McDonald’s Brings Back Quarter Pounder Ahead of Q3 Earnings (Different Than Chipotle in 2015?)

Well, here we are. Just when you thought it was safe to order a burger, McDonald’s is bringing back its infamous Quarter Pounder (minus the slivered onions that made it a public health nightmare). 

(Source: CNBC)

This week, around 900 McDonald’s locations (mostly across Colorado, Kansas, Wyoming, and some lucky neighboring states) will put the Quarter Pounder back on the menu. But it’s strictly no-onions-allowed for now as the fast-food giant tries to navigate the fallout of an E. coli outbreak that left 75 people sick, 22 hospitalized, and one tragically deceased.

McDonald’s USA President, Joe Erlinger, took to the web to offer a video apology, sincerely regretting that anyone feels “ill, scared, or uncertain” (pretty generous understatement there, Joe).

If you’re wondering why this sounds familiar, it’s because McDonald’s is basically walking down the same treacherous path Chipotle did during its own E. coli disaster a few years back. 

But McDonald's seems to think that they can keep things under control just by cutting onions out of the equation. They’re blaming the slivered onions, sourced from Taylor Farms in Colorado Springs, for the E. coli O157 strain, a nasty bug that can lead to kidney failure in severe cases. So, Taylor Farms? Out. Fresh Quarter Pounder patties? In, but hold the onions.

Now, we all know health should top money on the priority list, but the financial smackdown has been very real. The second the CDC linked the outbreak to Mickey D’s, McDonald’s stock dropped 7%. 

(Source: Fast Company)

Unlike Chipotle, McDonald’s isn’t solely on the hook here. The company collects about 61% of its revenue from franchise fees and rental income, not just burger sales (smart move, Ronald.) That’s a nice cushion for investors who still enjoy that reliable 2.4% dividend yield. So, sure, there’s a bit of a safety net here, but whether it’s enough to cover this PR nightmare remains to be seen.

For now, McDonald’s is staying away from slivered onions. But it’s hard to say if customers will forget about this mess anytime soon. With Q3 earnings just around the corner, McDonald’s is under pressure to show it can handle a crisis, though investors are rightfully skeptical. The FDA’s still sniffing around Taylor Farms, and the fast-food giant’s assurances that “any contaminated product has been removed” may feel a little too optimistic for some.

P.S. A new trade is about to drop any moment, and it could be the kind that takes off faster than a Halloween sale on November 1st. But don’t take my word for it—our last alert, timed down to the minute (Tuesday, 8:41 am EST, to be exact), soared 72.83% in under five minutes. So, if you’re done hearing about “what could have been,” it’s time to jump on the front lines.

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Stock.News has positions in McDonald’s.