Headline: "McDonald's Stock Plummets in Pre-Market Trade Following E. Coli Outbreak"

McDonald's stock experienced a nearly 6% drop following an E. coli outbreak linked to its Quarter Pounder burgers, resulting in one death and 49 illnesses. The outbreak has spread across 10 states in the U.S, with at least 10 people hospitalized. The situation began at the end of September and continues into this month.

The U.S. Centers for Disease Control and Prevention noted that this public health concern has arisen at a challenging time for McDonald's as it struggles to achieve growth. Susannah Streeter, head of money and markets at Hargreaves Lansdown, expressed that this development is unwelcome news for the company.

Past E. coli outbreaks provide examples The E. coli outbreak is suspected to have originated from sliced onions used in the Quarter Pounder. McDonald's stated that these onions were supplied by a vendor and distributed to three distribution centers. Similar E. coli outbreaks in the past, such as those affecting Chipotle in 2015 and Jack in the Box in 1993, led to significant sales losses for the companies involved.

Analyst Brian Vaccaro recalled that Chipotle's recovery took approximately a year and a half, while Jack in the Box experienced revenue losses for four quarters. The E. coli O157:H7 strain is cited as causing severe illnesses and is associated with the Jack in the Box incident.

McDonald's is taking measures to manage the crisis As a precaution, McDonald's has removed sliced onions and beef patties from the Quarter Pounder and temporarily halted sales in the affected areas. However, BMO Capital Markets analyst Andrew Strelzik is optimistic that similar sales pressures could be quickly resolved and not be long-lasting.

After launching an unprecedented value menu featuring $5 deals in the U.S., McDonald's experienced a decline in its rapid sales momentum. Nonetheless, JPMorgan analysts believe that the company's swift identification of the outbreak source and reorganization of its supply chain could provide an effective solution. They also mentioned that a national or international crisis is not anticipated.