McDonald's Chris Kempczinski talks about expanding fresh beef at a McDonald's event in Oak Brook, Illinois.
Richa Naidu | Reuters
A week after health authorities publicly linked a deadly E. coli outbreak to McDonald's Quarter Pounder burgers, the company's CEO, Chris Kempczinski, told investors that the situation is now behind us.
“The way we've handled the issue, now that we're moving… we view it as something that's behind us,” Kempczinski said on the company's call Tuesday.
During his prepared remarks, he said “the situation appears to be contained.”
On Sunday, McDonald's said Quarter Pounder burgers would return to about a fifth of its presence in the United States, where the company had removed the menu item following the outbreak. That's equivalent to about 3,000 restaurants, the company told CNBC on Tuesday.
Health authorities did not detect E. coli in the burger's fresh beef patties, but the Food and Drug Administration is still investigating the sliced onions used in Quarter Pounders as the likely source. McDonald's has stopped sourcing onions from the supplier indefinitely, and around 900 stores will serve the Quarter Pounder without chopped onions.
McDonald's saw daily sales and traffic to its U.S. restaurants turn negative in the days immediately following the outbreak announcement as consumers reacted to the news, Chief Financial Officer Ian Borden said. He added that the company does not foresee a material impact on the business.
Now McDonald's is focused on reassuring diners and returning to the higher sales it saw in early October, boosted by its $5 meal and the launch of the Chicken Big Mac.
“What I would say is that we certainly believe that the most important events are behind us, and the work that needs to be done now is focused on restoring consumer confidence, getting our US business back to that strong momentum of the that I just talked about,” Borden said.
On Tuesday, McDonald's reported third-quarter U.S. same-store sales rose 0.3% from the year-earlier period, reversing a decline during the second quarter but slightly weaker than 0.3% growth. .5% projected by StreetAccount estimates.
McDonald's beat Wall Street estimates for quarterly profit and revenue, but its overall same-store sales fell 1.5%, driven by weaker demand in key international markets.
McDonald's shares fell as much as 2.5% in premarket trading Tuesday, but rebounded during the conference call. The stock was largely flat when markets opened.
At the beginning of the call, Kempczinski apologized to customers for the situation.
“The recent spate of E. coli cases is deeply concerning, and hearing reports about how this has affected our customers has been heartbreaking for us,” Kempczinski said. “On behalf of the entire system, we are sorry for what our customers have experienced. We offer our deepest condolences and are committed to making this right.”
As of Friday, 75 health cases in 13 states have been linked to the outbreak, including the death of an elderly adult.
Victims of the outbreak have already filed at least three lawsuits against McDonald's.
Clarification: This story has been updated to clarify that McDonald's is returning the Quarter Pounder to approximately 3,000 locations after removing the menu item following an E. coli outbreak. Some 900 restaurants will serve burgers without chopped onions.
