McDonald’s CEO Chris Kempczinski said Tuesday the E. coli outbreak that sickened at least 75 individuals and led to one death is largely contained, and the chain is trying to move past the public safety incident.
McDonald’s attributed the outbreak to slivered onions from a Taylor Farms Colorado Springs facility, from which it has stopped sourcing onions indefinitely. Tests by the Colorado Department of Agriculture confirmed Sunday that E. coli did not come from fresh beef patties used in the Quarter Pounders. The chain will return the patties to roughly 3,000 stores this week.
“The recent spate of E. coli cases is deeply concerning and hearing the reports of how this has impacted our customers has been wrenching for us. On behalf of the entire system, we are sorry for what our customers have experienced,” Kempczinski said during an earnings call.
Kempczinski said the chain remains committed to food safety and claimed that the last major public health issue at McDonald’s happened over 40 years ago.
“[McDonald’s] has taken the outbreak very seriously, and assuming the company has accurately identified the source of the issue, we do not expect a longstanding impact to trends,” M Science analyst Matthew Goodman said in an email to Restaurant Dive.
The chain needs to regain consumer confidence and get its U.S. business back to the momentum it saw during the third quarter, CFO Ian Borden said.
The chain said domestic same-store sales increased 0.3% last quarter after a year-over-year decline in Q2. The $5 Meal Deal it launched earlier this year brought in more low-income customers, while its Collectors Edition cups promotion sold out within two weeks.
The first three weeks of October had comp sales growth “close to mid-digit-single positive” in addition to positive traffic, Borden said. After the outbreak, McDonald’s saw daily negative sales and traffic trends.
During the week of Oct. 14 traffic was up nearly 3%, according to Placer.ai data emailed to Restaurant Dive. On Oct. 23, the day after the outbreak was announced, traffic fell 6.4% year-over-year and traffic fell 9.1% and 9.5% on Oct. 24 and 25, respectively. Declines were even sharper in Colorado, where the outbreak had the biggest impact. Traffic fell by 32.6% on Oct. 25, per Placer.ai.
R.J. Hottovy, head of analytical research at Placer.ai, said in an email to Restaurant Dive that the outbreak may have a prolonged impact on sales.
“Historically, food safety events like these can impact visitation trends for an extended period,” Hottovy wrote. “But because the company was able to identify and communicate the source of the outbreak while implementing preventative measures, it should reduce the negative impact on visit trends.”
To regain traffic and sales momentum, McDonald’s will lean into its $5 Meal Deal in addition to food innovation and digital sales, Kempczinski said. The chain expects to have additional LTOs during the fourth quarter and will roll out a holistic value platform during early 2025.
“It’s going to be a combination of getting back to what was working prior to this very unfortunate event and then supplementing it as needed with additional activity to make sure that we get that customer back into the restaurants,” Kempczinski said.
