E.coli Outbreak linked to mcDonalds Quarter Pounder burgers Kills 1 Person, raises health concerns and threatens McDonald’s recovery efforts amid sales struggles.
McDonald’s shares took a significant hit today after an E. coli outbreak tied to its Quarter Pounder burgers left one person dead and dozens sick across 10 U.S. states. Shares fell nearly 6% in premarket trading on Wednesday as the fast-food giant confirmed it was investigating the source of the contamination.
The outbreak, which began in September, has so far affected 49 people, with 10 requiring hospitalization. A Colorado resident has died, while a child is battling severe kidney complications, according to the Centers for Disease Control and Prevention (CDC). Most cases have been traced to customers who consumed Quarter Pounders, and the CDC noted that slivered onions used in the burgers may be the source.
McDonald’s has temporarily halted distribution of the suspect onions and removed the Quarter Pounder from menus in affected states, including portions of Idaho, Nevada, New Mexico, and Oklahoma.
Health Scare Hits Fast-Food Giant’s Growth Prospects
“This public health scare is the last thing McDonald’s needs, given that it’s already struggling to drive growth,”
said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Colorado has reported the most cases with 26, followed by Nebraska with nine. Other affected states include Iowa, Kansas, Missouri, Montana, Oregon, Utah, Wisconsin, and Wyoming. McDonald’s said initial findings suggest the contaminated onions were sourced from a single supplier serving three distribution centers.
Analysts Weigh Impact on Sales
Industry analysts are already comparing the situation to past E. coli outbreaks at Chipotle in 2015 and Jack in the Box in 1993, both of which led to prolonged declines in sales. Brian Vaccaro, an analyst at Raymond James, noted that Chipotle took a year and a half to stabilize, while Jack in the Box experienced a four-quarter slump after a similar E. coli strain caused four fatalities in 1993.
McDonald’s fourth-quarter sales may face pressure, but some analysts believe the impact could be short-lived. “Historical precedent suggests comparable sales pressures can trough quickly and prove transitory, assuming no recurrence,” said Andrew Strelzik of BMO Capital Markets.
Despite the setback, McDonald’s quick response to identify the issue and halt the affected products may prevent the crisis from spreading further, J.P. Morgan analysts suggested, adding that the impact may be contained to the U.S. market.
This outbreak comes on the heels of McDonald’s first quarterly sales decline in over three years, as cost-conscious consumers pushed back against higher-priced menu items during the summer.
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