Back in October, McDonald’s stock was on a heater, climbing 28% in just three months… and investors were loving it (pun intended).

Then bam! The ghost of Chipotle’s past came knocking. E. coli snuck into McDonald’s slivered onions, sending over 100 people across 12 states straight to the hospital. Next thing you know, customers were sprinting away from McDonald's instead of toward it (which is rare, because fast food loyalists I know don’t usually “sprint”).

The fallout was immediate. Lawsuits piled up, foot traffic tanked, and McDonald's stock sank from $316 to $292 in under a week.

(Source: Fox News)

Which brings us to the present day. This morning, McDonald’s reported its fourth-quarter earnings, and while it didn’t completely implode, let’s just say they’ve had better days. Revenue landed at $6.39 billion, slightly missing Wall Street’s $6.45 billion target. Adjusted earnings per share hit $2.80, failing to meet expectations of $2.84.

Now, those numbers might not scream catastrophe, but here’s where it gets extra painful… U.S. same-store sales fell 1.4%, a bad turnaround from last year’s 4.3% gain. That drop was also worse than the expected -0.35% decline, meaning even the analysts mentally prepared for impact underestimated just how much the outbreak would hurt.

The global side of McDonald’s business managed to grow 0.4%, slightly outperforming expectations, while international same-store sales rose 4.1% (finally, some good news). But make no mistake… the U.S. market is what drives McDonald's, and that’s where things got ugly.

The E. coli outbreak could not have come at a worse time for McDonald’s. By early December, the CDC officially declared the outbreak over, but by then, the damage was done. Consumers had already taken their business elsewhere, lawsuits were stacking up, and McDonald's now had a serious brand trust issue on its hands.

To counteract the downturn, McDonald's did what any giant corporation in crisis mode does… throw money at the problem and hope everyone forgets.

They spent $100 million on marketing, attempting to remind customers that most of their food won’t send you to the hospital. They also launched the McValue Menu, a menu loaded with chicken tenders, snack wraps, and combo deals aimed at convincing customers that McDonald’s is still an affordable option (despite the evidence to the contrary).

(Source: McDonald’s)

But here’s the issue, the deep discounts didn’t save them. According to BTIG analyst Peter Saleh, about 35% of McDonald's total sales now come from steeply discounted or free items, which sounds decent until you realize franchisees aren’t charities. The entire business model is built on thin margins, and if you’re giving away half the menu just to get people in the door, profitability starts looking like a pipe dream.

Even with the messy quarter, some analysts still see a path to recovery. Wedbush’s Nick Setyan pointed out that sales comparisons get much easier in the second half of 2025, meaning McDonald’s might look like it’s rebounding even if it’s just coasting on weak comps.

TD Cowen’s Andrew Charles is watching how McDonald's handles pricing, because if too many people get used to dollar-menu deals, it’s going to be tough to nudge them back toward paying full price for a Big Mac. All that to say, McDonald's has bounced back from disasters before (remember the Super Size Me era?), but the next few quarters will be crucial. So far, it’s not off to a great start two months into the new year, considering the stock is only up .61% year to date.

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Stock.News has positions in McDonald’s.