McDonald's stock fell as much as 6% Wednesday following an E. coli outbreak linked to the Golden Arches' famous Quarter Pounder burger that sickened about 50 people and killed one.
Shares of the world's largest hamburger chain fell from $314.70 per share at Tuesday's close to $299.61 per share by late Wednesday morning.
“This public health concern is the last thing McDonald's needs, given that it is already struggling to drive growth,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. said.
The Centers for Disease Control and Prevention reported Tuesday that at least 49 people became ill after eating the hamburger, and 10 of them were hospitalized.
According to the CDC, cases have been reported across 10 states, mostly concentrated in Colorado and Nebraska.
The E. coli O157:H7 strain that caused the rapid spread at McDonald's can cause serious illness.
This is the same dangerous strain associated with the 1993 Jack in the Box outbreak that killed four children and infected more than 700 people in four U.S. states.
The CDC said it is investigating which ingredient in McDonald's is causing the illness.
According to the CDC, McDonald's has discontinued the use of raw shredded onions and quarter-pound beef patties at its stores in several states.
The CDC urged customers who experience diarrhea, fever, vomiting, or signs of dehydration after eating a McDonald's Quarter Pounder to contact their health care provider.
Analysts say the E. coli infection could hurt McDonald's sales in the fourth quarter.
On Wednesday, McDonald's President Joe Erlinger sought to allay growing concerns, assuring customers that it was safe to return to the restaurant's premises.
“We're confident people will come to McDonald's and enjoy our classic menu items.” Ellinger said on Wednesday's Today show.. “We took swift action yesterday to remove the Quarter Pounder from our menu.”
McDonald's did not respond to a request for comment.
In July, McDonald's reported an unexpected drop in sales (its first decline since 2020) as cash-strapped customers pushed back against Golden Arches price hikes.
BMO Capital Markets analyst Andrew Strelzyk said the timing was unfortunate for McDonald's and its investors. The chain's comparable sales were just beginning to recover as its popular $5 meal sale won over customers hit hard by inflation.
Jack in the Box and Chipotle were responsible for two E. coli outbreaks in 2015 and an outbreak of salmonella and other illnesses throughout 2018, but customers have lost faith in the fast-food chains. As a result, the company suffered serious reputational damage and lost sales.
The Jack in the Box outbreak comes after the Washington State Department of Health reported numerous cases of hemolytic uremic syndrome (a serious disease caused by E. coli that affects the kidneys) among children in the Seattle area. It was discovered when it was traced back to .
Raymond James analyst Brian Vaccaro said it took Chipotle a year and a half to stabilize, but Jack in the Box sales have declined for four consecutive quarters.
In the year and a half since the Jack in the Box E. coli outbreak, restaurants have lost about $160 million in lost sales and legal costs. According to attorney Bill Marlerrepresented clients during the Jack in the Box and Chipotle outbreaks.
In 2015, Chipotle's $17 billion market capitalization plummeted by about $6 billion as investors panicked over the disease.
with post wire
