Why McDonald's E. coli outbreak is different than Chipotle's
Fast-food giant McDonald's (MCD) has removed the Quarter Pounder from its menus in select states as the chain investigates the source of an E. coli outbreak possibly linked to its slivered onions. Placer.ai, head of analytical research R.J. Hottovy joins Julie Hyman on Asking for a Trend to discuss the impact of McDonald's E. coli outbreak and how it differs from Chipotle’s (CMG) challenges: “I think there's really two differences here with the Chipotle situation,” Hottovy says. “One is [Chipotle was] never able to identify what happened. It was always kind of a mystery, and so at the same time, a lot of consumers were wondering, ‘Is my food safe?’... So I think that's the big difference. McDonald's has come out and pretty clearly identified what the cause was and put together a pretty good game plan.” He adds that it was a “double whammy” for Chipotle since “it wasn't just the E coli. They had a norovirus situation immediately after that.” “There obviously are similarities. There's some shock to the system for consumers when they hear this. There's usually a pause. I think it's pretty obvious we will see an impact on visitation trends,” Hottovy says. He adds, "It really comes down to being able to identify the problem and communicate what they're doing to solve and prevent that from happening. I think McDonald's has done a good job in that, so it may not have the same impact as we saw with Chipotle.” BTIG managing director and restaurant analyst Peter Saleh told Yahoo Finance earlier this week that McDonald's own E. coli situation is "more contained and more neutralized" than Chipotle's outbreak in 2015. Other fast-food chains have since pulled onions from their menus in response to McDonald's current outbreak. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. This post was written by Naomi Buchanan.
