New York CNN —
A day after an E. coli outbreak linked to the Quarter Pounder in the western United States left one person dead and 10 hospitalized, McDonald’s went into full damage control mode.
“We’re very confident that people will come to McDonald’s and enjoy our classic menu items,” Joe Erlinger, president of McDonald’s U.S., told NBC’s “Today” on Wednesday. “What we want to say to consumers is that you can go to McDonald’s with confidence today.”
The U.S. Centers for Disease Control and Prevention issued a food safety alert Tuesday, reporting at least 49 outbreaks of illness in 10 states. Most of the illnesses occurred in Colorado and Nebraska, and most of the people who got sick had eaten Quarter Pounders at McDonald’s.
“Yesterday, we took swift action to remove the Quarter Pounder from our menu,” Erlinger said. “If we have a contaminated product within our supply chain, it is very likely that we have already spread contaminated product through that supply chain.”
McDonald’s (MCD) stock plummeted 7% in pre-market trading, the worst pace since March 12, 2020, when the world entered coronavirus lockdowns.
The incident and investors’ immediate exit are reminiscent of Chipotle’s years-long battle with E. coli and norovirus outbreaks at multiple locations that began in the summer of 2015. For three years, Chipotle has repeatedly failed to contain multiple outbreaks. Once-high-priced stocks have plummeted, losing two-thirds of their value.
Chipotle was ultimately fined a minimal amount ($25 million by the U.S. Food and Drug Administration in 2020), but struggled to regain customers in the red. The company ultimately hired Brian Nicol, who just started his new role at Starbucks last month, as its new CEO. Nicol helped turn around Chipotle in 2018 by retraining the company’s food handlers to promote safety. The company also tested its employees for food safety standards.
A year after Nicol’s founding, the company’s stock price has fully recovered from the three-year pandemic nightmare.
Chipotle’s outbreak is a worst-case scenario for any restaurant chain, and McDonald’s E. coli situation appears to be limited to a supply issue, at least for now. The U.S. Food and Drug Administration found that sliced onions were the likely source of the contamination, and McDonald’s stopped using onions and quarter-pound beef patties in several states, the CDC said.
Still, the investigation continues, and investors are nervous. The company said in a statement that it is taking swift and decisive measures to prevent the spread of infection.
“Serving customers safely across the McDonald’s system, every day and in every restaurant, is our top priority and cannot be compromised,” the company said in a statement.
McDonald’s scandal history
McDonald’s is no stranger to food-related scandals. In December 2003, an outbreak of mad cow disease in a McDonald’s supplier was discovered, causing the company’s stock price to briefly plummet. The company announced later that month that it had found no evidence that customers were avoiding the restaurant chain because of this isolated incident.
In 2004, director Morgan Spurlock’s blockbuster documentary “Supersize Me” harshly criticized McDonald’s for serving unhealthy food. The film and its subject matter received significant media attention, and later that year McDonald’s discontinued the super-size menu option. But investors remained unfazed, and the stock rose by about a quarter that year.
In 2011, the company was found to have been using a type of beef commonly known as “pink slime” that had been treated with a chemical known as ammonium hydroxide. The company announced the following year that it would stop using pink slime, but rumors of its continued use plagued the company for a decade. And McDonald’s had to issue a new statement in 2021 to set the record straight.
But McDonald’s most famous food-related scandal was the 1992 hot coffee lawsuit, in which a woman spilled coffee on her lap and suffered third-degree burns. According to the American Tort Museum, the jury agreed with her claim that the coffee was unreasonably hot, and that was indeed the case. According to the Law Museum, the coffee was “30 to 40 degrees hotter than coffee served by other companies.” The plaintiffs in the case were initially awarded nearly $3 million in damages, but after an appeal the case was settled for a lower amount of about $480,000.
