Taco Bell Sales Decline Following Cyclospora Outbreak Despite Strong Quarterly Results
Yum Brands has reported strong second-quarter financial results, but the company says sales at Taco Bell have slowed following a cyclospora outbreak that triggered a food safety investigation in the United States.
Company executives disclosed during an earnings call on Thursday that Taco Bell’s sales declined by 2% between the end of June and July 27, with the sharpest drop occurring around July 18, shortly after U.S. health authorities publicly identified the restaurant chain as part of their investigation.
Yum Brands’ shares, which had fallen by about 8% since Taco Bell became linked to the outbreak, initially slipped in pre-market trading before recovering during the earnings call.
The company’s quarterly results, which cover the April-to-June period before the outbreak, showed net income rising to $853 million, more than double the $374 million recorded during the same period last year.
Global same-store sales across Yum Brands’ restaurant portfolio—including KFC, Pizza Hut and Taco Bell—grew by 3%, while Taco Bell recorded a 7% increase in comparable sales, continuing the strong momentum it had built in recent years.
Opening the earnings call, Yum Brands Chief Executive Chris Turner acknowledged the impact of the outbreak on customer demand but expressed confidence that the setback would be temporary.
“Elevated uncertainty initially weighed on consumer demand, and since then, consumers have become increasingly aware that this is an industry-wide issue, not an issue specific to Taco Bell.”
Turner said sales had improved steadily over the previous 10 days, helped by promotional offers such as the company’s $1 “Tuesday Drops” campaign, which remained popular despite the outbreak.
Industry analyst Ben Parker of GlobalData said Taco Bell continues to be the company’s strongest brand.
“Taco Bell remains the star of the show,” Parker said.
However, he warned that because Yum Brands depends heavily on Taco Bell for growth, “it is essential that the group moves quickly to restore confidence and trust in the brand – the loss of which has been considerable, at least in the short term.”
According to the U.S. Centers for Disease Control and Prevention (CDC), more than 1,900 people across nine states became ill after eating at Taco Bell restaurants. Nearly 100 people were hospitalised, although no deaths have been reported.
The company said it acted immediately after the outbreak by removing lettuce supplied by Taylor Farms, which U.S. health officials identified as the likely source of the contamination.
Data from analytics firm Placer.ai showed that customer visits to Taco Bell restaurants dropped by around 30% in mid-July after federal investigators publicly linked the chain to the outbreak. By July 23, foot traffic had begun to recover but remained about 20% below normal levels.
To encourage customers to return, Taco Bell introduced one-day promotions offering lettuce-free menu items for $1. The chain’s Chief Executive, Sean Tresvant, also shared a message on LinkedIn thanking loyal customers for their support and pledging to “always act quickly and put safety first.”
The outbreak marks an unusual challenge for Taco Bell, which has consistently outperformed many of its fast-food rivals in recent years. During the first quarter of the year, comparable sales at Taco Bell restaurants increased by 8%, compared with growth of 3.8% at McDonald’s and 5.8% at Burger King, while Wendy’s reported a 2.1% decline.
