McDonald's Chris Kempczinski speaks about fresh beef expansion at a McDonald's event in Oak Brook, Illinois.
Richa Naidu | Reuters
A week after health authorities publicly linked a deadly E. coli outbreak McDonald's Quarter Pounder Burgers company CEO Chris Kempczinski told investors that the situation is now behind them.
“The way we've handled the issue, now that we're moving … we expect it to be behind us,” Kempczinski said on the company's conference call Tuesday.
In his prepared remarks, he said the “situation appears to be contained.”
On Sunday, McDonald's said Quarter Pounder burgers would again make up about a fifth of its presence in the U.S., where the company had discontinued the menu item following the outbreak. That's about 3,000 restaurants, the company told CNBC on Tuesday.
Health authorities have found no E. coli in the burger's fresh beef patties, but the Food and Drug Administration is still investigating the chopped onions used in Quarter Pounders as a likely source. McDonald's has stopped sourcing onions from the supplier indefinitely, and around 900 locations will serve the Quarter Pounder without onion slices.
McDonald's saw daily sales and traffic to its U.S. restaurants decline in the days immediately following the outbreak announcement as consumers reacted to the news, CFO Ian Borden said. He added that the company does not expect any material impact to the business.
Now McDonald's is focused on reassuring diners and returning to the higher sales of early October, fueled by its $5 meal and the introduction of the Chicken Big Mac.
“What I would say is that we certainly believe that the most important events are behind us and that the work that needs to be done now is focused on restoring consumer confidence and getting our U.S. business back to normal strong dynamic that I just talked about,” Borden said.
On Tuesday, McDonald's reported third-quarter U.S. same-store sales rose 0.3% compared to the same period last year, reversing a decline in the second quarter but slightly weaker than StreetAccount's forecast growth of 0. 5% failed.
McDonald's beat Wall Street estimates for its quarterly profit and revenue, but overall same-store sales fell 1.5% due to weaker demand in key international markets.
Shares of McDonald's fell as much as 2.5% in premarket trading on Tuesday but recovered during the conference call. When markets opened, the stock was roughly flat.
At the start of the call, Kempczinski apologized to customers for the situation.
“The recent wave of E. coli cases is deeply concerning, and we are distressed by reports of how this has impacted our customers,” Kempczinski said. “On behalf of the entire system, we regret what our customers have experienced. We express our sincerest and deepest condolences and are determined to make amends.”
As of Friday, 75 health cases in 13 states have been linked to the outbreak, including one death in an older adult.
At least three lawsuits have already been filed against McDonald's by victims of the outbreak.
Clarification: This story has been updated to clarify that McDonald's is bringing back the Quarter Pounder at approximately 3,000 locations after discontinuing the menu item following an E. coli outbreak. About 900 restaurants serve the burgers without onion slivers.
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