McDonald’s is reportedly spending over $100 million to boost franchisees impacted by the recent E. coli outbreak.
The burger giant will put $35 million toward marketing and advertisements and another $65 million will be invested into supporting franchisees who have lost business, targeting those in the states that were most affected, McDonald’s confirmed via email.
The CDC announced on October 22 that an outbreak of E. coli was linked to McDonald’s Quarter Pounders. The source was traced to slivered onions from a Taylor Farms facility in Colorado Springs, Colorado. Testing confirmed that no E. coli was found in the beef patties. So far, 104 cases have been reported across 14 states, including 34 hospitalizations and one death.
The outbreak has significantly impacted traffic. Here’s data from Placer.ai on how the company trended when news spread.
| Nationwide | |
| DAILY | YoY Change |
| 10/23/2024 | -6.40 percent |
| 10/24/2024 | -9.10 percent |
| 10/25/2024 | -9.50 percent |
| Colorado (30 cases, most among any state) | |
| DAILY | YoY Change |
| 10/23/2024 | -23.5 percent |
| 10/24/2024 | -30.8 percent |
| 10/25/2024 | -32.6 percent |
McDonald’s was already dealing with a tough macroeconomic environment and choosy customers. The chain’s same-store sales lifted 0.3 percent in Q3, pulled down by negative traffic that fell below expectations. However, the brand saw momentum in sales and traffic as it exited the quarter before the E. coli incident occurred. McDonald’s told investors in October that the U.S. business outperformed the QSR industry in comp sales and comp guest counts for the third quarter. The third quarter’s comp guest count gap to most near-end competitors was the highest since Q1 2023. At the start of Q4, the company experienced comp sales of close to positive mid-single digits and positive guest counts just below that.
The company attracted customers with the $5 Meal Deal—which was extended through December—and had them coming more often and spending higher amounts thanks to the marketing of the Collector’s Edition. The launch of the Chicken Big Mac in Q4 has been a boost as well.
McDonald’s has prepared levers to claw back customers. One is a new value platform that may be coming in Q1 2025. The company is in active conversations with franchisees to create a platform featuring entry-level pricing, a meal deal component—the $5 Meal Deal or another one—and the incorporation of digital offers. CFO Ian Borden called it a “more holistic U.S. value platform” and said the brand is “blending the best thinking from around the world as well as our own history in the U.S.”
The brand is looking internationally to help with this next move. The value deal could look like McSmart (a value-focused meal offering introduced in international markets like Australia, Germany, and France) or the Savers Menu in the U.K. (a group of affordable menu options).
Also, there will be food innovation in Q4 and the brand will continue to drive digital (loyalty members represented $8 billion in global sales in Q3).
