McDonald's (MCD) Shares Drop 0.65% as E. coli Outbreak, Labor Controversies, and Weak U.S. Sales Weigh

McDonald’s (MCD) shares fell to their lowest level since July 2025 on October 8, with an intraday decline of 0.98% as the stock closed down 0.65%. The selloff reflects a confluence of operational, reputational, and macroeconomic pressures weighing on the fast-food giant’s performance. Analysts highlight a fragile consumer environment, recent food safety crises, and ongoing labor controversies as key drivers of the near-term volatility.

Sluggish consumer spending, particularly among middle- and low-income demographics, has hurt same-store sales in the U.S., the company’s core market. Recent reports show a 3.6% quarterly drop in U.S. same-store sales—the worst since the 2020 pandemic—driven by reduced discretionary spending amid inflation and rising living costs. Executives acknowledged a “nearly double-digit” decline in middle-income traffic, with many customers avoiding breakfast or opting for homemade meals to cut costs. While high-income consumers remain stable, the widening spending gap underscores broader economic uncertainty.

A severe E. coli outbreak linked to Quarter Pounder burgers in October 2024 further dented confidence. The crisis, traced to contaminated onions, led to 49 illnesses across 10 U.S. states, including one death and 10 hospitalizations. McDonald’s temporarily removed the product from 11 states, causing a 6.4% year-over-year drop in restaurant visits on October 23, which worsened to 9.4% by October 25. The incident raised questions about food safety protocols and eroded short-term consumer trust, despite the CEO’s optimism about a recovery by mid-2025.

Struggles to balance affordability and profitability have compounded challenges. While the $5 Meal Deal and “McValue” menu initially boosted average spending per customer, low-income traffic remained “down double digits” in the fourth quarter. Pricing strategies, including menu hikes and inflation-driven cost pressures, have prompted 78% of consumers to view fast food as a luxury, with 62% reducing consumption. The company’s efforts to attract budget-conscious diners have shown mixed results, highlighting tensions between cost-cutting and maintaining margins.

Reputational risks have also emerged from workplace harassment allegations in the UK, where over 700 employees are pursuing legal action. Reports of “toxic” work environments, including sexual harassment and exploitative labor practices, threaten the brand’s image, particularly among younger consumers. Critics argue recent audits lack transparency, with franchise-led initiatives seen as insufficient to address systemic issues. Such controversies could lead to legal penalties or erode consumer goodwill.

Geographic and market-specific hurdles further complicate recovery. The E. coli outbreak disproportionately affected 11 U.S. states, while rising anti-American sentiment in northern Europe and Canada, though attributed to broader geopolitical trends, adds complexity. Executives caution about “volatility” in the coming months, even as the company maintains its long-term growth outlook, including plans to open 2,200 new locations. However, repeated revenue misses and recent earnings underperformance signal ongoing operational headwinds.