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CONCERNS are growing among McDonald’s and Coke customers after a major E. coli outbreak occurred linked to the fast food chain’s Quarter Pounder.
Retail experts say the major brands must work to regain trust with consumers, who are increasingly worried after the outbreak made dozens sick and caused one death.
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The calls come after Coca-Cola CEO James Quincey sought to quell investor fears on Wednesday, saying the company did not expect the outbreak to hurt the beverage company’s sales.
In Coke’s third-quarter earnings call, Quincey said it was unlikely the outbreak would have “a large, significant impact to the business”.
McDonald’s is Coke’s largest restaurant customer, with the two companies with deep links which have existed for nearly seven decades.
“We’re a big partner of McDonald’s, they’re a big partner of ours,” Quincey said on Wednesday. “We’ll be helping them in any way we can as they work through whatever’s happening here.”
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But retail experts have called on the major brands to work to rebuild customers following the E. coli outbreak.
Business Development Specialist Olivia Thompson said consumer behavior could be “unpredictable” following the outbreak, and that the major brands needed to take swift corrective action.
Thompson said some customers may be hesitant to visit the fast-food outlet especially in regions directly impacted by the outbreak.
Amid persistent inflationary pressures hitting consumer’s back pocket, Thompson noted the event may further decrease shoppers’ appetite to eat out.
However, she noted that Coke may be insulated from financial impacts of consumer hesitancy.
“In situations like these, consumer behavior can be unpredictable. There may be short-term hesitancy among some consumers to visit McDonald’s, especially in regions affected by the outbreak, but this doesn’t necessarily translate into a broad impact for Coca-Cola,” Thompson told The U.S Sun.
“Consumers tend to associate such outbreaks with specific food products rather than the overall dining experience, especially when companies take swift corrective actions, as McDonald’s has done.”
“However, given the current economic environment where consumers are already cutting back on dining out, the outbreak may add another layer of caution among those already reducing restaurant visits.
“In this case, both McDonald’s and Coca-Cola will need to focus on regaining consumer trust and offering attractive incentives to draw them back to restaurants.”
OUTBREAK LINKED TO BEEF
The Centers for Disease Control and Prevention on Tuesday announced the E. coli outbreak was present across 10 states, with 49 sick including one fatality.
Investigators said the outbreak was likely caused by the burger chain’s onions and its fresh beef patties.
McDonald’s took immediate action saying it had the highest food standards to ensure safety across all its restaurants including daily food temperature checks, storage, cooking temperature and handwashing.
On Tuesday, the company advised customers that it had temporarily removed the Quarter Pounder from restaurants in the affected areas including Colorado, Kansas, Utah and Wyoming.
“It is why we are taking swift and decisive action following an E. coli outbreak in certain states,” the company said.
“The initial findings from the investigation indicate that a subset of illnesses may be linked to slivered onions used in the Quarter Pounder and sourced by a single supplier that serves 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 supply and we have paused the distribution of all slivered onions in the impacted area.”
Shares in the company dropped by more than 5% on Wednesday which was the sharpest drop for the stock since March 2020.
Following the outbreak, Yum Brands on Thursday said it would be removing fresh onions from its meals at select Taco Bell, Pizza Hut and KFC restaurants out of an “abundance of caution”.
OUTBREAK SPARKS LAWSUIT
A Colorado man on Thursday became the first person to sue McDonald’s after the outbreak, alleging negligence after he tested positive for E. coli soon after eating at the fast food restaurant.
Dr. Anthony Miyazaki, who is a Professor of Marketing at Florida International University, told The U.S. Sun that McDonald’s had taken significant precautions and that there was unlikely to be an impact on future consumers other than having to substitute menu items over the next few weeks.
With Coke standing by McDonald’s despite the ongoing brand issues, Professor Miyazaki said Coke was unlikely to suffer any significant financial hit from the outbreak.
As for the financials, even a short-term hit to McDonald’s sales volume would have a negligible impact on Coca-Cola’s overall beverage sales despite the fact that McDonald’s constitutes a large portion of the soft drink company’s fountain business
Dr Anthony Miyazaki
Dr. Miyazaki said the outbreak would have a small impact on short term sales given most consumers do not react “as negatively to health outbreaks and most people would expect, at least not with their actions”.
“This is due to habitual purchase behavior as well as consumer beliefs that the company will take extra precautions following such an event,” Dr. Miyazaki told The U.S. Sun
