Cyclospora Parasite Sours Sales Outlook for Taco Bell Parent
Parent company Yum Brands is a sprinkle of shredded lettuce away from disaster as it heads into earnings today.
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Taco Bell customers have found a culprit besides beans, cheese and sour cream to blame for their post-meal indigestion: the “diarrhea parasite” known as Cyclospora.
Parent company Yum Brands is a few shreds of lettuce away from heartburn as it heads into earnings today. Though the fast-food corporation is expected to post sales gains of 3%, fueled in part by Taco Bell’s six straight years of growth, a single-celled organism could see investors flush their shares.
Not What Customers Ordered
The CDC linked the Mexican-inspired chain’s shredded lettuce to nearly 2,000 cases in which people who reported eating Taco Bell were infected with cyclosporiasis, and regulators subsequently tied the parasite-riddled produce to Taylor Farms de Mexico. Both brands reacted quickly: Taco Bell nixed lettuce from all US locations the day after the FDA’s first report, while Taylor Farms stopped sourcing iceberg lettuce from central Mexico. Customers, however, already had the ick:
- Both foot traffic and sales fell sharply at Taco Bell after the FDA’s July 16 report, with Placer.ai finding foot traffic declined more than 20% on July 23 from the chain’s Thursday average for this year through July 6. Consumer Edge says daily sales have notched a similar drop. At least three lawsuits have already been filed against the chain.
- To win customers back, Taco Bell has rolled out deals on some lettuce-less fan favorites. The chain sold $1 Enchiritos and nacho fries last Wednesday, and this Tuesday it sold $1 Mexican Pizzas. Experts still expect a short-term impact on Yum’s earnings for the year, with several industry analysts lowering their expectations.
Protozoan Problems: This isn’t the fast-food industry’s first battle with parasites, and the past paints a sunny picture for Taco Bell’s future. Chipotle has been able to win back customers after being linked to a cluster of outbreaks in the 2010s. The burrito-bowl chain beat expectations in the quarter reported yesterday, opening 100 new stores. McDonald’s sales recovered within weeks of removing the slivered onions likely responsible for its 2024 Quarter Pounder crisis, when its burgers were linked to E. coli. Taco Bell could be on a similar timeline, especially considering the social media love it’s getting from diehard fans.
