Taco Bell has removed lettuce linked to a cyclosporiasis outbreak from its restaurants, the company said Friday. The outbreak has currently affected more than 1,600 people across five states, according to the Centers for Disease Control and Prevention.
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.
Cyclosporiasis Outbreak Investigation
On Thursday, the agency said its investigation into the source linked the outbreak to shredded iceberg lettuce served at Taco Bell locations in Indiana, Kentucky, Michigan, Ohio, and West Virginia. The U.S. Food and Drug Administration is working with the supplier to determine if the lettuce was sent elsewhere, as well.
“Based on ongoing conversations with public health officials, and out of an abundance of caution, Taco Bell worked swiftly to voluntarily remove the product from restaurants and the affected ingredient has been removed from our supply chain nationwide,” Taco Bell said.
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Taco Bell’s parent company, 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%.
Analysts say the outbreak likely won’t have a major effect on Yum Brands’ stock, especially based on how restaurants have fared during past health scares. 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.
In the middle of this outbreak, it’s clear that companies like Taco Bell will need to focus on regaining customers’ trust, which can be a difficult task. By being transparent and accountable, they can make their food safety processes better, and that’s a lesson in marketing and brand loyalty for Taco Bell and other restaurants.
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. Taylor Farms said in a Friday statement that it has removed all iceberg lettuce sourced from central Mexico.
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Supplier Investigation
The company added that none of its branded salads or kits are associated with the outbreak. “While the FDA traceback is indicating a specific independent farm, which represents less than 1% of the U.S.’s iceberg lettuce supply, as the potential source of the outbreak, we have removed all iceberg lettuce from the region indefinitely,” the company said.
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, which did not see as much stock movement this week, 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.
The sales and stock effects of the outbreak will likely be temporary, and analysts expect Taco Bell to return to positive same-store sales growth in a matter of weeks. As the company has recently been “firing on all cylinders” with strong sales numbers, it’s likely to recover quickly from this health scare. While recent reports indicate that similar food safety issues can impact financial performance, analysts remain optimistic about the company’s resilience.
