McDonald’s faced a downturn in sales during the fourth quarter, primarily due to an E. coli outbreak linked to slivered onions used in its Quarter Pounder hamburgers. CEO Chris Kempczinski reported a 1.4% decline in U.S. store sales and a revenue of $6.39 billion, falling short of Wall Street’s expectations of $6.44 billion.
The E. coli outbreak resulted in 104 confirmed cases across 14 states, hospitalizing 34 individuals and leading to one death, as reported by the Centers for Disease Control and Prevention (CDC). The outbreak was declared "closed" in December, following its emergence in late October. Investigations attributed the contamination to raw onions sourced from Taylor Farms in Colorado, prompting McDonald's to remove Quarter Pounders from menus at 900 locations in affected areas.
Prior to the outbreak, McDonald’s had experienced strong sales, but the incident led to a decrease in consumer spending, particularly impacting the high-margin Quarter Pounder. Despite a slight increase in customer traffic, the overall spending trend was downward. Kempczinski noted that the effects of the outbreak were primarily localized to the Rocky Mountain region, which experienced the most significant impact.
In response to the situation, McDonald’s is focusing on enhancing value offerings and digital promotions to regain consumer trust and bolster sales. The company aims to have fully recovered from the food safety issues by the start of the fiscal second quarter. CFO Ian Borden indicated that the company’s strategy for 2025 will adapt to the current challenges facing the restaurant industry, which is experiencing a decline in traffic across various markets.