Wendy’s, Chipotle, Taco Bell: A look at three notable foodborne outbreaks in the past

McDonald’s (NYSE:MCD) came under intense scrutiny this week, after the world’s largest fast-food chain was linked to an E. coli outbreak by the U.S. Centers for Disease Control and Prevention (CDC) that has sickened 75 people across 13 states and killed one person.

The CDC announced an investigation into an outbreak of infections caused by the bacteria on Tuesday, with the initial count at 49 sick people across ten states and the one death. The illnesses have been linked to McDonald’s (NYSE:MCD) popular Quarter Pounder burger.

Investors reacted negatively to the news, sending McDonald’s (MCD) stock down -7.1% from Tuesday to its last close on Friday.

Seeking Alpha took a look at three notable foodborne outbreaks in the past and the effect it had on the stock of the companies involved. The three instances were: a 2022 E. coli outbreak that was linked to Wendy’s (NASDAQ:WEN); several E. coli and norovirus outbreaks linked to Chipotle Mexican Grill (NYSE:CMG) in 2015; and a 2006 E. coli outbreak linked to Taco Bell, owned by Yum! Brands (NYSE:YUM).

Seeking Alpha’s analysis found that Wendy’s (NASDAQ:WEN) stock shed -5.1% for the duration of the 2022 outbreak, and it took the stock 17 trading days to recoup that loss. Meanwhile, shares of Yum! (NYSE:YUM) fell -6.2% for the duration of the 2006 outbreak, and it took them 90 trading days to regain that decline.

But those stats are nothing compared to Chipotle (NYSE:CMG). The Mexican restaurant chain had it rough in 2015, suffering multiple outbreaks. The stock cratered -36.6% during that time. It took the stock a whopping 782 trading days – or over three years – to recoup its loss.

See below for some more details on these three historical outbreaks:

Wendy’s 2022

As per the CDC, illnesses started on July 26. The outbreak was declared over on October 4. A total of 109 people were infected with E. coli across 6 states. No deaths were reported.

On August 19, the CDC said romaine lettuce served on burgers and sandwiches at Wendy’s (WEN) was one of the most common ingredients eaten by sick people. Wendy’s (WEN) took the precautionary measure of removing the romaine lettuce from restaurants in the region of the outbreak.

CDC investigators ultimately could not confirm romaine lettuce as the source of the outbreak.

Chipotle 2015

The Mexican restaurant chain’s troubles with outbreaks in 2015 were well-publicized.

According to a U.S. Food and Drug Administration (FDA) investigation, in August, 234 consumers and employees of a Chipotle (CMG) restaurant in Simi Valley, Calif. reported becoming ill. Then, in December, 141 people reported illness related to a norovirus incident at a Chipotle restaurant (CMG) in Boston, Mass.

The CDC separately investigated two outbreaks of E. coli linked to Chipotle (CMG) – an initial larger one in October that sickened 55 people across 11 states and a second, smaller one in December that sickened five people across three states. The CDC declared the two outbreaks to be over on February 1, 2016.

Steve Ells, CMG’s chief executive at that time, called Q4 2015 the “most challenging period” in the company’s history. Chipotle’s (CMG) comparable restaurant sales in that quarter plummeted 14.6%.

Taco Bell 2006

The CDC investigated an E. coli outbreak linked to Taco Bell, owned by Yum! Brands (YUM), that sickened 71 people across 5 states. The illness onset dates ranged from November 20 to December 6, and the CDC declared the outbreak to be over on December 14.

Taco Bell took precautionary actions such as removing green onions from all 5.8K of its U.S. restaurants at that time.

David Novak, Yum! (YUM) top boss at that time, said the Taco Bell developments had resulted in “adverse publicity” and had “the most significant impact on U.S. performance” in Q1 2007. Operating profit from its U.S. business in that quarter had decreased 11% Y/Y.

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