E. Coli Outbreak Linked to McDonald's Fresh Onions

By Brad Brooks
LONGMONT, Colorado (Reuters) – Fresh onions are the likely source of an E. coli outbreak at McDonald's restaurants that has sickened 49 people and killed one, the U.S. Department of Agriculture said late on Wednesday, alarming some McDonald's customers and other fast-food chains using onions as an ingredient.

Taylor Farms, a supplier for McDonald's, the biggest U.S. burger chain, recalled several batches of yellow onions produced in a Colorado facility, according to a recall memo on Wednesday by US Foods, one of the largest suppliers of food service operations in the country. The US Foods recall alert does not mention whether US Foods supplies onions to McDonald’s (NYSE:MCD).

Fresh onions are an ingredient in McDonald's Quarter Pounder, and McDonald's pulled the Quarter Pounder from its menu in Colorado, Kansas, Utah and Wyoming, and in parts of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico and Oklahoma.

The McDonald's outbreak has killed one and sickened nearly 50 people so far.

McDonald's shares were up 0.8% at $301.06 on Thursday afternoon. Past outbreaks of the bacterial disease have hampered sales at big fast-food restaurants, as customers shun the affected chains for fear of illness.

Yum Brands said on Thursday that it was removing fresh onions from its menus "out of an abundance of caution" at some of its KFC, Pizza Hut and Taco Bell chains.

Restaurant Brands International (NYSE:QSR), parent of McDonald's rival Burger King, had removed onions from its menu at at least one Burger King location in Colorado, which was at the center of the McDonald's outbreak.

"We've been told by corporate to not use any onions going forward for the foreseeable future," Maria Gonzales, the on-duty manager inside a Burger King in Longmont, Colorado, said on Wednesday. "They're off our menu."

Neither McDonald's nor Restaurant Brands International immediately responded to requests for comment on Thursday.

David Tarantino, an analyst at Baird Equity Research, downgraded McDonald's shares to "neutral" late on Wednesday. "We are concerned that reports of an E. coli outbreak linked to McDonald's restaurants in multiple U.S. states could pose a major threat to consumer sentiment" and thus hurt U.S. comparable-store sales, he said.

Customer Reactions

In the immediate aftermath of the McDonald's outbreak, plenty of people in Colorado were still eating at the U.S. giant, according to checks by Reuters. Some were avoiding the hamburgers.

Charity Atkinson was munching on a 20-piece box of Chicken McNuggets in a McDonald's parking lot in Longmont on Wednesday afternoon, about 30 miles (48 km) north of Denver.
Atkinson said she was not worried about the outbreak, but she did note that for now she was avoiding the burgers.
"I'm hoping everything gets taken care of really soon, because my mom loves the Quarter Pounders with cheese," Atkinson said. "Hopefully they'll have better sanitary protections soon."

At Burger King, Monica and Jesus Martinez were digging in to a bag of burgers and fries while sitting inside their car, and said they had decided to frequent Burger King in large part because of the outbreak at McDonald's.
"I'm worried! I like the Quarter Pounder but I'm really worried," Monica Martinez said. "It will definitely influence my choices of where we eat going forward."

The outbreak of E. coli was first reported to the U.S. Centers for Disease Control and Prevention in late September.

McDonald's has moved quickly to try to contain the damage while also trying to reassure customers of its efforts. That may be critical – previous outbreaks in 2015 at Chipotle Mexican Grill (NYSE:CMG) and in 1993 at Jack in the Box (NASDAQ:JACK) caused sales at those companies to drop sharply for several quarters.

At a McDonald’s outlet in New York City on Wednesday, Jordan Sparks, a 17-year-old from Brooklyn, admitted that news of the outbreak had initially made her hesitant about eating there.
"I’m going to get those fries," she said. Several other patrons interviewed by Reuters said they had not heard of the outbreak, and when informed, said they were not going to stop eating at McDonald's unless it spread nationwide.

The USDA on Wednesday said that one of its state partners was also testing samples of beef for E. coli.