McDonald’s recent E. coli outbreak hasn’t been good for business, but the burger giant is cooking up a new value offering to reel back customers next year.
The brand has seen daily negative sales and guest count results since the beginning of the food safety incident, which has left at least 75 sick and one dead across more than a dozen states. There is more impact in concentrated areas, like Colorado, Montana, and Nebraska, but there are also some broader effects because of the widespread news and lack of clarity early on.
Below is McDonald’s recent traffic, tracked by Placer.ai.
| Nationwide | |
| DAILY | YoY Change |
| 10/23/2024 | -6.40 percent |
| 10/24/2024 | -9.10 percent |
| 10/25/2024 | -9.50 percent |
| Colorado (where the most cases have been reported) | |
| DAILY | YoY Change |
| 10/23/2024 | -23.5 percent |
| 10/24/2024 | -30.8 percent |
| 10/25/2024 | -32.6 percent |
The brand is ready to respond. McDonald’s hinted that a new value offer may be coming in Q1 2025 to help regain traction with consumers. The company is in active conversations with franchisees to create a platform featuring entry-level pricing, a meal deal component—the $5 Meal Deal or another one—and the incorporation of digital offers.
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CFO Ian Borden called it a “more holistic U.S. value platform” and said the brand is “blending the best thinking from around the world as well as our own history in the U.S.”
CEO Chris Kempczinski added this value deal could look like McSmart (a value-focused meal offering introduced in international markets like Australia, Germany, and France) or the Savers Menu in the U.K. (a group of affordable menu options).
“As you think about what this is going to look like, I think you can look to some of our other markets where we have platforms like either a McSmart or a Savers, where you’ve got a branded platform that can house all of these various individual value components,” Kempczinski said during McDonald’s Q3 earnings call. “And I think that’s what you should expect to see from us launching in Q1 of next year.”
The CEO clarified that McDonald’s implements value at a local level instead of finding global solutions that move from the top down. However, if the chain sees something working in one market, he said, “We’d be remiss if we didn’t share that learning and opportunity with other markets to pick up on.” For instance, McSmart has been picked up by several markets but with its execution varying country by country.
In France, the brand has started to see signs of improvement in market trends since the launch of the McSmart menu. Germany rolled out an expanded McSmart Menu at the end of September, which extended the range of meal bundle options at different price points. The market is experiencing a strong initial response and positive incrementality. The Savers Menu has worked in the U.K. for over 10 years.
“I think the way I would look at it is, we have a global framework on how we think about value and there’s a number of different ways to deliver value,” Kempczinski said.
For Q3, U.S. same-store sales lifted 0.3 percent, fueled by average check growth but offset by slightly negative traffic. McDonald’s attributed the positive sales to effective value and marketing campaigns featuring the core menu, successful restaurant-level execution, and continued growth in digital and delivery. The figures do not account for the E. coli outbreak.
Although the overall quarter saw slipping consumer visits and was below expectations, McDonald’s gained sales and traffic momentum as it exited Q3 and began Q4 before the E. coli incident occurred. In fact, the U.S. business outperformed the QSR industry in comp sales and comp guest counts for the quarter. The third quarter’s comp guest count gap to most near-end competitors was the highest since Q1 2023.
The company attracted customers with the $5 Meal Deal and had them coming more often and spending higher amounts thanks to the marketing of the Collector’s Edition. The launch of the Chicken Big Mac in Q4 has been a boost as well.
The $5 Meal Deal—which was extended through December—helped the brand gain share with lower-income guests for the first time in more than a year. Also, Borden said the Chicken Big Mac drew “incredibly strong demand in the first couple of weeks of October.” The brand experienced comp sales of close to positive mid-single digits and positive guest counts just below that. The Collector’s Edition captured guests’ attention without adding operational complexity and gave consumers more reason to buy core menu items.
The E. coli problem halted this momentum, but McDonald’s believes it has plenty of levers to pull. There will be food innovation in Q4 and the brand will continue to drive digital (loyalty members represented $8 billion in global sales in Q3.)
The CEO said the chain will bring “the full resources of McDonald’s to bear to reengage customers.”
“I think it’s going to be a combination of getting back to what was working prior to this very unfortunate event and then supplementing it as needed with additional activity to make sure that we get that customer back into the restaurants,” Kempczinski said.
The brand emphasized Tuesday that the most significant part of the E. coli incident is behind them. McDonald’s traced the issue back to slivered onions from a Taylor Farms production facility in Colorado Springs. The chain also confirmed with the Colorado Department of Agriculture that its Quarter Pounder beef patties had no traces of E. coli. McDonald’s will resume distributing a fresh supply of beef patties, and the Quarter Pounder is expected to be available in all locations in the coming week. Impacted restaurants linked to the Taylor Farms facility will serve Quarter Pounders without slivered onions.
“Despite the external challenges we are facing, the bright spots we see in execution and performance are clear indications that Accelerating the Arches is the right strategy to grow our business over the long term,” Kempczinski said. “We know we have more work to do to sustain guest count-led growth and continued market share gains, but I am very confident in our growth strategy and our ability to deliver outstanding execution for our customers.”
McDonald’s finished Q3 with 13,498 U.S. shops and 29,321 international shops for a total of 42,819. International Operated Markets (i.e. France, the U.K.) saw comps decrease 2.1 percent, and International Developmental and Licensed Markets (i.e. China, Latin America) experienced a 3.5 percent decline.
