This is how important the Quarter Pounder is to McDonald's — and why it will want to address E. coli issues quickly

• McDonald's Quarter Pounder has been linked to a deadly E. coli outbreak across 10 states.
• The fast-food chain overhauled its famous burger in 2018 — then reported a surge in sales.
• Now, McDonald's says it's temporarily removing the Quarter Pounder from its menus.

McDonald's push to revamp the Quarter Pounder in recent years — switching to fresh beef and pushing a marketing campaign complete with "I'd rather be eating a Quarter Pounder" stickers — hit a hurdle this week with an E. coli outbreak tied to the sandwich.

The Golden Arches' focus on the classic Quarter Pounder since its 2018 revamp had been paying off — leading to a 50% increase in sales during the first month after its rollout, the company said at the time.

And since then, the Quarter Pounder and other "classics" like the Big Mac have made up more than 70% of food sales in recent years in McDonald's top markets, an executive said.

That underlines just how important the Quarter Pounder is to McDonald's — and why it will want to address the food safety issue quickly.

Investors sense the importance, too: McDonald's stock tumbled sharply late Tuesday as the company said it would temporarily remove the burgers from menus in a number of states across the US.

"The Quarter Pounder is extremely important to the McDonald's product line," John A. Gordon, founder of Pacific Management Consulting Group and a chain restaurant analyst, told Business Insider in the wake of the E. coli outbreak news.

He said a potential hit to the Quarter Pounder's reputation could negatively affect sales — and pose a challenge for McDonald's overall brand in the short term.

In an internal message published on the company's website Tuesday, Cesar Piña, North American chief supply chain officer, said McDonald's is taking "swift and decisive" action in response to the outbreak. Piña said the illnesses could be linked to slivered onions used in the Quarter Pounder. He said those onions are sourced from a single supplier serving three distribution centers.

Revamping a McDonald's fan favorite

The Quarter Pounder dates back to 1971 when franchisee Al Bernardin created the burger at his Fremont, California, store, naming the sandwich for its pre-cooked weight.

In March 2018, the company announced it would stop using frozen beef patties for its Quarter Pounders and instead switch to fresh meat. It came as competitors like Wendy's were using fresh meat — and upstarts like Shake Shack were starting to draw customer attention.

The transition to a new Quarter Pounder included the addition of new kitchen utensils and refrigerators at the company's locations and an advertising campaign complete with a John Goodman-voiced commercial.

At the time, McDonald's President Chris Kempczinski called the Quarter Pounder overhaul the "most significant change to our system and restaurant operations since All Day Breakfast."

A year after its release, the company said in the first quarter of 2019 it sold 40 million more Quarter Pounders than in the same quarter the previous year.

The chain doesn't break out sales figures for individual menu items, but presentations to investors in recent years hint at just how important "classics" like the Quarter Pounder and Big Mac are to the business.

In 2020, Ian Borden, then president of McDonald's international division — and now CFO — said long-standing menu items represented about 70% of food sales in its top markets."Our core classics are the heart of our business," he said at the time.

The Quarter Pounder is similarly important to McDonald's from a branding perspective. The Golden Arches sold a whole product line devoted to it — T-shirts, mittens, calendars, and other merch, including the "I'd Rather Be Eating ... " sticker.

The E. coli outbreak has killed one, the CDC Says

The CDC said Tuesday that the E. coli outbreak has 49 confirmed cases across 10 states, though it said the extent of illness is likely greater. So far, 10 people have been hospitalized, and one person has died, the CDC said.

While Gordon, the analyst, said affected stores will likely see a decrease in sales, he said the company's outlook in general isn't bleak.

"Having one menu item on a 'bad' list, shall we say, doesn't indict the whole brand," he said, citing other fast-food chains that have bounced back from food-safety incidents over time, including Chipotle in 2015 and Jack-in-the-Box in the 1990s.

Just the name "McDonald's" is worth a lot — it's ranked the No. 5 most valuable brand based on a Kantar survey from earlier this year. It's the only food company in the Top 10.

Still, Gordon said that repairing the Quarter Pounder's possibly dented reputation will mean McD's has some work to do. For now, he said, don't expect to see the classic sandwich in any promotions — the Quarter Pounder will be on the marketing back-burner for now.

"Let the heat of fire burn itself out," he said.