Shares of McDonald’s ( MCD ) fell more than 6% in premarket trading Wednesday after the Centers for Disease Control and Prevention said the company’s quarter pounder burgers had been linked to an E. coli outbreak in some states, with the most diseases in Colorado and Nebraska.
“This is a rapidly evolving outbreak investigation,” the CDC wrote on its website. “Most sick people report eating McDonald’s Quarter Pounder burgers and investigators are working quickly to confirm which food ingredient is contaminated.”
The company’s shares were down as much as 10% in extended trading in the immediate aftermath of Tuesday’s news.
The CDC said McDonald’s has stopped using fresh-cut onions and quarter-pound beef patties in certain states while a source of the disease has been confirmed.
One person has died from the outbreak, the agency said, and 10 hospitalizations have been reported in 10 states.
In an internal memo that McDonald’s shared on its website Tuesday evening, Cesar Piña, McDonald’s chief supply chain officer for North America, said the company is taking “swift and decisive action” and noted that the investigation’s initial findings “indicate that a subset of diseases may be linked to chopped onions used in the Quarter Pounder that come from a single supplier serving three distribution centers.”
“As a result, and in line with our safety protocols, all local restaurants have been instructed to remove this product from their offerings and we have halted the distribution of all chopped onions in the affected area,” the company said.
The menu item is being temporarily removed from restaurants in the affected areas, including Colorado, Kansas, Utah and Wyoming, as well as parts of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico and Oklahoma. All other menu items are available.
“While the incident appears to be more contained than others we have seen in the industry, an expansion of the investigation or continued publicity is what has the potential to weigh on consumer traffic,” BTIG analyst Peter Saleh wrote in Wednesday a note to customers. .
He added that the incident could dampen the ongoing limited-time offers of Chicken Big Mac and McRib that will close out the year.
“We believe McDonald’s could reduce advertising supporting these LTOs in the near future as the message could fall on deaf ears amid the broader news coverage,” he explained. “The company may also want to shift its message toward quality, and away from value, to reassure consumers about food safety.”
