McDonald's Corporation (MCD, Financial) lost 5% of the market value of its shares after an E.coli bacteria outbreak that was linked to its Quarter Pounder hamburgers, even with the gamut of promises of its U.S. President Joe Erlinger. At that, in the latest spot on the “Today” show, Erlinger sought to assure the public of McDonald's safety precautions by pointing out that the deleterious burger had been discluded from most states where it was offered and several others.
Identified by the U.S. Centers for Disease Control and Prevention (CDC), the outbreak impacted ten states – Texas, Pennsylvania, Illinois, and Colorado; New York, Ohio, Michigan, Indiana, Kentucky, and Tennessee – with 49 confirmed cases reported from the OCT 27 to Nov 11. The affected states are Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, Oregon, Utah, Wisconsin, and Wyoming. Unfortunately, the illness has claimed one fatality in Colorado and ten hospitalizations, all resulting from eating the tainted Quarter Pounder.
Erlinger emphasized, “What is relevant today is that the action has been made to shield the American public and advance its wellness. We are optimistic that we will find our way through this and give the American consumer another reason to come to McDonald's".
In this regard, one still cannot dismiss consumer and investor reactions to the incident, as evidenced by McDonald's shrinking stock. Now, it is high time the company started working on how it is going to rebuild and recreate the public faith it once enjoyed while dealing with the consequences of this public health disaster. The market and consuming public will be observing how McDonald's reacts to these volatile times and how well this company can manage to lower future risks.
