McDonald’s on Tuesday said its sales and restaurant visits nosedived after a deadly E.coli outbreak was linked to its Quarter Pounder burgers.
“There’s been an impact in the US as a result of that food safety incident [with a] shift to daily negative sales and guest count results since the beginning of the food safety incident,” Chief Financial Officer Ian Borden said during an earnings call on Tuesday.
The outbreak, which has been tied to the slivered onions atop the popular burger, has sickened 75 people and killed one in Colorado, according to the Centers for Disease Control.
On Wednesday, the day after federal health agencies reported the E. coli outbreak, customer visits to McDonald’s plunged 6.4% across the country and 24% in Colorado, where the outbreak was most prevalent with at least 26 cases, according to Placer.ai data reported by CNN.
Customers continued to avoid McDonald’s throughout the week. By Thursday, visits to McDonald’s had dropped 9% across the country and 31% in Colorado, according to Placer.ai. By Friday, visits had cratered 10% in the US and 33% in Colorado, according to Placer.ai.
The world’s largest fast food chain said it will resume sales of its Quarter Pounder burgers without slivered onions throughout all of its locations this week after the Colorado Department of Agriculture said a sample of the company’s beef patties tested negative for E. coli.
“We certainly believe the most significant events are behind us and the work to do right now is focused on restoring that consumer confidence,” Borden said.
The company’s beef suppliers are producing a new supply of fresh beef patties for all of the affected areas, CEO Chris Kempczinski said during the earnings call.
“The issue appears to be contained to a particular ingredient and geography, and we remain very confident that any contaminated product related to this outbreak has been removed from our supply chain and is out of all McDonald’s restaurants,” McDonald’s said Sunday.
McDonald’s supplier Taylor Farms on Thursday recalled yellow onions produced at its Colorado plant. McDonald’s said it “swiftly” removed all onions supplied by the Taylor Farms facility in Colorado and has stopped sourcing onions from this particular facility indefinitely, Kempczinski said.
McDonald’s CEO and CFO emphasized that the E. coli outbreak appears to be contained during the company’s third-quarter earnings call.
“We are certainly very sorry if someone got sick at our restaurant for eating an onion that we used on our QPC [Quarter Pounder cheeseburger] and I am relieved that I think we are past this and on the road to getting back to serving our customers,” Kempczinski said.
He said the company has dealt successfully with unannounced crises before, comparing the outbreak to the challenge that the pandemic posed.
“Out of Covid, we made some moves and we did some things to make sure we could reengage the customer, and if we have to make some of those same moves in the US, we’re ready to do that,” the CEO said.
McDonald’s shares jumped one percent after the earnings call after the company’s leaders said the outbreak would likely have little impact on business.
The burger chain’s earnings for the period ended Sept. 30 were not affected by the outbreak. The company reported revenue and earnings that beat expectations, though same-store sales in the US missed estimates.
McDonald’s customers continued to pull back on spending amid inflationary prices, according to the company’s leaders.
“Consumers, especially those in the low income category, were choosing to eat at home more often. This trend continued in the third quarter,” Kempczinski said. “Our performance so far this year has fallen short of our expectations.”
McDonald’s reported adjusted earnings per share of $3.23, beating LSEG analysts’ expectations of $3.20.
The company posted revenue of $6.87 billion, above expectations of $6.82 billion.
Global same-store sales fell 1.5%, worse than the 0.6% decline analysts expected.
US same-store sales grew 0.3%, which reversed last quarter’s decrease but remained below estimates of 0.5% growth.
Though McDonald’s US same-store sales missed expectations, the company said its special deals – including a $5 value meal, limited-edition Grimace-themed shake and collector’s cups – helped McDonald’s gain share with low-income consumers for the first time in more than a year.
“Consumers continue to be discerning with where, with whom, they’re spending their money,” Borden said. “While there’s broad consumer pressure, I think certainly lower-income consumers and families are consumers who are under more acute pressures. That’s why, obviously, we have such a heightened focus on value and affordability.”
Leave a Reply