E. coli outbreak is ‘behind us’
McDonald’s Chris Kempczinski speaks about fresh beef expansion at a McDonald’s event in Oak Brook, Illinois.
Richa Naidu | Reuters
A week after health authorities publicly linked a deadly E. coli outbreak to McDonald’s Quarter Pounder burgers, the company’s CEO, Chris Kempczinski, told investors that the situation is now behind them.
“How we’ve handled the issue, now that we’re moving … we view it as being behind us,” Kempczinski said on the company’s call Tuesday.
During his prepared remarks, he said that the “situation appears to be contained.”
On Sunday, McDonald’s said Quarter Pounder burgers would return to roughly a fifth of its U.S. footprint where the company had pulled the menu item following the outbreak. That amounts to roughly 3,000 restaurants, the company told CNBC Tuesday.
Health authorities didn’t detect any E. coli in the burger’s fresh beef patties, but the Food and Drug Administration is still investigating the slivered onions that are used in Quarter Pounders as the likely source. McDonald’s has stopped sourcing onions from the supplier indefinitely, and around 900 locations will serve the Quarter Pounder sans slivered onions.
McDonald’s saw daily sales and traffic to its U.S. restaurants turn negative in the days immediately following the outbreak announcement as consumers reacted to the news, CFO Ian Borden said. He added that the company isn’t anticipating a material impact to the business.
Now McDonald’s is focused on reassuring diners and returning to the higher sales it had been seeing earlier in October, fueled by its $5 value meal and the launch of the Chicken Big Mac.
“What I would say is we certainly believe the most significant events are behind us, and the work to do right now is focused on restoring consumer confidence, getting our U.S. business back to that strong momentum that I just talked about,” Borden said.
On Tuesday, McDonald’s reported U.S. third-quarter same-store sales that increased 0.3% over the prior-year period, reversing a decline during the second quarter but slightly weaker than the 0.5% growth projected by StreetAccount estimates.
McDonald’s beat Wall Street’s estimates for its quarterly earnings and revenue, but its overall same-store sales fell 1.5%, fueled by weaker demand in key international markets.
Shares of McDonald’s fell as much as 2.5% in premarket trading on Tuesday but recovered during the conference call. The stock was roughly flat when the markets opened.
Earlier on the call, Kempczinski apologized to customers for the situation.
“The recent spate of E. coli cases is deeply concerning, and hearing reports of how this has impacted our customers has been wrenching for us,” Kempczinski said. “On behalf of the entire system, we are sorry for what our customers have experienced. We offer our sincere and deepest sympathies, and we are committed to making this right.”
As of Friday, 75 health cases across 13 states have been tied to the outbreak, including one death of an older adult.
At least three lawsuits have already been filed against McDonald’s by victims of the outbreak.
Clarification: This story has been updated to clarify that McDonald’s is returning the Quarter Pounder to roughly 3,000 locations after pulling the menu item following an E. coli outbreak. About 900 restaurants will serve the burgers without slivered onions.