McDonald’s recent E. coli outbreak has sickened at least 104 people in 14 states, with at least one fatality. It also led to negative sales and traffic in the early days of the crisis, though executives noted during the company’s earnings call last month that they didn’t expect it to have a “material impact” on the business during the remainder of the year.
That said, chief executive officer Chris Kempczinski noted that McDonald’s has shifted its focus to “reinforcing trust and getting momentum back,” while “bringing the full resources of McDonald’s to bear to reengage the customer.”
In doing so, the company is investing more than $100 million to accelerate recovery. The company confirmed in an email that $65 million will be earmarked to support franchisees who were impacted the most by the outbreak. About 900 restaurants halted the sale of Quarter Pounders while health agencies investigated the source of the outbreak, which was identified as raw onions from a single supplier in Colorado Springs, Colo. McDonald’s stopped sourcing onions from the supplier indefinitely.
Quarter Pounders, one of McDonald’s top-selling items, were taken off of menus for about a week in Colorado, Kansas, Wyoming, and portions of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma, and Utah.
The remaining $35 million will go toward marketing efforts, including a value deal starring McDonald's signature Chicken McNuggets, CNN reported.
McDonald’s outlined additional strategies during its earnings call to continue recovering from the health crisis, including a shift to “holistic value,” meaning entry-level items and meal bundles offered under a branded platform expected to launch in the first quarter of 2025. Also, the chain will simultaneously promote full-margin promotions to grow check sizes.
Digital promotions are also expected to become a bigger part of the company’s strategy.
“Over the mid- to long-term, digital will become a much bigger part and then we'll obviously bring value to life at an individual level with a lot of data and insights, which allow us to effectively target value that's most relevant for that individual consumer,” chief financial officer Ian Borden said during the earnings call.
“We’re going to do what we need to do to make sure we get the momentum back in the business,” Kempczinski added.
Contact Alicia Kelso at [email protected]
