Taco Bell, the Mexican-inspired fast-food chain owned by restaurant operator Yum! Brands NYSE:YUM, has experienced a sharp decline in customer visits following a parasite outbreak linked by health authorities to lettuce supplied to some of its locations. On July 17, foot traffic was nearly 19% below Taco Bell's average for Fridays between January 1 and July 6, according to Placer.ai, which tracks mobile-device activity to estimate customer visits. This decline was substantially worse than the 1.9% drop recorded across the broader fast-food category that day. Taco Bell also underperformed the fast-food industry during the four days leading up to July 17, suggesting the outbreak may be placing pressure on a chain that has served as Yum's strongest growth driver in recent years. Yum shares have fallen about 10% since July 10 as reports increasingly connected Taco Bell to the outbreak.
Taco Bell voluntarily removed all lettuce supplied in the U.S. by Taylor Farms, one of the country's largest produce suppliers, after health officials traced cases of cyclosporiasis to the chain's restaurants. Cyclosporiasis is a gastrointestinal illness caused by ingesting a microscopic parasite. The Food and Drug Administration initially reported that it had identified cyclospora in a Taylor Farms lettuce sample that was not included in an existing recall, raising the possibility that the recall could expand. However, the agency later re-examined the sample and determined that the positive result was false. Health authorities are continuing to investigate Taylor Farms produce and are using other methods to trace the source of the outbreak, leaving investors with limited clarity over how long the disruption may affect Taco Bell's traffic.
The outbreak also appears to be weighing on other restaurant businesses. Chopt, an East Coast-focused fast-casual salad chain, recorded double-digit traffic declines on July 16 and July 17 compared with similar days earlier in the year, while burrito and bowl restaurant operator Chipotle Mexican Grill NYSE:CMG and bakery-cafe chain Panera Bread also declined and underperformed the broader fast-casual category. Chipotle said it was closely monitoring the outbreak but did not believe its ingredients were connected, while Panera declined to comment and Chopt did not respond to a request for comment. Salad restaurant operator Sweetgreen NYSE:SG also underperformed the fast-casual industry, although by a smaller margin, and said it was not linked to the outbreak and did not serve iceberg lettuce. Sweetgreen shares have fallen more than 20% since July 10, suggesting investors may remain sensitive to any restaurant stock perceived as exposed to the outbreak. Cyclosporiasis cases have been reported across more than 30 U.S. states, with Michigan recording 6,148 illnesses and 102 hospitalizations, a scale that could continue affecting restaurant traffic and sector sentiment while the investigation remains ongoing.