Headline: E. Coli Outbreak Takes a Bite Out of McDonald's Stock
Shares of McDonald's Corporation (NYSE:MCD) fell approximately 6% in pre-market trading today following a report of an E. coli outbreak linked to Quarter Pounder burgers. The U.S. Centers for Disease Control and Prevention confirmed on Tuesday that the outbreak led to one death and sickened 49 people across 10 states. At least 10 of the affected individuals have been hospitalized, with cases occurring from September through October.
The strain of E. coli identified, O157:H7, is known for causing severe illness and is the same strain responsible for the deadly 1993 Jack in the Box incident. Preliminary investigations by McDonald's suggest that chopped onions from a single supplier serving three distribution centers might be the source of contamination. The fast-food giant has ceased the use of the suspect onions and beef patties and has temporarily halted the sale of Quarter Pounders at affected locations.
Despite the current situation, analysts have cautiously optimistic views on the company’s ability to recover from this incident. Andrew Strelzik of BMO Capital Markets noted that while the impact on fourth-quarter sales remains uncertain, historical examples indicate that if no further incidents occur, the pressure on comparable sales from such outbreaks can dissipate quickly.
McDonald's had recently begun seeing an increase in comparable sales in the U.S. following the introduction of $5 value menus. According to analysts at J.P. Morgan, the company's swift action to switch supplies is expected to address the issue, and the outbreak is not anticipated to have a widespread impact on McDonald's operations either domestically or internationally.