McDonald’s Slides on E. Coli Outbreak, Starbucks Slumps, Boeing CEO Exclusive 10/23/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:13)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber, a post-9 of the New York Stock Exchange. Futures once again under some pressure as yields creep up to some July highs. McDonald's weighing on the Dow. Big morning for the corporate giant earnings, AT&T, Coke. And we'll talk to the CEO of Boeing later on this hour. Our roadmap begins with the heart of earning season. Boeing, AT&T among the names crossing the tape today. Boeing CEO will join us exclusively in a few minutes.

David Faber (0:40)

Plus McDonald shares are tumbling this morning, at least ahead of the open, a deadly E coli outbreak linked to its Quarter pounders sickens dozens in tense fades. And Starbucks seeing a quote, pronounced traffic decline. Sales are falling. What it means for Brian Nichols' turnaround plan, we'll discuss.

Carl Quintanilla (1:01)

Let's begin with the big news on the food front, and that begins with McDonald's. The CDC, as you may know by now, says an E coli outbreak linked to the company's Quarter pounder hamburgers resulted in the death of one person, sickened 49 in the US. The outbreak was reported in 10 states, and at least 10 people have been sent to the hospital. This is what the president of McDonald's USA had to say this morning on the Today Show.

SPEAKER_5 (1:24)

We took swift action yesterday to remove the Quarter pounder from our menu. This was swift and decisive action by us. And it is the Quarter pounder and two ingredients on that Quarter pounder that are under investigation by the CDC. So I want to say to our consumers that you can confidently go to McDonald's today.

Carl Quintanilla (1:47)

As we know, Jim, stock's been a monster over the last year, but this is a dynamic that you're familiar with, having covered the E coli outbreak at Chipotle years ago.

Jim Cramer (1:55)

Yeah, okay, so that took 18 months before people were to come back. Jack in the Box, very similar. Same thing with Taco Bell. It's an 18-month period. Now, the one thing is that this is one death. It's isolated, not since October 11th that we've seen anything. So I believe that the issue I find that is most unnerving, and David, you tell me, is that they think it might be the onions.

It's not the hamburger. They think it might be these states. It's not that states. I think that they... It's very difficult to get your head around if you're at McDonald's because you're dealing with the CDC, which is not exactly in control of the news flow. So I understand why Baird would downgrade it. I totally understand why you might just say, look, this thing, as Carl said, is a monster. So maybe take profits. That's been the form of this earning season so far, is to take profits. Now you have another reason to take it. I don't mean to be, you know, that someone died, but Baird and Guggenheim downgraded just simply because there's too much unknown.

David Faber (2:53)

Yeah. I mean, you know, it's funny reading David Palmer at Evercore Eye Size Note. He's one of the well-known analysts we have him on. It's sort of two, one, it's all right. McDonald's may get more of the benefit of the doubt, given an incredibly strong track record on food safety over the last 20 years. But at the same time, given their brand name, he also goes on to say, you know, and the prominence of the brand, it could cause an outside sales impact in the near term. They do have supply chain tracing, he thinks, will help limit additional outbreaks.

Jim Cramer (3:23)

Well, I mean, the analog is the 1992-1993 Jack in the Box E coli outbreak, Carl. There was some 73 Jack in the Boxes, and infected 732 people, and four people died, and yet, amazingly, 18 months later, the comp store sales numbers turned up. I remember dealing directly with Chipotle when theirs, they had a double, they had a first issue out west, and then they had a Novavirus at Boston, linked to Boston College people in one particular store, and so it was a bang, bang, negative, negative, and yet, they still came back 18 months later. So the question is, is this as moving as those? And I think the answer is no. But if you want to buy it today, remember, you got to have the earnings, and the earnings, they're going to talk about it again. Maybe wait till the earnings.