McDonald's shares fall 5% due to an E. coli outbreak linked to Quarter Pounders

McDonald's Corporation (MCD, Financial) lost 5% of the market value of its shares after an outbreak of E. coli bacteria linked to its Quarter Pounder hamburgers, despite extensive promises from its U.S. President Joe Erlinger. In the final spot on the Today show, Erlinger tried to convince the public of McDonald's safety precautions by pointing out that the harmful burger was banned in most of the states where it was offered and in several others.

The outbreak identified by the US Centers for Disease Control and Prevention (CDC) affected ten states: Texas, Pennsylvania, Illinois and Colorado; New York, Ohio, Michigan, Indiana, Kentucky and Tennessee with 49 confirmed cases reported from October 27th to November 11th. The affected states are Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, Oregon, Utah, Wisconsin and Wyoming. Unfortunately, the disease has caused one death and ten hospitalizations in Colorado, all attributed to consumption of the tainted Quarter Pounder.

Erlinger emphasized: What is relevant today is that the action was taken to protect the American public and promote their well-being. We are optimistic that we can find a way forward and give the American consumer another reason to come to McDonald's.”

In this regard, one still cannot ignore the reactions of consumers and investors to the incident, as evidenced by the shrinking shares of McDonald's. Now it is high time for the company to begin thinking about how it can restore the public trust it once enjoyed while managing the consequences of this public health disaster. The market and consumers will be watching to see how McDonald's responds to these volatile times and how well this company manages to mitigate future risks.

This article first appeared on GuruFocus.