A look at McDonald’s plan to win back American consumers amid slumping sales and E.coli outbreak

Valuable meals caused a turnaround McDonald’s US sales in the third quarter, but that recovery could be affected by a E coli outbreak tied to the company’s Quarter Pounder burgers.

U.S. same-store sales — or sales at stores open at least a year — rose 0.3% in the July-September period, the company said Tuesday. McDonald’s launched one $5 value meal in late June, after a disappointing second quarter, saying the deal drew lower-income consumers back to stores and improved customers’ value perceptions.

The $5 deal was so successful that McDonald’s recently… extended until December in most US stores.

But last week a crisis broke out. McDonald’s removed Quarter Pounders from the menu at about 3,000 stores after the U.S. Food and Drug Administration determined that the burger’s shaved raw onions were the likely cause of E. coli contamination. The outbreak has killed one person and sickened at least 75 others in 13 states.

Chris Kempczinski, chairman, president and CEO of McDonald’s, apologized for the outbreak during a conference call with investors on Tuesday. He said this is the first major public health issue involving McDonald’s in more than four decades.

“Nothing is more important to us than the safety of our customers,” said Kempczinksi. “The recent surge in E coli cases is deeply concerning, and hearing reports of how this is impacting our customers has been heartbreaking for us.”

McDonald’s says it will no longer buy onions from this supplier and expects the Quarter Pounder to be back on all its U.S. menus within a week, although it will be served without onions in 900 stores.

“I am relieved that this situation appears to be under control and I remain confident in the safety of McDonald’s food,” Kempczinski said.

Still, the company acknowledged that the outbreak hurt sales momentum. The company didn’t share sales data, but Placer.ai, which tracks store traffic using cellphone data and other signals, said late last week it had seen a 9% year-over-year decline in U.S. visits to McDonald’s.

Kempczinski said the company hopes to win back customers by acting quickly to contain the outbreak, cooperating with authorities and promoting its offers such as the $5 meal deal and the limited-time Chicken Big Mac. But further action will be taken if necessary, he said.

Outside the US, McDonald’s struggled during the third quarter. Chinese demand was weak that country’s economy is slowing downwith customers choosing cheaper rivals, and the company has also been affected by the war in the Middle East. To reverse the slowdown in French sales, the company introduced a 4-euro Happy Meal deal in August. It also sells $1 coffee in Canada.

McDonald’s same-store sales fell 1.5% companywide in the third quarter. That was worse than the 0.6% decline Wall Street had forecast, according to analysts polled by FactSet.

Kempczinski said the focus on value will continue in the U.S. in the first quarter of next year, but the company and its franchisees are still deciding what that will look like. He said it will likely be a mix of low-priced entry-level items, meal deals and digital offers. The company could also introduce a McSmart menu with meal deals, as it has already done in markets such as Germany and Australia.

McDonald’s revenue rose 3% to $6.87 billion this quarter. That was slightly higher than the $6.82 billion analysts had forecast.

McDonald’s net profit fell 3% to $2.25 billion. Adjusted for one-off items, including the costs associated with the McDonald’s acquisition business in Israelthe company earned $3.23 per share, which was higher than the $3.21 per share Wall Street had expected.

Shares of McDonald’s Corp. were up 1% in morning trading on Tuesday.