McDonald’s secretive new CosMc’s concept could be Dutch Bros rival

As Dutch Bros marches east with its lineup of outrageously colorful caffeinated beverages, the Oregon drive-thru chain may have caught the attention of a formidable competitor.

McDonald’s is launching a similar concept early next year it calls CosMc’s with a drink lineup that evokes Dutch Bros’ menu. CosMc’s appears set to offer iced drinks, spiced lattes and sugary confections with names like Sour Cherry Energy Burst, Island Pick-Me-Up Punch and S’More’s Cold Brew.

McDonald’s plans to offer more details at its annual investor day Wednesday, but it quietly set up the first CosMc’s this month in Bollingbrook, Illinois, near Chicago, and the internet has already taken notice.

CosMc’s names and brightly hued styles are reminiscent of some of Dutch Bros’ popular drinks, among them the Palm Beach and Tiger’s Blood lemonades, Electric Berry and Dragon Slayer sodas and the Caramelizer Dutch Freeze. Dutch Bros’ irreverent attitude and flamboyant drinks helped the Oregon company gain a devoted following, especially among young people, and it’s become one of the state’s largest businesses.

Dutch Bros’ stock dropped by about 10% last week in the days after CosMc’s menu hit social media last week. It’s not clear if the potential competition drove the decrease, though, and shares regained some of the lost ground in the following days.

McDonald’s announced the CosMc’s concept last summer but said little at the time about what it had in mind.

“CosMc’s is a small format concept with all the DNA of McDonald’s, but with its own unique personality,” McDonald’s CEO Chris Kempczinski told investment analysts on a quarterly conference call. The company said it would start with a small number of CosMc’s locations in a “limited geography.”

CosMc’s is named for a bug-eyed, multi-armed alien McDonald’s created to advertise its products in the 1980s and ‘90s.

Real estate investor Iman Jalali said he enjoys checking out new restaurants and drove by the CosMc’s site in Illinois last week while on his way to one of his properties nearby. He shot some photos with his iPhone and posted them on social media.

CosMc’s Bollingbrook location is reminiscent of a Dutch Bros, Jalali wrote in an email Tuesday.

“In recent years I’ve noticed brands like Dutch Bros and Biggby Coffee expanding their menus beyond your typical coffee drinks,” Jalali said. “I see this as McDonald’s way of doing the same, combined with an all-day breakfast menu that McDonald’s lovers have begged for.”

CosMc’s Illinois location appears much bigger than Dutch Bros’ drive-thru stands, and its menu — at least as shown on the menu board photographed by Jalali — includes breakfast sandwiches and other foods that the Oregon chain doesn’t offer.

The broader menu could give CosMc’s an opportunity to differentiate itself from Dutch Bros but would also make it more expensive to build and operate its drive-thrus. The chain might also run into resistance from McDonald’s franchisees, who might not be thrilled about having a similar menu operating anywhere close to their restaurants.

McDonald’s did not respond to a request for comment on its plans, and Dutch Bros declined to discuss a potential competitor.

Dutch Bros started in 1992 with two brothers’ coffee pushcart in the small southern Oregon town of Grants Pass. It now has nearly 800 drive-thrus in 16 states but its headquarters haven’t left Grants Pass.

Dutch Bros has its biggest presence in Oregon, and it has a large California footprint, too. Its current growth is focused on Texas, Tennessee, Oklahoma and other parts of the South and southeastern United States.

The chain hopes to have 4,000 Dutch Bros drive-thrus nationwide by the early 2030s.

This article has been updated with additional detail from Iman Jalali.

-- Mike Rogoway | mrogoway@oregonian.com | 503-294-7699

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