Yum Brands disclosed that a cyclospora outbreak tied to Taco Bell restaurants resulted in notable sales declines during the current quarter. Chief Executive Officer Chris Turner characterized the impact as a meaningful near-term setback but indicated the company expects it to be temporary. Through July 27 in the current quarter, Taco Bell’s U.S. same-store sales fell 2%.
The parasitic outbreak was first connected to iceberg lettuce served at Taco Bell by the Food and Drug Administration in mid-July. Traffic to Taco Bell locations dropped by double-digit percentages following the initial announcement, with the steepest declines occurring over the weekend of July 18. However, sales trends have shown steady improvement over the subsequent 10 days, with average sales over the last four days achieving roughly 50% recovery compared to the peak decline period, Turner noted.
The company’s executives attributed the rebound partly to shifting consumer perception. Turner stated that consumers increasingly recognize the outbreak as an industry-wide issue rather than a Taco Bell-specific problem, reducing the initial uncertainty that depressed demand. Brand sentiment on social media has returned to pre-crisis levels, according to the company.
Yum Brands’ stock climbed more than 3% on Thursday following the optimistic sales commentary. The broader restaurant industry also felt effects from the outbreak, as Chipotle Mexican Grill reported that consumer mistrust of chains serving fresh lettuce impacted sales during the latter portion of July, despite Chipotle not using the affected iceberg lettuce from the outbreak source.
Separately, Yum reported second-quarter results for the period ended June 30, before the outbreak connection became public. The company posted net income of $853 million, or $3.08 per share, compared with $374 million, or $1.33 per share, in the prior year. Net revenue grew 12% to $2.17 billion, driven by new restaurant openings. Global same-store sales increased 3%, with Taco Bell rising 7%, KFC up 2%, and Pizza Hut declining 1%.
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