McDonald’s faces a significant sales decline following an E. coli outbreak linked to Quarter Pounders, impacting its reputation and revenue.
At a Glance
- McDonald’s U.S. comparable sales fell 1.4% in Q4, the steepest drop since the COVID-19 pandemic
- E. coli outbreak affected 104 people across 14 states, resulting in one death
- Quarter Pounders were temporarily removed from 20% of U.S. restaurant menus
- McDonald’s is focusing on value menus and digital promotions to regain consumer trust
- Global same-store sales increased by 0.4%, despite the U.S. decline
E. Coli Outbreak Impacts McDonald’s Sales
McDonald’s, the fast-food giant, has experienced its most significant sales decline in years following an E. coli outbreak linked to Quarter Pounders. The company reported a 1.4% drop in U.S. comparable sales during the fourth quarter, surpassing the expected 0.4% decline. This marks the steepest decrease since the COVID-19 pandemic, highlighting the severity of the situation.
The outbreak, which began on October 22, led to the temporary suspension of Quarter Pounder sales in 20% of U.S. restaurants. By December 3, the Centers for Disease Control and Prevention (CDC) concluded its investigation, revealing that the outbreak had affected 104 individuals across 14 states, resulting in 34 hospitalizations and one death.
McDonald's to resume quarter pounder sales after E. coli outbreak https://t.co/q8PSGNmjwd
— Axios (@axios) October 28, 2024
The E. coli contamination was traced back to raw onions used on Quarter Pounders. These onions were sourced from Taylor Farms’ Colorado processing plant and an unnamed Washington state farm. In response to the outbreak, McDonald’s swiftly removed Quarter Pounders from menus in 900 restaurants located in affected areas and terminated its relationship with the implicated onion supplier.
The company’s quick action helped save lives, but the financial impact was unavoidable. Despite positive customer traffic, the average spend per visit decreased, partly due to the high-margin nature of the Quarter Pounder. The outbreak’s effects are now primarily localized to the Rocky Mountain region, but the company’s overall sales and reputation have taken a hit.
The company’s net income dropped 5% to $2.04 billion on an adjusted basis, falling short of the estimated $2.07 billion. Revenue for the quarter came in at $6.39 billion, missing Wall Street’s expectation of $6.44 billion.
“In our view, the challenge McDonald’s faces in the months and quarters ahead will be weaning customers off these deep discounts” BTIG analyst Peter Saleh said.
To counter these losses and regain consumer trust, McDonald’s is implementing a multi-faceted strategy. The company is increasing its focus on value menus, affordability, and digital promotions. In 2024, McDonald’s has already extended a $5 meal deal and introduced new items like the Chicken Big Mac to boost spending. However, analysts warn that an over-reliance on discounts, which currently make up over a third of sales, could impact franchise margins.
McDonald's says E. coli impact is now more "localized" to area of outbreak.
Company noted that one of the reasons sales were weak last quarter was due to weak Quarter Pounder sales post-outbreak. $MCD
— Jonathan Maze (@jonathanmaze) February 10, 2025
While U.S. sales struggled, McDonald’s saw some positive results internationally. The International Developmental Licensed Markets segment experienced a 4.1% rise in comparable sales, led by strong performances in the Middle East and Japan. Overall international sales rose by 0.1%, though weakness was noted in the British market. Globally, same-store sales increased by 0.4%, contrary to the expected 0.63% decline.
McDonald’s expects to recover eventually – but in the meantime, let’s hope these common outbreaks of listeria and E. coli stop…