McDonald’s shares plunge on investor panic over E. coli outbreak
McDonald’s shares plunged as much as 6% Wednesday after an outbreak of E. coli that sickened almost 50 people and killed one was linked to the Golden Arches’ famous Quarter Pounder hamburgers.
The largest burger chain in the world saw its shares drop from $314.70 a share at Tuesday’s closing to $299.61 a share by late Wednesday morning.
“This public health scare is the last thing McDonald’s needs given that it’s already been struggling to drive growth,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
At least 49 people have fallen ill – including 10 who were hospitalized – after eating the burgers, the Centers for Disease Control and Prevention reported on Tuesday.
The cases were reported across 10 states and primarily concentrated in Colorado and Nebraska, the CDC said.
The E. coli O157:H7 strain that led to the fast-moving McDonald’s outbreak can lead to serious illness.
It is the same dangerous strain linked to a 1993 Jack in the Box outbreak that killed four children and infected more than 700 people across four US states.
The CDC said it is investigating which McDonald’s ingredient is to blame for the illnesses.
McDonald’s has stopped using fresh slivered onions and quarter pound beef patties at its locations in several states, according to the CDC.
The CDC urged customers who experience diarrhea, fever, vomiting or signs of dehydration after eating a McDonald’s Quarter Pounder to contact their healthcare provider.
Analysts have said the E. coli cases could hit McDonald’s fourth-quarter sales.
On Wednesday, McDonald’s president Joe Erlinger tried to squash rising worries and assured customers they could safely return to restaurant locations.
“We are very confident that you can go to McDonald’s and enjoy our classics,” Erlinger told the Today show on Wednesday. “We took swift action yesterday to remove the Quarter Pounder from our menu.”
McDonald’s did not immediately respond to a request for comment.
In July, McDonald’s reported a surprise sales drop – its first decline since 2020 – as cash-strapped customers revolted against the Golden Arches’ price hikes.
The timing was unfortunate for McDonald’s and its investors, said BMO Capital Markets analyst Andrew Strelzik. The chain’s comparable sales were just starting to bounce back as its popular $5 Meal Deal won over customers hit hard by sticky inflation.
Both Jack in the Box and Chipotle – which spurred two E. coli outbreaks in 2015, as well as salmonella and other illness epidemics through 2018 – suffered severe reputation damage and sales losses as customers lost faith in the fast-food chains.
The Jack in the Box outbreak was discovered when the Washington State Department of Health traced a high number of cases of hemolytic uremic syndrome – a serious disease that affects the kidneys caused by E. coli – among Seattle-area children back to the chain’s burgers.
Chipotle took a year and a half to stabilize, while Jack in the Box sales declined for four straight quarters, Raymond James analyst Brian Vaccaro said.
In the year and a half following the Jack in the Box E. coli outbreak, the restaurant lost about $160 million in lost sales and court fees, according to attorney Bill Marler, who represented clients during the Jack in the Box and Chipotle outbreaks.
In 2015, Chipotle saw its $17 billion market cap plummet by about $6 billion as investors panicked over the illnesses.
With Post wires
