By Heather Haddon

McDonald's U.S. store sales and earnings fell as the burger chain dealt with the fallout of an E. coli outbreak hitting its domestic business last year.

The company said its U.S. same-store sales declined 1.4% in the three months ended Dec. 31, driven in part by customers spending less money per visit. A slowdown in the pace of price increases across restaurants also contributed.

The chain's fourth-quarter revenue and adjusted earnings per share trailed analysts' expectations. Some investors had feared steeper declines, and were upbeat about the company's recovery in many international markets.

McDonald's said it expects to open 2,200 restaurants globally this year, up slightly from the total it projected last year. Around 600 of those locations would be in the U.S.

Shares of the company rose 4.5% in morning trading.

Restaurants so far have reported mixed business results for the last three months of 2024. Chipotle Mexican Grill, Yum Brands' Taco Bell and Chili's owner Brinker International said their restaurants brought in more customers last quarter, while Starbucks, Pizza Hut and KFC marked declines in their domestic markets.

McDonald's said consumers remain pressured, particularly low-income diners and families. U.S. sales were sluggish in January, reflecting a broader slump in the industry, McDonald's said.

"The industry is still seeing a fair bit of headwind," Chief Financial Officer Ian Borden said.

McDonald's had an uneven 2024, as it faced concerns about whether consumers were cutting visits because meal prices were too high. Last July, it reported its first drop in same-store sales since 2020. Value promotions and a new Chicken Big Mac sandwich were providing a boost to its U.S. locations before the onset of its recent health crisis.

In October, federal health officials linked an E. coli outbreak to slivered onions served on McDonald's Quarter Pounder burgers. The outbreak eventually infected a total of 104 people across 14 states, resulting in 34 hospitalizations and one death, the U.S. Food and Drug Administration said in December. McDonald's stopped sourcing onions from the implicated facility and a related farm.

The fast-food chain pledged to invest $100 million to help its U.S. operations recover from the incident and support franchisees hurt by a loss of business after the outbreak. The National Owners Association, an independent group of McDonald's operators, estimated that the outbreak had depressed franchisees' cash flow by more than $200 million.

The company has doubled down on affordable meals since, releasing a broader value menu last month. The continuing U.S. menu includes the chain's $5 meal deal, along with a new selection of items available for a dollar with another purchase.

McDonald's said it expects to fully recover from the outbreak by the spring.

On Monday, McDonald's reported its fourth-quarter net income dropped 1% to $2 billion. Earnings per share adjusted for one-time items were $2.83; analysts polled by FactSet expected $2.85. Revenue was roughly flat at $6.4 billion, while analysts expected $6.5 billion.

Outside the U.S., McDonald's said its business improved in many markets, including the Middle East and Japan. The U.K. business remained a drag, the company said. Global same-store sales increased 0.4%, a better result than analysts had expected.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

February 10, 2025 10:07 ET (15:07 GMT)

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