McDonald’s suffers massive sales loss after E. coli outbreak
McDonald’s suffered its worst US sales loss since the pandemic during its most recent quarter as demand took a hit from a widespread E.coli outbreak while inflation-battered diners remained watchful of their spending.
Comparable sales in the US, the fast-food giant’s biggest market, fell 1.4% in the fourth quarter, its steepest drop in almost five years, when restaurants limited operations to drive-thru and delivery because of the pandemic.
The steeper-than-expected loss topped an estimated 0.4% decline, according to data compiled by LSEG.
However, the Chicago-based company reported a surprise jump in global sales as informal boycotts over McDonald’s perceived pro-Israel stance started to fade.
Shares in McDonald’s rose 5% Monday morning on its strong results in the Middle East, Japan and China.
The burger-and-fries chain reported adjusted earnings per share of $2.83, which met expectations.
Yet McDonald’s revenue still fell short, hampered by the E. coli impact in its largest market. The company reported revenue of $6.39 billion, missing expectations of $6.44 billion, according to LSEG analysts.
The fast-food giant reported fourth-quarter net income of $2.02 billion, down from $2.04 billion last year.
Global same-store sales rose 0.4%, beating Wall Street expectations of a 1% decline, according to StreetAccount estimates.
“Comparable sales results for the quarter reflect a decline in average check, partly offset by slightly positive comparable guest counts,” McDonald’s said in a press release.
Over the summer, McDonald’s released its $5 Meal Deal to win back cash-strapped customers.
The value meal – which includes a McChicken or McDouble, a four-piece Chicken McNuggets, small french fries and a small soft drink – was a massive success, helping boost sales in the third quarter.
However, cheap meal deals only help restaurants if customers are tacking on extra items to their ticket.
A deadly E. coli outbreak cast a shadow over McDonald’s, spooking customers and putting a damper on its sales turnaround.
In October, the Centers for Disease Control and Prevention linked an E. coli outbreak to McDonald’s Quarter Pounder burgers, specifically its slivered onions.
The fast-food chain switched suppliers and temporarily stopped serving slivered onions at impacted locations across 14 states.
The CDC declared the outbreak — which sickened more than 100 people and killed at least one – officially over in early December.
After the E. coli outbreak, McDonald’s announced it was investing $100 million to bring customers back to its restaurants.
Meanwhile, McDonald’s saw gains in the fourth quarter in both of its international markets.
Its international developmental licenses markets segment, which includes the Middle East and Japan, reported same-store sales growth of 4.1%.
McDonald’s international operated markets division, which includes some of its largest markets like Canada, the United Kingdom, France and Germany, reported same-store sales growth of 0.1%.
