Taco Bell Sales Briefly Move South After Parasite Outbreak

Taco Bell saw sales decline this month following a parasite outbreak tied to the chain.

Parent company Yum Brands addressed the multi-state cyclospora outbreak, which happened during its current quarter, on a Thursday (June 30) earnings call to discuss the previous quarter.

“The brand has seen a meaningful near-term sales impact,” CEO Chris Turner said. “We expect the sales impact to be temporary and are encouraged by a few factors.”

For example, consumer demand was initially dampened by heightened uncertainty, though the public has since become more aware that the parasite is an industry-wide issue, not one confined to Taco Bell.

The company said that so far this quarter and through July 27, same-store sales for Taco Bell have dipped 2% in the U.S. During the second quarter, sales for Taco Bell and KFC were both up 7%.

“Since the U.S. food safety industry issue became front and center only two weeks ago, we saw maximum impact to sales over the weekend of July 18,” said CFO Ranjith Roy, who also pointed out that sales have since started to recover.

A report on the earnings by CNBC cites data from Placer.ai showing that traffic to Taco Bell has fallen by double-digit percentages since the Food and Drug Administration (FDA) first connected the parasitic outbreak to iceberg lettuce served by Taco Bell earlier this month.

Cyclospora is a water-borne parasite and often found on fresh produce, such as iceberg lettuce, herbs and raspberries.

It can cause diarrhea, fatigue, nausea, cramping and loss of appetite, symptoms that could persist for weeks or even months if left untreated, according to the Centers for Disease Control (CDC). The parasite is not fatal, and not everyone exposed to it will get sick.

Taylor Farms, which supplies lettuce to Taco Bell and to retail stores, issued a wide-ranging recall earlier this month.

In response to recent food safety concerns, Yum said it is further investing in promotions like its Tuesday Drops program to drive restaurant traffic.

Earlier this week, it sold $1 versions of its Mexican Pizzas, typically priced between $5 to $7. The prior week, it sold $1 enchritos, a burrito/enchilada hybrid normally sold for $4. Both were the highest-performing Tuesday Drop promotions the company has recorded, Turner said.