CEO of McDonald’s speaks on E. coli incident during earnings call: ‘We sincerely apologize’
McDonald’s anticipates that the E. coli incident impacting Quarter Pounders across 12 states will not affect its financial results. CEO Chris Kempczinski expressed regret over the food safety situation.
This week, Quarter Pounders are set to be back in all U.S. locations, and McDonald’s has issued an official apology regarding the E. coli outbreak that has affected 75 people and resulted in one fatality.
“We are certainly very sorry if anyone fell ill after eating an onion used in our (Quarter Pounder), and I’m relieved that we have nearly resolved this issue and are on the path to serving our customers again,” stated CEO Chris Kempczinski during a call with investors on Tuesday.
Kempczinski expressed relief that the issue seems to be under control and he remains confident in the safety of dining at McDonald’s.
The popular Quarter Pounder item is expected to reappear on menus in all U.S. McDonald’s restaurants soon, according to Kempczinski.
McDonald’s reports sales increase in the U.S., but a 1.5% decline worldwide
Before the E. coli outbreak, McDonald’s noticed a modest rise in sales in the U.S. From July to September, there was a 0.3% increase in sales, largely attributed to the popularity of $5 Meal Deals.
Due to the $5 Meal Deal, McDonald’s experienced a boost in orders over $10 and saw a resurgence of business among low-income customers for the first time in over a year. Consequently, McDonald’s plans to maintain the $5 Meal Deal in most restaurants until December.
The E. coli outbreak, disclosed on Oct. 22, did not impact McDonald’s July to September sales, and it is not anticipated to harm the company’s overall business, stated CFO Ian Borden.
In October, following the rollout of the Chicken Big Mac, McDonald’s observed a strong start to the last quarter of the year, reporting comparable sales growth compared to the previous year.
However, McDonald’s performance thus far this year has not met expectations, according to Kempczinski.
This follows a period from April to June where the restaurant chain experienced a 1% decline in global sales, with U.S. sales down 0.7%. This marked McDonald’s first global sales drop since late 2020, during the peak economic challenges posed by the COVID-19 pandemic.
Worldwide, McDonald’s global sales fell by 1.5% in the third quarter. Revenue reached nearly $6.9 billion, surpassing the $6.82 billion expected by analysts from S&P Global Market Intelligence, although profits dropped 3% to $2.25 billion, missing analyst estimates of $2.3 billion.
McDonald’s stock rose nearly 1% on Tuesday morning after experiencing a nearly 2% drop in pre-market trading.
E. coli outbreak linked to Quarter Pounders
The source of the E. coli outbreak has been traced back to diced onions included in McDonald’s Quarter Pounders. McDonald’s has halted the use of onions sourced from the Taylor Farms facility in Colorado Springs, where an investigation by the Food and Drug Administration is currently taking place.
Inspectors from the Colorado Department of Agriculture have found no E. coli in the beef patties used for the Quarter Pounders.
The 900 restaurants that temporarily stopped offering the sandwich will now provide Quarter Pounders without the onions. These locations are situated in states including Colorado, Kansas, Wyoming, and areas of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma, and Utah.
As of Oct. 25, health officials reported a total of 75 illnesses from E. coli linked to McDonald’s in 13 states, including 22 hospitalizations and a death in Colorado. Cases peaked between Sept. 27 and Oct. 10, as detailed by the Centers for Disease Control and Prevention. Additionally, two individuals developed hemolytic uremic syndrome, a serious condition that can lead to kidney failure.
Health officials believe there may be more cases tied to this outbreak, with McDonald’s indicating on Sunday that the reported numbers might continue to rise. Three lawsuits related to the outbreak have already been initiated against McDonald’s, with more anticipated from affected individuals.