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McDonald's pulls Quarter Pounder from one-fifth of its US

restaurants

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Burger King and other chains remove onions from menu items

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Outbreak has sickened nearly 50, killed one

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Onions, beef patties under scrutiny by regulators

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(Updates with FDA comment in paragraph five)

By Brad Brooks

LONGMONT, Colorado, Oct 24 (Reuters) - U.S. fast-food

chains were pulling fresh onions out of their menu items on

Thursday after the vegetable was named as the likely source of

an E. coli outbreak at McDonald's restaurants that has

sickened 49 people and killed one.

Restaurant Brands International, parent of McDonald's

rival Burger King, and Yum Brands ( YUM ) said they were

removing fresh onions from menu items. Roughly 5% of Burger King

locations have removed onions from the menu, a Burger King

spokesperson said in a statement.

McDonald's said on Thursday that Taylor Farms was the

supplier of the sliced onions that have been removed. Taylor

Farms did not immediately respond to a request for comment. The

company has recalled several batches of yellow onions produced

in a Colorado facility, according to a recall memo on Wednesday

by US Foods ( USFD ), one of the largest U.S. suppliers of food

service operations.

About 5% of Burger King stores also get supplies from Taylor

Farms, but a company spokesperson said Burger King has not been

contacted yet from health authorities or had any illnesses. Yum,

which operates KFC ( YUM ), Pizza Hut and the Taco Bell chains, said it

was removing onions "out of an abundance of caution."

The U.S. Department of Agriculture said late on Wednesday that

fresh onions were the likely source of the outbreak. The U.S.

Food and Drug Administration said it is looking at all possible

sources of the outbreak and has not determined the cause.

Past E. coli outbreaks have hampered sales at big fast-food

restaurants as customers avoid the affected chains for fear of

illness. Regulators are still investigating whether McDonald's

beef patties could be affected, but E. coli is killed in beef

when cooked properly, whereas the McDonald's Quarter Pounder is

served with raw, slivered onions.

McDonald's has pulled the Quarter Pounder from about

one-fifth of its U.S. restaurants, including in Colorado,

Kansas, Utah and Wyoming, and in parts of Idaho, Iowa, Missouri,

Montana, Nebraska, Nevada, New Mexico and Oklahoma.

"We've been told by corporate to not use any onions going

forward for the foreseeable future," Maria Gonzales, the on-duty

manager inside a Burger King in Longmont, Colorado, said on

Wednesday. "They're off our menu."

McDonald's did not immediately respond to a request for

comment on Thursday.

McDonald's has moved quickly to try to contain the damage while

also trying to reassure customers of its efforts. That may be

critical - previous outbreaks in 2015 at Chipotle Mexican Grill ( CMG )

and in 1993 at Jack in the Box caused sales at

those companies to drop sharply for several quarters.

David Tarantino, an analyst at Baird Equity Research,

downgraded McDonald's shares to "neutral" late on Wednesday. "We

are concerned that reports of an E. coli outbreak linked to

McDonald's restaurants in multiple U.S. states could pose a

major threat to consumer sentiment" and thus hurt U.S.

comparable-store sales, he said.

PLENTY OF CUSTOMERS

In the immediate aftermath of the McDonald's outbreak,

plenty of people in Colorado were still eating at the U.S.

giant, according to checks by Reuters. Some were avoiding the

hamburgers.

Charity Atkinson was munching on a 20-piece box of Chicken

McNuggets in a McDonald's parking lot in Longmont on Wednesday

afternoon, about 30 miles (48 km) north of Denver.

Atkinson said she was not worried about the outbreak, but

she did note that for now she was avoiding the burgers.

"I'm hoping everything gets taken care of really soon,

because my mom loves the Quarter Pounders with cheese," Atkinson

said. "Hopefully they'll have better sanitary protections

soon."

At Burger King, Monica and Jesus Martinez were digging in to

a bag of burgers and fries while sitting inside their car, and

said they had decided to frequent Burger King in large part

because of the outbreak at McDonald's.

"I'm worried! I like the Quarter Pounder but I'm really

worried," Monica Martinez said. "It will definitely influence my

choices of where we eat going forward."

The outbreak of E. coli was first reported to the U.S.

Centers for Disease Control and Prevention in late September.

The USDA on Wednesday said that one of its state partners

was also testing samples of beef for E. coli.