Taco Bell sales fall more than expected after cyclosporiasis outbreak
YUM•Taco Bell same-store sales fell 4% in the third quarter, versus analysts’ expectations for a 0.9% decline, after a multistate cyclosporiasis outbreak made customers wary of dining at the chain. Yum Brands’ overall same-store sales were flat, while operating profit rose to $2.32 billion, including a $1.68 billion gain from the Pizza Hut divestiture.
1. Taco Bell sales decline
Taco Bell same-store sales fell 4% in the third quarter, missing analysts’ expectations for a 0.9% decline. A multistate cyclosporiasis outbreak made customers wary of dining at the chain, and weekly foot traffic fell 20% at its peak in early July, according to Placer.ai. US health authorities declared the outbreak over last month; it resulted in 570 hospitalizations and two deaths.
2. Yum results and outlook
Same-store sales at Yum Brands were flat from a year earlier, below analysts’ expectations for a 0.9% rise. KFC same-store sales rose 1%, compared with expectations for a 2.1% increase. CEO Chris Turner said Taco Bell US had outpaced the quick-service restaurant industry in same-store sales growth since the end of September.
3. Divestiture lifts profit
Yum’s operating profit rose to $2.32 billion from $666 million a year earlier, including a $1.68 billion gain from the divestiture of Pizza Hut in a $2.7 billion deal earlier this year. Fast-food chains are competing for customers as higher living costs push some consumers toward cheaper meals at home, while higher earners turn toward fine dining.
