(Bloomberg) -- A severe E. coli outbreak likely tied to onions served on McDonald’s Corp.’s Quarter Pounders sickened dozens of people in the US, mainly in Colorado and Nebraska, and killed one, the US Centers for Disease Control and Prevention said.
Ten people have been hospitalized, including a child with complications from HUS, a syndrome that damages small blood vessels and can lead to deadly clots, the agency said. Of the people who have been interviewed, all reported eating at McDonald’s before falling ill between Sept. 27 and Oct. 11, the CDC said, with most specifying a Quarter Pounder.
The restaurant chain’s shares fell as much as 7.6% at the New York market open, their biggest intraday loss in more than four years, as investors tried to assess the extent of the outbreak. McDonald’s stock had risen 6.1% in 2024 through Tuesday’s close.
Twenty-six cases have been reported in Colorado, the state’s health department said. One older person with underlying conditions died after getting infected, according to the statement, and state public health officials are coordinating with the CDC.
E. coli is a bacteria that can be spread through contact with contaminated foods, often raw or undercooked meat. But it can also be transmitted via fruits and vegetables, which may be contaminated via tainted irrigation water. Cooking typically kills the bacteria.
The fresh slivered onions linked to the outbreak at McDonald’s are primarily used on Quarter Pounder hamburgers and not other menu items, according to a preliminary analysis by the US Food and Drug Administration. Diced onions used in other burgers and menu items have not been implicated.
McDonald’s said it was taking “swift and decisive action” to control the outbreak. It removed the Quarter Pounder from restaurants in the affected areas while the investigation continues and instructed all local restaurants to remove the slivered onions that it identified as the likely culprit from their supply chains.
The true number of people infected is likely much higher than is currently known and may involve additional states, the CDC said. That’s because many people recover without being tested. The case count may also continue to rise because it takes three to four weeks to determine if a sick person is part of an outbreak, the agency said. Symptoms typically start three to four days after swallowing the bacteria and can include severe stomach cramps, diarrhea and vomiting.
Resolving the issue is likely to last at least into next month. McDonald’s said some of the infections may stem from a single supplier of the onions that serves three distribution centers. The onions eventually ended up in restaurants in Colorado, Kansas, Utah and Wyoming, as well as parts of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico, and Oklahoma.
“We are working in close partnership with our suppliers to replenish supply for the Quarter Pounder in the coming weeks,” the company said in a statement. All of its other menu items remain available, it said.
Investors are closely watching how well McDonald’s controls the outbreak, Citigroup analyst Jon Tower said, particularly whether the company takes responsibility for the situation and over-corrects on food safety messages and investments.
“Negative food safety news is never welcomed by restaurants operators, especially those working to improve the brand image after getting off-sides on consumer affordability in recent years,” Tower said.
Major outbreaks can haunt restaurant chains for years. In 2015, an E. coli and norovirus outbreak across Chipotle Mexican Grill Inc. locations in multiple states led to a drastic drop in sales, as well as fines. In August 2022, the lettuce served at hundreds of Wendy’s Co. stores was linked to dozens of E. coli infections in the US Midwest.
At least two analysts downgraded their ratings on McDonald’s, including Baird analyst David Tarantino who said the outbreak poses “elevated risk” to the company. “With uncertainty now creeping in across all segments, we find difficulty calling for near-term upside for the shares,” he said.
The US Food and Drug Administration said it was working to determine if the onions linked to the E. coli infections at McDonald’s were served or sold at other businesses. While onions remain the main suspect, the FDA is also tracing hamburger patties to determine if ground beef was a source in any of the illnesses.
--With assistance from Riley Griffin, Anne Cronin, Shadab Nazmi, Deena Shanker and Julia Fanzeres.
(Updates with opening shares in third paragraph.)
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