Taco Bell sales dip 2% amid cyclospora outbreak, Yum Brands reports earnings

Sales at Taco Bell declined 2% from the end of June through July 27, according to executives on an earnings call Thursday, after U.S. health officials linked the chain to a cyclospora outbreak on July 18. The decline coincided with a 30% drop in foot traffic in mid-July, which later recovered to about 20% below the chain's usual daily average.

Yum Brands, the parent company of Taco Bell, KFC and Pizza Hut, reported net income of $853 million for the April-June quarter, more than double the $374 million recorded a year earlier. Worldwide sales at stores open at least one year rose 3%, with Taco Bell locations showing a 7% increase in sales at existing sites.

CEO Chris Turner acknowledged the outbreak’s effect on the brand but said the impact should be short-lived, adding that consumer uncertainty has lessened as the issue is recognized as industry-wide rather than specific to Taco Bell. He noted that sales have risen steadily over the past ten days, helped by short-term promotions such as $1 "Tuesday drops."

"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.

Analyst Ben Parker of GlobalData commented that Taco Bell remains a key growth driver for Yum Brands and that the company must act quickly to restore consumer confidence.

The Centers for Disease Control and Prevention reported more than 1,900 illnesses across nine states, with nearly 100 hospitalizations and no deaths. Taco Bell responded by removing lettuce from its supplier, Taylor Farms, and introduced a one-day promotion of lettuce-free menu items priced at $1 each. CEO Sean Tresvant posted a message on LinkedIn thanking customers and pledging to prioritize safety.