McDonald’s shares have dipped after the CDC reported E. coli cases linked to their ‘Quarter Pounder’ hamburger, with one fatality and multiple hospitalizations in Colorado and Nebraska. The company has halted the use of certain ingredients while investigating the source of contamination. Analysts predict a temporary decline in customer demand and sales, recalling similar past incidents at competing restaurants. McDonald’s is under pressure to boost growth, especially ahead of its upcoming third-quarter earnings report.
(BFM Bourse) – McDonald’s shares are dipping on Wall Street following reports from US health officials about E.coli poisoning linked to their ‘Quarter Pounder’ hamburger.
The fast-food chain is experiencing a downturn in its stock price after announcements of food poisoning incidents involving customers who visited their outlets in the United States.
According to the Centers for Disease Control and Prevention (CDC), out of 49 reported cases, one individual has passed away and several others have been hospitalized in Colorado and Nebraska due to contamination with the Escherichia coli (E.coli) bacteria.
‘All interviewed individuals had consumed food at McDonald’s before falling ill, with many specifically mentioning the Quarter Pounder burger,’ stated the CDC. While the exact contaminated ingredient remains unidentified, McDonald’s has reportedly ceased the use of ‘fresh slivered onions and Quarter Pounder beef patties in multiple states’ while investigations continue.
The fast-food giant’s stock decline is capped at 5%, having earlier plummeted over 9% during the day’s trading session.
A Temporary Setback
This health scare is likely to deter patrons from the brand, at least in the immediate future, according to market analysts.
‘We anticipate a decline in demand for McDonald’s offerings for a period,’ remarked analyst Hani Abuagla from XTB.
‘Historically, McDonald’s has faced similar situations, and while the resulting drops in stock prices or sales have been temporary in the long run, the announcement of a death is an unprecedented turn of events,’ the analyst noted, referencing past incidents with competitors in the fast-food industry.
‘When examining the E. coli incidents at Chipotle (2015) and Jack in The Box (1993), it took Chipotle a year and a half for sales to stabilize, whereas Jack in The Box saw declines for four consecutive quarters,’ he elaborated.
This health issue arises at a challenging juncture for McDonald’s, which is already navigating a turbulent period.
‘This public health crisis comes at a particularly tough time for McDonald’s, as the company has been striving to bolster growth,’ commented Hargreaves Lansdown’s Susannah Streeter, as reported by Reuters.
In late July, McDonald’s had reported sluggish growth in its second quarter and cautioned that 2025 could prove to be ‘difficult.’ To rekindle customer interest and stimulate growth, the chain introduced its $5 meal offerings this summer. Whether this low-cost menu strategy will succeed remains to be seen, with the market awaiting the corporation’s third-quarter earnings report on October 23.
Analysts from Barchart are forecasting earnings of $3.15 per share, reflecting a 1.3% decrease from the $3.19 per share reported in the previous quarter. The report further indicates that McDonald’s has surpassed Wall Street expectations in two of the last four quarters, while falling short in the remaining two.