By Savyata Mishra

(Reuters) – McDonald's executives on Tuesday dismissed concerns over potential sales impacts from a recent E. coli outbreak in the U.S., stating they are focused on revitalizing demand through promotions and value menu items.

Shares of McDonald's reversed to trade up about 2% in early trading, after initially falling about 2% premarket following the company's report of a larger-than-expected drop in global comparable sales, despite exceeding quarterly profit expectations.

Last week, McDonald's (NYSE:MCD) temporarily paused serving Quarter Pounders in 20% of its 14,000 U.S. outlets due to the outbreak, which resulted in at least one death. Shares had decreased nearly 7% as infections rose to 75. This week, Quarter Pounders are being reintegrated into the menu.

CEO Chris Kempczinski expressed apologies to customers for the outbreak during a post-earnings call, stating that the situation seems contained, and he is "confident in the safety of eating at McDonald's."

CFO Ian Borden noted, "The most significant events are behind us, and now our focus is on restoring consumer confidence and regaining momentum in our U.S. business."

According to investigators, slivered onions used in hamburgers are suspected to be the source of the infection, with the Colorado Department of Agriculture ruling out beef patties as the cause.

McDonald's reaffirmed most of its annual targets, including its operating margin, as they account for no significant impact from the E. coli outbreak. However, the company acknowledged ongoing efforts to reverse the decline in daily customer visits and sales, which have decreased by 6.4%, 9.1%, and 9.5% year-over-year on October 23, 24, and 25, respectively, according to a Gordon Haskett report.

In contrast, a similar outbreak in 2015 affected Chipotle (NYSE:CMG) leading to five consecutive quarters of sales decline.

M Science analyst Matthew Goodman expressed optimism, stating that investors may overlook the E. coli issue given McDonald's proactive management. "Assuming no further issues, we expect investors to focus on future trends instead of dwelling on the E. coli impacts," he noted.

Despite challenges, U.S. sales performed well. In the quarter ending September 30, U.S. comparable sales grew by 0.3%, reversing a previous drop, aided by promotional efforts.

Industry challenges have prompted fast-food chains such as McDonald's, Wendy's (NASDAQ:WEN), Burger King, and Taco Bell to offer meal bundles and limited-time promotions to attract traffic, particularly among lower-income consumers.

INTERNATIONAL MARKETS STRUGGLE

However, sales in international markets fell by 2.1%, primarily due to weaknesses in France and Britain, against forecasts of a 1.21% decline.

Executives acknowledged dissatisfaction with the recovery pace in key international markets, noting that declining consumer spending in China and the ongoing Middle East conflict have negatively impacted sales in regions where restaurants are operated by local partners, resulting in a 3.5% decline compared to a 10.5% increase the previous year.

Analyst Jim Sanderson of Northcoast Research remarked, "We believe European economies remain under strain, potentially leading to decreased traffic due to concerns over the Middle East conflict, especially in urban areas, along with cost pressures from a stronger dollar."

Western fast-food chains such as McDonald's and Starbucks (NASDAQ:SBUX) have faced boycotts due to perceived pro-Israeli stances and alleged financial ties to Israel.

The Chicago-based company reported earnings of $3.23 per share on an adjusted basis, surpassing analysts' estimates of $3.20.