McDonald's is spending $100 million to recover from E.coli scare
McDonald’s is committing $100 million to recover from a damaging onion E. Coli outbreak that led to hundreds of illnesses and sent customer traffic tumbling.
The fast food giant is directing $35 million into marketing and advertising to reignite sales, and plans to dedicate another $65 million on a broader relief package to help franchisees in the most affected states, a McDonald’s spokesperson confirmed to Quartz.
The outbreak caused a sharp drop in visits, with food traffic falling 6.4% nationwide on Oct. 23 — the day after the news broke, according to data from foot traffic analytics firm Placer.ai. The slump deepened in the following days, further hurting sales across the chain. McDonald’s responded by pulling Quarter Pounders from 20% of its 13,000 U.S. locations. The beloved burger has since made a return — onions, however, are not included.
The contamination was traced to slivered onions supplied by the Taylor Farms facility in Colorado Springs. As a result, McDonald’s “indefinitely” suspended shipments from the facility. Other chains, including Burger King (QSR) and Taco Bell (YUM) also tossed the onions. The outbreak has affected over 100 people, according to the Food and Drug Administration’s latest update.
“Hearing the reports of how this has impacted our customers has been wrenching for us,” CEO Chris Kempczinski said during the company’s October earnings call.
Before the outbreak, McDonald’s had been experiencing strong growth, with a 0.3% increase in same-store U.S. sales in its third quarter. That boost was largely fueled by numerous promotions, including a $5 meal deal, a Chicken Big Mac, Collector’s Cups and a limited-time collaboration with Crocs.
The outbreak underscores the challenges McDonald’s faces in bouncing back from food safety concerns. As history has shown with Chipotle (CMG), food safety incidents can have a lasting impact on customer sentiment and visitation patterns.
