NEW YORK — Visits to McDonald’s plunged because of an E. coli outbreak last fall — and so did its profits.
Fourth-quarter sales at McDonald’s locations open for at least one year fell 1.4% in the United States, a reversal compared to the same time period a year prior when sales rose 4.3%. The rough quarter only compounded with the rest of a tough 2024, with McDonald’s value perception slipping among its cash-conscious customers, many of whom ended up eating elsewhere.
“Our performance in 2024 did not meet our expectations,” CEO Chris Kempczinski said on a call with analysts Monday. “It was a big year, and at times it felt like McDonald’s was part of almost every major news story, reflecting the reach and visibility of our brand.”
The earnings report Monday gives investors a peek at how detrimental the E. coli outbreak was, which sickened more than 100 people across a dozen states and resulted in several lawsuits against the chain. Fresh slivered onions served on the Quarter Pounders were the likely source of the bacteria, and the Centers for Disease Control declared the outbreak over in November.
Sales bottomed out in November and improved in the following months; however, the company doesn’t expect its business to recover fully until the beginning the second quarter in 2025.
In an attempt to bring customers back, McDonald’s spent $100 million on marketing efforts during the quarter. It also announced a new value menu, which launched in January, to turn sales around.
McDonald’s hopes the new “McValue” menu category reignites growth after several dismal quarters dragged down by perceptions about its pricing. The average price of its menu items has soared about 40% since 2019, but the company says that is in line with its rising costs.
So far, the chain is “pleased” with the results of the new menu, and mornings are a bright spot for its performance. McDonald’s has been serving breakfast in the US for 50 years as of this year, Kempczinski said, adding that the chain has gained market share for breakfast lately.
Looking ahead to 2025, McDonald’s will open about 2,200 new restaurants globally this year — with a quarter of them in “mature markets,” including the US. The chain will also continue growing its chicken selection, including the addition of new chicken tenders, the return of the Snack Wrap and bringing back the Chicken Big Mac for limited time offers.
While McDonald’s is still struggling in the United States, quarterly sales rose 4.1% at its international development licensed markets — particularly in the Middle East, where the American brand had been the target of boycotts and backlash.
McDonald’s (MCD) stock rose nearly 4% in early trading.
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