Shares of McDonald’s Corporation (MCD) fell as much as 10% in after-hours trading on Tuesday following alarming news from the Centers for Disease Control and Prevention (CDC) regarding an E. coli outbreak associated with the chain’s Quarter Pounder burgers. The majority of reported cases are concentrated in Colorado and Nebraska.
The CDC highlighted the rapid pace of the outbreak investigation on its website, stating, “Most sick individuals have reported consuming Quarter Pounder hamburgers from McDonald’s, and investigators are working diligently to identify the contaminated food ingredient.”
As of the latest trading data, McDonald’s stock closed at $314.69, down $0.20 (-0.06%) for the day, and subsequently dropped to $296.44 in after-hours trading, representing an 18.25 decrease (-5.80%).
In response to the outbreak, the CDC announced that McDonald’s has suspended the use of fresh slivered onions and Quarter Pounder beef patties in specific states until the source of contamination is established. The outbreak has resulted in one fatality and ten hospitalizations across ten states, according to the agency.
In an internal memo shared on the company’s website, McDonald’s North America Chief Supply Chain Officer Cesar Piña emphasized the company’s commitment to swift action. He indicated that preliminary findings suggest that some illnesses could be traced back to slivered onions supplied by a single vendor serving three distribution centers.
In accordance with safety protocols, McDonald’s has directed local restaurants to remove these onions from their inventory and has halted their distribution in affected regions. Consequently, the Quarter Pounder will be temporarily removed from the menu in impacted states, which include Colorado, Kansas, Utah, Wyoming, and parts of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico, and Oklahoma. All other menu items will remain available.
This situation echoes a similar crisis faced by rival fast-food chain Chipotle (CMG), which experienced its own E. coli outbreak in 2015, resulting in the temporary closure of 43 locations in Washington and Oregon. The CDC declared that outbreak over in February 2016, after Chipotle revamped its food preparation practices. However, it took years for the company to regain consumer trust and stabilize its stock, which has surged over 500% since 2016.
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