The US Food and Drug Administration linked a cyclosporiasis outbreak to lettuce served by Taco Bell, a chain owned by Yum Brands. The outbreak has sickened at least 1,947 people, resulting in 98 hospitalizations and no reported deaths as of Friday, according to the US Centers for Disease Control and Prevention.

Daily traffic to Taco Bell locations decreased by double digits since the FDA linked the parasitic outbreak to its lettuce, according to Placer.ai data. Yum Brands shares fell 5% over the same period, reducing the company's market value to approximately $42 billion.

1,947 people

Sickened in the cyclospora outbreak linked to Taco Bell lettuce.

Federal health agencies identified iceberg lettuce supplied by Taylor Farms as the likely cause of the outbreak. Taco Bell removed affected lettuce from its restaurants by July 17, and CEO Sean Tresvant wrote an open letter to diners five days later, stating, 'We aren't entitled to your loyalty. We earn it one meal at a time.'

The outbreak comes as Yum Brands prepares to report second-quarter earnings. LSEG analysts project earnings of $1.58 per share on revenue of $2.2 billion. Taco Bell is expected to report 7% same-store sales growth for the quarter, which ended more than a month before the FDA link.

RBC Capital Markets analyst Logan Reich stated that the recent outbreak likely has minimal impact on Taco Bell's Q2 results, but debate around impact on Q3 and beyond is the key driver of the stock. Between June 30 and Tuesday, seven industry analysts revised their full-year earnings per share expectations for Yum Brands downward, according to a Factset survey.

Daily cases in Michigan, which appears to be the epicenter of the initial outbreak, continue to rise. US Health and Human Services Secretary Robert F. Kennedy Jr. told reporters that the outbreak is 'under control,' but the CDC has not declared it over.

Foodborne illness outbreaks have historically hit fast-food chains hard. Chipotle Mexican Grill was implicated in at least five outbreaks between 2015 and 2018, reporting double-digit same-store sales declines from Q4 2015 to Q4 2016. In late 2024, an E. coli outbreak linked to McDonald's Quarter Pounder burgers caused a temporary sales dip, but domestic sales fully rebounded by the following quarter. McDonald's severed ties with supplier Taylor Farms after that outbreak.

Yum Brands considers Taco Bell one of its 'twin growth engines' alongside KFC's international business. The company recently divested Pizza Hut from its portfolio, and its other brand, Habit Burger & Grill, has fewer than 400 locations, making Taco Bell a critical component.