Cyclosporiasis outbreak hits Taco Bell sales, unlikely to cause lasting scar, analysts say

The United States' largest foodborne illness outbreak in recent years, linked to shredded lettuce served at some Taco Bell eateries, may dent the fast-food chain's sales, but is unlikely to cause any long-lasting damage to the brand, analysts said. U.S. health officials are investigating the source of the cyclosporiasis outbreak, which has sickened thousands of people in Michigan and four other states. Some reports had initially linked the parasite, Cyclospora, to a Taylor Farms plant in Mexico. However, Mexico said on Tuesday that there was no evidence yet to suggest that lettuce sourced from it caused the outbreak in the U.S. Foot traffic at Taco Bell — owned by Yum Brands YUM.N — was down 18.9% as of Friday, July 17, compared with the traffic on all Fridays from January 1 through July 6, according to Placer.ai, a company that gathers foot traffic data. "Wary consumers may temporarily take their appetites elsewhere to sidestep any perceived health risk," said Morningstar analyst Ari Felhandler. Shares of Yum Brands fell nearly 10% last week after Taco Bell's link to the outbreak emerged. The company is scheduled to report quarterly results as soon as next week. Analysts and consultants said the outbreak would need to persist for months to materially damage the brand. They pointed to McDonald's MCD.N, which returned to growth within a few quarters of the 2024 E. coli outbreak linked to one of its most popular menu items. Taco Bell has said it removed potentially affected lettuce from restaurants in select states as a precaution and stopped using iceberg lettuce supplied by Taylor Farms nationwide while the investigation continues. "They are already making the right moves," said Izzy Kharasch, president of Hospitality Works. "This type of action, in addition to lots of communication to the public, will get them back on track sooner rather than later." The Tex-Mex chain has been a key driver of Yum's growth, outperforming many rivals despite broader weakness in the restaurant industry. A long-term dip in its sales would amount to a big hit in overall revenue. Chipotle Mexican Grill CMG.N, for instance, took years to rebuild customer confidence and restore sales after a series of foodborne illness outbreaks in 2015. David Mayer, senior partner at global brand and design consultancy Lippincott, brushed such concerns aside. "People have very short-term memories," he said. "The most important thing for Taco Bell is that there is no additional food poisoning incident within the next 12 months." A few Taco Bell customers Reuters spoke with echoed the sentiment. Firefighter Shai Bialer said he was confident restaurants would quickly discard the affected lettuce because they feared lawsuits. "This is the only fast food I like," Bialer said, as he ate a bean burrito without lettuce at a Taco Bell in West Orange, New Jersey. Spice distributor Benny Tejeda, who has a standing biweekly Taco Bell date with his father when the pair makes a delivery at a nearby market, said the tradition meant too much to him to skip. Tejeda is skeptical of the seriousness of the outbreak, saying he struggles to trust government agencies like the FDA to disseminate accurate information. Other fast food chains are also protectively communicating with customers. Salad chains Sweetgreen SG.N and Chopt posted notices emphasizing that they do not use iceberg lettuce, while Chipotle highlighted to app users that it does not serve shredded iceberg lettuce. Just Salad separately emailed customers saying it does not use iceberg, pre-cut or shredded lettuce. At a New Jersey Chipotle outlet on Tuesday, Caleb Rinn, 23, said he had forgotten all about the outbreak when he ordered a burrito bowl with lettuce. Rinn said he is only mildly concerned. "No one has died from this," he said. Then, pausing, he said: "Right?"

Cyclosporiasis outbreak hits Taco Bell sales, unlikely to cause lasting scar, analysts say

Outbreak hits Taco Bell traffic and Yum shares

Analysts expect a short-term hit, not lasting brand damage

Restaurants communicate food-safety assurances to customers

Related News

Zoetis Inc. <ZTS.N>: Morgan Stanley cuts target price to $99.00 from $115.00

Westwood Holdings Group to host Q2 earnings call and webcast

Oatly lifts FY2026 constant-currency revenue growth view to 8%-10%

Monopar starts rolling FDA NDA submission for ALXN1840 in Wilson disease

Repligen to buy BioLife in $1.5 billion deal to expand cell therapy business