McDonald's US sales rebound on value meals, but E. coli outbreak could slow that pace

Quality food helped McDonald's U.S. sales turn around in the third quarter, but that recovery may slow down in the final months of the year. E. coli outbreak The company's quarter pounder is tied to hamburgers.

US same-store sales – or sales at stores open at least one year – rose 0.3% in the July-September period, the agency said on Tuesday. McDonald's launched one $5 worth of food in late June after a disappointing second quarter, and it said the deal had returned lower-income consumers to McDonald's and improved customer value.

The $5 deal was so successful that McDonald's recently It has been extended till December Most of its US stores.

But last week, a crisis hit. McDonald's pulled Quarter Pounders from the menu at about 3,000 stores after the US Food and Drug Administration determined that the burger's slivered raw onions contained E. coli is a possible cause of contamination. The outbreak has killed one person in 13 states and sickened at least 75.

McDonald's Chairman, President and CEO Chris Kempczynski apologized for the outbreak in a conference call with investors on Tuesday. He said it was the first major public health issue linked to McDonald's in more than 40 years.

“Nothing is more important to us than the safety of our customers,” Kempsinksi said. “The recent spate of E. coli cases is deeply concerning, and the reports of how it has affected our customers have been embarrassing to us.”

McDonald's said it has stopped getting onions from that supplier and expects to return the quarter pounder to all of its U.S. menus within weeks, though it will be served without onions in 900 stores.

“I am relieved that this situation appears to be contained and I am confident in the safety of eating at McDonald's,” Kempczynski said.

Still, the company acknowledged that the outbreak has hit its sales momentum. The company did not share sales data, but Placer.ai, which tracks retail traffic using cell phone data and other signals, said it saw a 9% year-over-year drop in U.S. visits to McDonald's late last week.

Kempczynski said the company worked quickly to contain the outbreak, cooperating with authorities and hoping to win back customers by promoting its offers such as $5 meal deals and limited-time Chicken Big Macs. However, he said that further action will be taken if necessary.

Outside the US, McDonald's struggled in the third quarter. Chinese demand was weak as well The economy of the country is slowCustomers choose cheaper rivals, and the company has also been damaged by the Middle East war. To counter the slump in French sales, the company introduced a 4 euro ($4.32) Happy Meal deal in August. It is also selling $1 coffee in Canada

McDonald's same-store sales fell 1.5% company-wide in the third quarter. That was worse than the 0.6% decline Wall Street had predicted, according to analysts polled by FactSet.

Kempczynski said the focus on pricing will remain in the U.S. through the first quarter of next year, but the company and its franchisees are still deciding what that will look like. He said it will likely be a mix of low-priced entry-level items, food deals and digital offerings. The company may also introduce a MaxSmart menu of food deals, as it has done in markets such as Germany and Australia.

McDonald's revenue rose 3% to $6.87 billion for the quarter. That was slightly higher than analysts' forecasts of $6.82 billion.

McDonald's net income fell 3% to $2.25 billion. Adjusted for one-time items including costs associated with the acquisition of McDonald's Business in IsraelThe company earned $3.23 per share, higher than Wall Street's estimate of $3.21 per share.

Shares of McDonald's Corp. rose 1% in early morning trading on Tuesday.