McDonald's reported a decline in profits on Tuesday, as the ongoing Middle East conflict impacted its financial performance, and the company's CEO apologized for a recent food safety issue. The fast-food chain, which has been dealing with an E. Coli outbreak in the western United States, saw a slight increase in comparable sales in its home market but experienced lower sales in other regions. The company reported a third-quarter profit of $2.3 billion, a 3% decrease from the same period last year, on revenues of $6.9 billion, which increased by 3%.
Global comparable sales decreased by 1.5%. In the United States, larger order sizes helped offset a decline in customer visits, and delivery sales also increased. However, the company cited the ongoing war in the Middle East and negative comparable sales in China as factors that negatively impacted its results, outweighing gains in Latin America. McDonald's also noted weaknesses in France and Britain.
The company's US operations have been in crisis mode following an E. Coli outbreak linked to McDonald's Quarter Pounder hamburgers, primarily in the western United States. Restaurants in a dozen US states temporarily removed the burgers from their menus due to the outbreak, which resulted in dozens of customers being hospitalized and one death. Chief Executive Christopher Kempczinski confirmed that the company had removed the source of slivered onions, believed to be the root cause of the problem, from its supply chain.
Kempczinski expressed deep concern over the recent E. Coli cases and the impact on customers, stating, "On behalf of the entire system, we are sorry for what our customers have experienced." Shares initially dropped in pre-market trading but recovered to be up 0.2% by mid-day.
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