We do have some metrics that point to both of those films being particularly popular due to the streaming figures. While Encanto is still relatively new, it was by far the most-streamed movie in 2022 and had all the other attendant success with the music, etc. In the case of Coco, it was the twelfth most-streamed movie in the US in 2022 and was also in the top twenty the previous year. While newer Pixar films Turning Red and Luca were higher, it seems Coco is still being watched by more people on Disney+ than any of the films from the Pixar franchises like Toy Story, Finding Nemo, Cars, and The Incredibles they've already brought to the parks. That suggests there's a market out there for more Coco!
I'd certainly prefer Coco to yet more Toy Story.