(qlmbusinessnews.com Wed. 30th Oct, 2024) London, UK —
E. Coli Scare: McDonald's CEO Apologises as Sales Decline Globally
McDonald’s CEO Chris Kempczinski has publicly apologised following an E. coli outbreak in the United States that has been linked to the chain’s Quarter Pounders, a setback for the fast-food giant already grappling with slowing sales. “We are truly sorry for what our customers experienced,” Mr Kempczinski said. “We extend our deepest sympathies and are dedicated to making things right.”
Executives informed investors that they believe the health risk has been contained and are hopeful the incident won’t cause further sales impact. Yet the episode has added strain to McDonald’s performance as budget-conscious consumers continue to cut back on dining out.
Mr Kempczinski addressed McDonald’s financial update, acknowledging that the year’s performance has not met expectations amid an “increasingly challenging environment.” McDonald's reported a 1.5% drop in sales across stores open for at least a year, with international markets such as the UK, France, China, and the Middle East facing notable challenges. This marks the company’s second consecutive quarterly sales decline, the steepest in four years.
To counter the sales slump, McDonald’s has focused on value offerings, especially in the US, where promotions like the $5 Happy Meal and a new chicken sandwich have helped to drive a slight 0.3% sales increase in recent months. The brand is extending this strategy abroad, with deals like the “Three for £3” and the £2.75 breakfast bundle recently introduced in the UK. Meanwhile, the debut of the “Grimace” shake has generated excitement among UK customers.
Chief Financial Officer Ian Borden noted progress, though he warned that ongoing conflict in the Middle East would likely continue to impact the company’s regional performance. Despite recent setbacks, McDonald's executives stated they do not intend to raise prices significantly until they see stronger business performance, citing continued customer price sensitivity.
The outbreak, which has affected at least 75 people, did not affect the latest quarterly results, which show a 3% revenue increase to $6.8bn (£5.2bn) compared with last year, although profits fell by 3% to $2.25bn. The company has since stopped working with Taylor Farms, believed to be the supplier responsible for the onion contamination. Quarter Pounder sales have also resumed in US locations following a temporary halt in about 20% of stores.
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