After the E. coli outbreak, what McDonald's should do next.

• Since the CDC issued an advisory notice linking McDonald's Quarter Pounder burgers to an E. coli outbreak in 10 states, the company's stock has dropped by 5%.
• Although investigators have narrowed down the source of the outbreak to the onions used in the burger, the investigation could take several more months to confirm this.
• McDonald's has removed Quarter Pounder burgers from about 20% of its U.S. restaurants to ensure customer safety.

The burger chain may struggle to maintain the trust of customers and investors as health officials work to control a deadly E. coli outbreak.

Since the CDC issued an advisory notice on Tuesday linking the Quarter Pounder burgers of the fast-food giant to an E. coli outbreak in 10 states that resulted in one death, the company's shares have fallen 5%.

McDonald's has identified the slivered onions used in its Quarter Pounder as the possible source of contamination, and has confirmed that California-based vegetable producer Taylor Farms is the supplier of onions it removed from its supply chain. Taylor Farms has issued a recall on four raw onion products due to potential E. coli contamination, as stated in a notice to customers on Thursday. It is important to note that U.S. Foods is not a supplier for McDonald's.

As of Tuesday, the CDC reported that 49 individuals fell ill due to the outbreak from Sept. 27 to Oct. 11. Health experts predict that the number of cases will probably increase as the investigation continues.

The CDC issued an advisory notice two days ago, and it is yet to be determined how the outbreak will impact McDonald's business. However, investors are concerned that the case count may cause sales to decline at the company, which is currently struggling to recover from low customer traffic. The company has been attempting to attract price-sensitive customers by offering promotions.

McDonald's is yet to share if the outbreak is affecting its restaurants' sales, as stated by company spokespeople on Wednesday. The company is set to report its third-quarter results on Oct. 29 before the markets open.

The safety of McDonald's restaurants will determine the extent of the damage to the business.

Where the investigation could go next

The duration of investigations into multistate foodborne outbreaks can range from a few weeks to several months.

According to Dr. Thomas Jaenisch, an epidemiology professor at the Colorado School of Public Health, it is likely that it will take two or three weeks for federal agencies and McDonald's to determine the exact source of contamination and the chain of events leading to the E. coli outbreak. He stated that any testing of ingredients and supply sources should not take that long.

The CDC stated that the number of confirmed cases linked to the McDonald's E. coli outbreak may increase as the investigation continues, as many individuals recover from an infection without being tested or receiving medical care. Additionally, it typically takes three to four weeks to determine if a sick patient is part of an outbreak, the agency noted.

According to Xiang Yang, a professor and meat scientist at the University of California, Davis, there is a possibility that new cases of illnesses could emerge in regions that have not previously reported any cases.

The E.coli outbreak at McDonald's could have originated from an onion supplier that ships ingredients to restaurants across the U.S., according to Yang. It is also unclear if the supplier is based in Colorado, where the outbreak was first reported.

The O157:H7 strain, which can lead to serious complications including kidney failure, was found in one of the patients in the McDonald's outbreak. This strain is banned by the federal government, and suppliers are required to test their products for it.

E. coli can be transmitted through contaminated food or water, or by contact with an infected person, environment, or animal.

The CDC and the 10 affected states have been interviewing patients to gather detailed information about their E. coli exposure, including what they ate and when, according to Craig Hedberg, the co-director of the Minnesota Integrated Food Safety Center of Excellence. Hedberg, who is also a member of the McDonald's Food Safety Advisory Council, stated that he has not collaborated with the company on its response to the outbreak.

The CDC, states, and the Food and Drug Administration collaborate to trace onion distribution and identify the source of contamination, while the Food Safety and Inspection Service of the U.S. Department of Agriculture does the same with ground beef.

The Quarter Pounder's uncooked slivered onions and beef patty are being probed by the CDC as possible causes of the outbreak.

Several salmonella outbreaks have been linked to onions in recent years, according to Hedberg, who said the contamination of raw onions with E. coli is "highly plausible."

In the affected area, McDonald's sources its onions from a single supplier that washes and slices the vegetable.

McDonald's has multiple beef suppliers and cooks its burgers to kill bacteria. If beef was the cause of the outbreak, it would suggest widespread undercooking by many different McDonald's restaurants, according to Hedberg.

Investigators will likely examine the cooking practices of multiple locations as part of the investigation, Hedberg noted, since it seems unlikely that most fast-food chains have designed their cooking systems to prevent E. coli contamination of ground beef, which is a widely recognized hazard.

Jaenisch expressed hope that the investigation would scrutinize the Quarter Pounder preparation process to determine if there is any possibility of cross contamination between slivered onions and other ingredients.

"Jaenisch stated that when preparing a burger at McDonald's, it is important to closely examine the point at which slivered onions are added. He questioned whether they have a bowl of slivered onions and if someone puts their hands in it before touching the tomatoes."

McDonald's has removed Quarter Pounders from a fifth of its U.S. restaurants and instructed restaurants in the area to remove slivered onions from their supply. The company has also paused the distribution of that ingredient in the region.

Learning from the past

It's possible that McDonald's sales and brand image may not be negatively affected by past foodborne illness outbreaks at other restaurant chains.

Despite an E. coli outbreak that affected more than 100 people across six states two years ago, the rival chain's sales were not significantly impacted in the long run.

"Eric Gonzalez, a KeyBanc analyst, stated to CNBC that the incident was not widely publicized because it was likely only noticed by a few operators in the area who saw a slight decline in sales for a few days. The decline was estimated to be between 10% and 10%, and it was eventually forgotten as the news cycle moved on."

On the opposite end of the spectrum is , which has long been associated with food safety concerns.

In 1992 and 1993, an outbreak linked to the chain resulted in the deaths of four children and infected over 700 people. The severe outbreak, coupled with extensive media coverage, led to a sharp decline in sales that year, resulting in three consecutive years of losses and severely damaging Jack in the Box's reputation for years to come.

A more recent example of a chain that struggled for years to improve its food safety and turn around its image after a string of foodborne illnesses is Chipotle.

Gonzalez stated that the situation was a result of inexperience, as there were multiple illnesses, including E. coli, salmonella, and norovirus, and the expertise and experience level were not sufficient to manage the crisis.

It took Chipotle several years and a new CEO to rebuild trust in its burritos and bowls after the initial wave of outbreaks in 2015.

It's unlikely that McDonald's will suffer the same fate as Chipotle or Jack in the Box due to investor fears about the outbreak's impact on sales.

"Gonzalez stated that while the outcome of the outbreak is uncertain from McDonald's perspective, it is essential to have faith in their ability to manage it due to their advanced organization and supply chain."

Reassuring customers

Experts predict that McDonald's may be able to mitigate the harm to its brand if it continues to take measures to ensure the safety of its food, provided there is no significant crisis.

After the CDC issued its notice, McDonald's USA President Joe Erlinger released a statement detailing the company's efforts to control the outbreak, accompanied by a video.

On NBC's "TODAY," Erlinger stated that the food and drinks were safe to consume.

According to Jo-Ellen Pozner, an associate professor at the Santa Clara University Leavey School of Business, any product safety recall necessitates crisis communication and a demonstration of the corporation's commitment to consumer health and safety.

She stated that McDonald's should publicly apologize and target its messaging towards both customers and investors. Nevertheless, this transparency may result in increased media coverage, which could remind consumers of the crisis and discourage them from visiting McDonald's restaurants.

Yang stated that McDonald's is taking action based on the information available while awaiting further details on the contamination source.

Other experts hope the chain does more to prevent the spread of the outbreak during the investigation.

Dr. Darin Detwiler, a professor of food policy and corporate social responsibility at Northeastern University, advised that unaffected states should intensify their sanitation measures and increase ingredient testing to prevent future outbreaks.

Act promptly to avoid legal or inspection issues, Detwiler advised.

""Being proactive and taking corporate social responsibility means assuming there could be something in your state and checking out your product," he said."

McDonald's should, like Jack in the Box, compensate the victims of its E. coli outbreak by covering their medical bills and lost wages, advised Bill Marler, an attorney specializing in foodborne illness cases.

To bounce back quickly, they need to be perceived as a good corporate player, according to Marler.

A potential plaintiff linked to the crisis has contacted Marler, who previously represented hundreds of people in a class-action lawsuit against Jack in the Box, resulting in a settlement of over $50 million.

McDonald's is already facing at least two lawsuits tied to the outbreak.

Both Clarissa DeBock of Nebraska and Eric Stelly of Greeley, Colorado, are suing the company for damages over $50,000 after claiming to have tested positive for E. coli after eating at McDonald's, according to court documents.

McDonald's cannot evade responsibility for contaminated food. They are strictly liable for the production of the contaminated food. While they may try to blame the onion or meat supplier, ultimately, it is McDonald's that produced the hamburger, according to Marler.

McDonald's declined to comment on the lawsuits.

According to Pozner, although media coverage of related lawsuits may increase attention to McDonald's, the lawsuits themselves are unlikely to endanger the chain's existence.

"The E. coli outbreak has not significantly diminished the value of McDonald's as a brand, as it is still a ubiquitous and taken-for-granted brand," she said. "The scope of this tragedy is still very contained."

Slumping sales

McDonald's is facing an outbreak while trying to win back customers who abandoned the restaurant due to years of price hikes. For months, McDonald's has been engaged in a battle with its competitors over affordable meal options.

As inflation rises, consumers are opting to cook at home more often, resulting in a decline in restaurant traffic. In response, fast-food chains such as McDonald's, Burger King, and Wendy's are offering discounts and value meals to entice customers back.

McDonald's introduced a $5 value meal in its U.S. restaurants in late June and launched its Chicken Big Mac nationwide earlier this month, hoping customers would pay a higher price due to its novelty. These moves were successful for McDonald's before the outbreak.

Gonzalez stated that the burger category has many "capable substitutes" for McDonald's, which could negatively impact their momentum.

McDonald's has a 48.8% market share in the burger quick-service restaurant segment, while combined with Burger King and Wendy's, they control approximately 70%, according to Barclays.

"Wendy's and Burger King can gain 3 to 4 points of sales if McDonald's loses a point of sales in the burger category, according to Gonzalez."