk notes, CosMc’s was shaped around a “pseudo-nostalgic play” on historic McDonald’s brand characters, like the oft-forgotten ’80s alien CosMc. But the spin-off’s menu failed to align with that conceit. Further, the pilot format’s focus on drive-through architecture takes away from the overall brand experience, leaving consumers “overwhelmingly underwhelmed.”

And, to cap it off, he says, “Innovations and pilots work best when they’re new, exciting, and highly salient. McDonald’s seemingly didn’t invest in sufficient marketing efforts to support CosMc’s. Hence, the hype died far too quickly. Within weeks of launch, there was nothing more to talk about—nothing new, nothing to get people to come back.”

Why CosMc’s hasn’t failed yet

Michaluk’s assessment might seem like a fairly bleak one, but Danny Klein, editorial director of the trade publication QSR, says the failure of CosMc’s as a stand-alone doesn’t necessarily equate to a failure for McDonald’s business. 

From its inception, Klein says, McDonald’s likely viewed CosMc’s as more of a test run for a potential beverage expansion on its main store menus than a restaurant in its own right. Now that CosMc’s recipes are rolling out across stores in the U.S., it appears that the initial experiment was a success. 

“Hundreds of locations are going to start testing [CosMc’s beverages], and I think from the general McDonald’s system standpoint, a beverage extension is what they all wanted,” Klein says. “I don’t think it’s a failure. People are going to say that because it was such a big deal, and then it just flamed out into the universe. But in my opinion, it was always a marketing test with the potential to be something else, and that just didn’t materialize.”

In addition to broadening the availability of CosMc’s beverages, McDonald’s also announced last week that it would create a new beverage category team dedicated to “gaining share” in the space. As Kempczinski told investors in early May, “There’s a lot of growth that we see in beverages, and the profitability of beverages is very attractive,” adding, “frankly, we think there’s more that we can be doing to capture our fair share of that.”

Ultimately, Klein says, the true test of CosMc’s will be whether the average McDonald’s customer is interested in supplementing their Big Mac and fries with a Sour Cherry Energy Burst—or if they choose to stick with a plain old Coke.