The Centers for Disease Control and Prevention announced on Thursday that a cyclosporiasis outbreak affecting more than 1,600 people across five states has been linked to shredded iceberg lettuce served at Taco Bell locations in Indiana, Kentucky, Michigan, Ohio and West Virginia. The outbreak, caused by a parasite that produces symptoms resembling a serious stomach bug, has triggered stock declines for Taco Bell's parent company Yum Brands, which fell nearly 7% over the past five days. The CDC investigation identified the contaminated lettuce as the source, prompting Taco Bell to voluntarily remove potentially impacted lettuce from affected locations and replace it within 24 hours, while the U.S. Food and Drug Administration works with the supplier to determine if the lettuce was distributed to other restaurants.
CDC Links Outbreak to Taco Bell Lettuce in Five States
The CDC's investigation on Thursday identified shredded iceberg lettuce as the source of the cyclosporiasis outbreak at Taco Bell locations across Indiana, Kentucky, Michigan, Ohio and West Virginia. The infection resembles a serious stomach bug and often begins showing up two to three weeks after people become infected by the parasite, according to the CDC. No deaths have been reported. The U.S. Food and Drug Administration is working with the supplier to determine if the lettuce was sent elsewhere.
According to reports, the affected lettuce at Taco Bell may be traced back to supplier Taylor Farms, which distributes the product to many restaurant chains and sells directly in most grocery stores. Media reports noted the company was preparing to issue a recall of ingredients on Friday. Taylor Farms was the same company linked to the McDonald's E. Coli outbreak in 2024.
Yum Brands and Restaurant Stocks Decline Following Outbreak News
Yum Brands saw its stock sink nearly 7% over the past five days as the company grappled with the health scare. Other food companies that sell fresh lettuce also saw their shares drop, like salad chain Sweetgreen, which plunged nearly 13% this week, and fast casual chain Cava, which sank more than 3%. Shares of Sweetgreen and Cava rose more than 17% and about 2% on Friday, respectively, due to apparent relief that the CDC did not identify their ingredients as potential sources of cyclosporiasis.
Recent data from Placer.ai found that chains serving fresh lettuce saw declining foot traffic over the past week, with Taco Bell's down nearly 6% and Panera Bread down more than 7%.
Taco Bell Removes Affected Lettuce Within 24 Hours
Taco Bell said in a Thursday statement that the fast food chain is actively working to "voluntarily remove potentially impacted lettuce from a supplier in select states." The company stated: "The affected ingredient from our supplier is being indefinitely removed from our supply chain nationwide and will be replaced within 24 hours in select states."
Sweetgreen and other restaurant companies issued statements this week saying that they did not believe their ingredients were affected. The salad chain said it does not use iceberg lettuce on its menu. Chipotle said in a Friday statement that shredded iceberg lettuce is not served at its locations, and it does not believe its ingredients are associated with the outbreak.
Analysts Project One-Quarter Impact Based on Historical Outbreaks
TD Cowen analyst Andrew Charles told CNBC he believes the impact of the cyclosporiasis outbreak will be contained to a one-quarter risk for the company and culminate in a quick recovery. He said he expects that arc to look similar to how quickly both McDonald's and Wendy's recovered from separate E. Coli outbreaks in 2024 and 2022, respectively.
Analysts at Evercore ISI wrote in a Friday note that they believe the outbreak will transform from a vendor issue to a supplier issue as the spotlight moves away from Taco Bell to Taylor Farms instead. While lower demand in the impacted Midwest states will likely last longer than in other areas of the U.S., the Evercore analysts said Taco Bell could return to positive same-store sales growth in a matter of weeks, just as McDonald's did within roughly six weeks in 2024.
FAQ
What caused the Taco Bell cyclosporiasis outbreak?
The CDC investigation on Thursday identified shredded iceberg lettuce served at Taco Bell locations in Indiana, Kentucky, Michigan, Ohio and West Virginia as the source of the outbreak. The lettuce may be traced back to supplier Taylor Farms, according to reports.
How many people were affected by the Taco Bell outbreak?
The outbreak has currently affected more than 1,600 people across five states, according to the Centers for Disease Control and Prevention. No deaths have been reported.
How did the outbreak affect Taco Bell's stock price?
Yum Brands, Taco Bell's parent company, saw its stock sink nearly 7% over the past five days as the company grappled with the health scare. Analysts project the impact will be contained to one quarter based on historical outbreak recovery patterns.
