Cyclospora outbreak dents Taco Bell sales but recovery underway, exec says
CFO says sales declines have 'moderated materially' and the chain is halfway back to prior-year levels
Taco Bell removes lettuce nationwide after FDA, CDC probe possible outbreak source
The FDA and CDC are investigating Taco Bells lettuce supplier as consumers in four states are urged to avoid shredded lettuce.
The parent company of Taco Bell released its quarterly earnings report on Thursday and said that Taco Bell sales fell amid the cyclospora outbreak, though there were early signs of recovery in the last week.
Yum Brands – which operates fast-food chains like KFC and Pizza Hut as well as Taco Bell – said the Mexican-style chain's sales were down 2% quarter to date through July 27.
"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," Yum Brands CFO Ranjith Roy said on the company's quarterly earnings call.
"It is early days, but in the subsequent week, sales declines have moderated materially, and we are seeing steady improvement in day-over-day sales trends," Roy added.
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Taco Bell's sales dipped following the cyclospora outbreak, but have shown signs of recovery in the last week. (Marvin Joseph/The Washington Post via Getty Images)
Roy went on to say in response to an analyst's question that "if you take the average sales for the last four days, which includes the weekend and the first two days of this week, we are halfway back to sales levels of the prior year."
The cyclospora outbreak is under investigation by the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC), along with state and local partners. It has been linked to iceberg lettuce that was sourced from central Mexico through Taylor Farms de Mexico.
Taylor Farms' U.S. business initiated a voluntary recall that also included iceberg lettuce sold under the Taylor Fresh Foods and Marketside brands. The company has noted that the FDA hasn't identified a single positive product test result for cyclospora after a false positive was reported by the agency.
FDA SAYS TAYLOR FARMS CYCLOSPORA LETTUCE TEST WAS A FALSE POSITIVE
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| YUM | YUM! BRANDS INC. | 157.04 | +4.95 | +3.25% |
Cyclospora cases with exposure to Taco Bell have been reported in nine states, including Illinois, Indiana, Kansas, Kentucky, Michigan, Ohio, Oklahoma, Pennsylvania and West Virginia.
Yum Brands CEO Christopher Turner said that "our top priority is, and always will be, the safety and well-being of our consumers. With respect to the consumer sentiment, though, we've seen real improvement as consumers have understood better the nature of the issue and they understand that it is not a Taco Bell-specific issue."
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Taco Bell removed potentially affected lettuce from a supplier after the FDA linked it to a multistate cyclosporiasis outbreak. (Jeffrey Greenberg/Universal Images Group via Getty Images)
Turner added that there's "been no change in our measures of brand love" and that some of those metrics have seen growth in positivity, while Taco Bell's share of the conversation around food safety has declined.
"The best proof point is that consumers are coming back to the restaurants on a steady basis. We've seen steady improvement in those sales trends," he said, noting that the chain's Tuesday release of a Mexican pizza special drove the most transactions and loyalty acquisitions of any Taco Bell Tuesday drop.
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"There is no brand and no team better equipped to drive a recovery in this temporary sales impact than Taco Bell," he added.