McDonald's sales suffered a significant blow in its latest quarter due to an E. coli outbreak traced back to contaminated sliced onions. The outbreak resulted in one death and numerous hospitalizations, prompting the company to temporarily remove Quarter Pounders from its menu and halt the use of onions from a specific supplier. While the company is working to recover, the impact on sales and consumer confidence is expected to linger.
McDonald's faced a significant decline in sales during its latest quarter due to an E. coli outbreak linked to contaminated sliced onions. The outbreak, which was declared closed by federal health officials in December, resulted in one death and over two dozen hospitalizations. CEO Chris Kempczinski attributed the 1.4% drop in U.S. store sales during the fourth quarter primarily to the impact of the E. coli outbreak linked to sliced onions used on Quarter Pounder sandwiches.
\The company reported revenue of $6.39 billion, falling short of Wall Street's expectations of $6.44 billion. The outbreak, which emerged in late October, led to 104 confirmed cases of the E. coli O157:H7 strain across 14 states. Thirty-four individuals were hospitalized, with four developing hemolytic uremic syndrome, a serious condition that can cause kidney failure. According to the Centers for Disease Control (CDC), investigations identified raw onions used as toppings on Quarter Pounders as the likely source of the outbreak. Beef, on the other hand, was ruled out as the culprit. The agency stated it had completed inspections at the Colorado processing plant of Taylor Farms, which supplied the recalled onions to McDonald's, and an unnamed onion farm in Washington state.\Upon learning of the outbreak, McDonald's took immediate action, removing Quarter Pounders from the menu at 900 restaurants in affected areas and halting the purchase of onions processed at Taylor Farms' Colorado Springs facility. Executives revealed that the company had experienced 'strong sales' in the first few weeks of October before the outbreak. Although customer traffic remained slightly positive in the fourth quarter, spending declined. Executives pointed out that the Quarter Pounder was a 'high margin' item, contributing to the overall sales dip. Kempczinski noted that the E. coli impact is now 'localized to the areas that had the biggest impact,' primarily the Rocky Mountain region, which was the epicenter of the issue. \He added that the impact is contained to that region. McDonald's anticipates a full recovery from the food safety issues by the beginning of the second fiscal quarter. Following the outbreak, executives stated that the company invested in 'value, affordability, and obviously in digital offers to get consumers back' and regain trust. McDonald's plans to further enhance its value programs in the first quarter 'to ensure that we are offering industry-leading value and with good value at the foundation.' Despite these efforts, CFO Ian Borden told analysts that its approach to 2025 'reflects the current environment of softer, declining restaurant industry traffic in the U.S. and many of our larger markets.'
MCDONALDS E.Coli OUTBREAK SALES REVENUE FOOD SAFETY QUARTER POUNDER TAYLOR FARMS ONIONS
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