McDonald's E. coli outbreak adds to fast-food industry worries
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Fast-food chains are rushing to pull raw onions from their meals this week as part of a still-expanding E. coli outbreak tied to McDonald's Quarter Pounders.
Why it matters: McDonald's and others are in the midst of trying to win back customers. They can't afford another reason for diners to pass them over.
Catch up quick: McDonald's disclosed yesterday that Taylor Farms supplied onion products served on Quarter Pounder burgers that were the likely source of contamination.
- Burger King, which has not been tied to any illnesses, tells Axios that three days ago it asked the 5% of restaurants that used onions from that supplier to immediately dispose of what they held.
- Yum Brands, which owns Taco Bell, Pizza Hut and KFC, tells Axios that it has "proactively" taken out fresh onions from "select" restaurants under those three banners "out of an abundance of caution."
The big picture: This comes at a bad time for the fast-food industry. Consumers have recoiled at price hikes or may be trading up to fast-casual kitchens like Chipotle and Cava.
- And a rise in use of GLP-1 drugs has emerged as a threat to food producers at large — particularly to "more indulgent" fast foods.
Threat level: A larger-scale contamination spread could set restaurants back years if they lose the trust of customers in the process.
- Case in point: Just look at Chipotle's E. coli and norovirus outbreak nine years ago.
- The company lost about $6 billion in market cap during the saga, and it took four years to work its way back in the mind of investors (though it did, and then some).
Zoom out: We're nowhere near that yet.
- "It's only natural to expect a short-term impact to [McDonald's] sales," but it's also "likely premature to compare this incident" to Chipotle's nearly a decade ago, according to analysts at TD Cowen.
- Shares of McDonald's have fallen more than 7% this week. And there's been little impact to Yum, Wendy's and other stocks in the industry.
Context: Every year, the U.S. Centers for Disease Control and Prevention tracks about 800 foodborne illness outbreaks, defined by two or more people who are sickened by the same food or drink.
- There have been more than 300 logged so far this year, trending below the annual pace.
What we're watching: Health examiners haven't ruled out beef patties as a source of contamination behind this week's event.
Axios' Kelly Tyko contributed reporting.
