McDonald’s shares drop nearly 7% after a number of E. coli poisoning cases have been confirmed, caused by the ingredients of the chain’s burgers, mainly in the central states of the USA. Unprecedented, however, is a confirmed fatal case. Historically, this is not the first such situation at McDonald’s and every time the drop in share prices or sales resulting from similar ‘scandals’ has proved temporary in the long-term horizon.
This time, however, we are dealing with a series of negative factors. The company, after a weaker second quarter of the year, had already announced that 2025 is shaping up as a ‘challenging’ year, and a significant driver of its growth was the ‘strong’ market in North America, where the ‘$5 meal’ recently debuted. Looking at historic examples of E. Coli poisonings in Chipotle (2015) or Jack in the Box (1993), comparable sales in the first case stabilized only after 1.5 years, and in the second, they fell for four consecutive quarters.
We can expect McDonald’s meal demand to weaken for a time while shares slide from historic highs. Another aspect is the actual number of victims, which may increase, and possible legal costs. However, in the long term, the situation does not threaten the fundamentals of the network’s business, and consumers are aware of McDonald’s scale. With this in mind, isolated poisoning incidents do not undermine the standards across the entire company. Nevertheless, a confirmed fatal case might make an impression on consumers looking for alternatives to the chain.
Indeed, the problem with the E. coli bacteria has arisen at an unfortunate time for the Trump campaign. A few days earlier, the Republican leader had taken on the role of a network employee and served its customers. However, the impact of this convergence of events on campaign results seems uncertain. Trump’s ratings on Polymarket did not even flinch following reports of E. coli poisonings, and it seems that McDonald’s shares may be more subject to a drop than the former US president. The company will present its results on October 29, and if these also disappoint, a stronger downward impulse can be expected.
This commentary was written by Eryk Szmyd, an analyst at XTB.
Source: https://managerplus.pl/co-z-krachem-na-akcjach-mcdonalds-czy-bakteria-e-coli-pogrzebie-trumpa-85106
