McDonald’s shares slump 6% after CDC reports E. coli outbreak linked to Quarter Pounder burgers

McDonald’s shares plunged 6% in after-hours trading on the NYSE on Tuesday after the US’s Centers for Disease Control and Prevention (CDC) linked its Quarter Pounder hamburger to an E. coli outbreak.

As of 10:14 am GMT-4 (7:44 pm IST) on Wednesday, October 23, the equity was trading at $296.48, down 5.5% (or -$17.33) on the NYSE.

The E. Coli outbreak has affected 49 people across 10 US states, of which one has died and 10 are hospitalised, including a child who has hemolytic uremic syndrome, a severe condition affecting the kidneys, the CDC said in a release dated Tuesday, October 22.

"One older person in Colorado has died," a CDC statement said.

The cases were reported from September 27 to October 11, in Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, Oregon, Utah, Wisconsin and Wyoming.

Fast-moving outbreak investigation

“This is a fast-moving outbreak investigation. Most sick people are reporting eating Quarter Pounder hamburgers from McDonald’s and investigators are working quickly to confirm which food ingredient is contaminated,” the CDC said.

Although a specific cause has not been confirmed, preliminary investigation has revealed that it is either the slivered onions or beef patties on the Quarter Pounder that is the source of the contamination.

All the people interviewed in connection with the outbreak had reported eating the Quarter Pounder at McDonald’s before falling ill, they were also affected by the same strain of infection, the E. coli O157:H7.

The CDC, the Food and Drug Administration (FDA), the United States Department of Agriculture (USDA) FSIS, and public health officials in select states are jointly investigating.

McDonald’s response

In light of the outbreak, McDonald’s has stopped using fresh slivered onions and quarter-pound beef patties in the affected states.

“We've taken steps to proactively remove slivered onions, which are used in Quarter Pounders, in select states,” Joe Erlinger, president of McDonald's USA said.

"Food safety is so important to me and everyone at McDonald's," Erlinger further stated.

The fast-food chain is working in close collaboration with its other suppliers to replenish the supplies for the Quarter Pounder. Meanwhile, other products continue to be available in affected states.

McDonald’s sales woes

The outbreak couldn’t have come at a more challenging time for the Chicago-headquartered fast-food chain as its global same-store sales fell for the first time in nearly four years in the second quarter.

The fall in its quarterly global sales comes amidst a change in consumer behaviour patterns as high inflation rates have driven people to skip eating out or choose cheaper options. Although, as a response to this, the chain started offering $5 meals, not including the Quarter Pounder, in late June, the outbreak could further strain the company’s performance and reputation.