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McDonald's tests CosMc's stores as burger chain boosts beverages focus

FILE PHOTO: McDonald's Corp. reports fourth quarter earnings

(Reuters) - McDonald's is set to test a smaller-format concept store called "CosMc's", which will sell cold beverages including flavored iced teas and slushes, as the fast-food giant charts out an ambitious growth plan.

The first CosMc's location will open in Bolingbrook, Illinois, this week as part of a limited test run, the company said on Wednesday during its investor day.

McDonald's aims to open about 10 pilot stores by the end of 2024, with the rest set to come up in Texas, CEO Chris Kempczinski said. The company will study the results from the test locations for at least one year, he added.

"While the number of locations is not particularly concerning to the industry, it will likely put somewhat of a valuation cap on Starbucks and Dutch Bros," Guggenheim analyst Gregory Francfort wrote in a note.

Based on McDonald's alien character CosMc, which appeared in a series of advertisements in the 1980s and 90s, the CosMc's stores will also test Drive-Thru pickup lanes and cashless payment devices to boost service speed.

With drinks such as "Sour Cherry Energy Burst" and "Blueberry Ginger Boost", CosMc's could allow McDonald's to tap into the growing popularity of mixed cold beverages in the U.S., a trend that has boosted sales at coffee giant Starbucks.

CosMc's will also offer some popular McDonald's menu items such as the McMuffin, as well as new sandwiches and snacks.

McDonald's on Wednesday outlined plans to double down on its expansion, eyeing about 10,000 new store openings worldwide by 2027, and accelerate the digitizing of its business.

(Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)

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