McDonalds shares tumble after E coli outbreak kills one and leaves dozens sick across ten states and chain pulls quarter pounders
McDonalds shares fell dramatically today after an E.
McDonalds shares fell dramatically today after an E. coli outbreak linked to to burgers resulted in the death of one and left dozens sick.
Shares fell nearly six per cent in premarket trading on Wednesday morning as the company assured it was investigating the outbreak, affecting at least 10 states.
Ten people have been hospitalized among 49 who left ill from McDonalds quarter pounders. Cases were first reported in September and have continued into this month.
This public health scare is the last thing McDonalds needs given that its already been struggling to drive growth, said Susannah Streeter, Hargreaves Lansdowns head of money and markets.
The company has halted distribution of slivered onions suspected to be behind the outbreak and temporarily removed the Quarter Pounder from menus in the affected states, and also in portions of Idaho, Nevada, New Mexico and Oklahoma.
The CDC announced that 49 people in 10 states have been sickened with E coli after eating at McDonalds. Most ate a Quarter Pounder (pictured here)
Symptoms of Shiga toxin-producing E.coli include severe diarrhea and vomiting
The death was reported in an older person in Colorado, and one child has been hospitalized with severe kidney complications, the U.S. Centers for Disease Control and Prevention reported.
Infections were reported between Sept. 27 and Oct. 11, in Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, Oregon, Utah, Wisconsin and Wyoming.
Colorado has the most cases, 26, followed by Nebraska with nine.
Everyone interviewed in connection with the outbreak had reported eating at McDonalds before falling ill and most mentioned eating Quarter Pounder hamburgers, the CDC said.
The outbreak could have been caused by the use of slivered onions used in the Quarter Pounder and was sourced from a single supplier that serves three distribution centers, McDonalds said based on its initial findings.
The U.S. Agriculture Department, the Food and Drug Administration and state health officials are also investigating.
In the past, two notable E. coli outbreaks - at Chipotle Mexican Grill in 2015 and Jack in the Box in 1993 - had significantly impacted sales at the companies.
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.
The E. coli O157:H7 strain that led to the McDonalds outbreak is said to cause serious illness and was linked to Jack in the Boxs 1993 incident, which killed four children.
Analysts said McDonalds fourth-quarter sales could see some pressure from the outbreak but it is too early to say if it would be worse than the previous two E. Coli cases.
Officials have not yet traced the source of the outbreak of E.coli (STEC), a rare strain of the diarrhoea-causing bug
While most E. coli bacteria (pictured) are harmless, some can cause a host of gastrointestinal symptoms, including stomach cramps, bloody diarrhea, and vomiting.
...while it is early, historical precedent suggests comp (comparable sales) pressures can trough quickly and prove transitory, assuming no recurrence, BMO Capital Markets analyst Andrew Strelzik said.
The timing was unfortunate for McDonalds and its investors, he said, as U.S. comparable sales had just begun to accelerate following the launch of $5 value meals.
The companys move to quickly identify the source of the outbreak and replenish supplies should fix the problem, J.P. Morgan analysts said in a note, adding that it does not expect this to engulf the U.S. or certainly international.
The burger chain had posted a surprise drop in sales worldwide in July, its first quarterly decline in more than three years, as deal-seeking consumers pushed back on its higher priced menu items.
