Out of an abundance of caution, McDonald's (NYSE:MCD) recently halted the sale of salads at 3,000 restaurants across 13 states, as an outbreak of cyclosporiasis sickened more than 250 people.
Shares of McDonald's have seen little change since the Iowa Department of Public Health announced it was investigating the link between the illness and McDonald's salads. If the illness spreads, shareholders are likely to wonder whether the burger chain could experience the same backlash that fast-casual chain Chipotle Mexican Grill (NYSE:CMG) suffered just a few years ago.
Is history repeating itself?
The food safety controversy that took down Chipotle actually started in a similar fashion. Nearly 100 customers and employees fell ill in the summer of 2015 with norovirus, a highly contagious gastrointestinal infection.
Like McDonald's, shares of Chipotle Mexican Grill were largely unfazed by the initial reports. The company shut down the restaurant in question, threw out all the food, and treated the building to eradicate the virus. However, when an outbreak of E. coli cases linked to Chipotle erupted later that same year, the stock tumbled. And as subsequent outbreaks were publicized across the country, shares eventually plunged from around $750 to below $300. It's taken almost three years for Chipotle's stock to start moving higher again.
The burger chain is taking a proactive stance like the Mexican food chain did, pulling the salads from the restaurants until it can find a new supplier. But will that be enough to prevent future outbreaks?
Not so easily removed
Iowa public health officials say the cyclospora pathogen is extremely hard to treat, because once it enters the supply chain, "There's really nothing a distributor or vendor can do" to get rid of it. Because the pathogen is not actually found at McDonald's distribution centers or restaurants, switching suppliers might not do anything if the new supplier gets lettuce from the same fields.
Cyclospora comes from ingesting food or water that has been contaminated by feces. The microscopic parasite infects the small intestine and typically causes diarrhea, loss of appetite, nausea, and other flu-like symptoms.
So far, McDonald's in Iowa, Illinois, Minnesota, Missouri, Nebraska, South Dakota, and Wisconsin have had customers suffer from cyclosporiasis after eating its salads. It's also removing salads from restaurants in Indiana, Kentucky, Montana, North Dakota, Ohio, and West Virginia.
A key difference in cases
While McDonald's takes the necessary steps to combat this problem, the hope is it won't suffer the same fate as Chipotle. After all, the latter's marketing focused on fresh and healthy ingredients. Foodborne illness outbreaks served to undermine the brand.
Although McDonald's has tried to remake itself in that image by improving its food quality, the fast-food chain is still not thought of as a health-focused restaurant. Not that its customers accept getting sick from eating there, but they may be willing to cut the company some slack as long as McDonald's contains the problem.