Taco Bell Sales Fall Sharply as Food Safety Outbreak Hits Customer Traffic

Yum Brands reported a sharper-than-expected decline in quarterly same-store sales at its Taco Bell business, as a multistate cyclosporiasis outbreak in the United States during the quarter weakened customer confidence and discouraged dining out. Weekly foot traffic at Taco Bell outlets dropped 20% at the peak of the outbreak in early July, according to data firm Placer.ai. The outbreak, which resulted in 570 hospitalizations and two deaths, was declared over by US health authorities in September.

Taco Bell’s same-store sales declined 4% in the third quarter, significantly missing analysts’ expectations of a 0.9% drop, according to LSEG data. Overall, same-store sales at Yum Brands remained flat compared with the previous year, falling short of market expectations of 0.9% growth. KFC, the company’s largest business, recorded a 1% increase in same-store sales, below analysts’ estimates of 2.1%. CEO Chris Turner said Taco Bell’s US business had been outperforming the quick-service restaurant industry in same-store sales growth since the end of September.

The fast-food industry continues to face intense competition as rising living costs encourage budget-conscious consumers to opt for home-cooked meals, while higher-income customers increasingly turn towards fine dining. Yum Brands’ operating profit rose to $2.32 billion from $666 million a year earlier, largely driven by a $1.68 billion gain from the divestiture of Pizza Hut. The transaction was completed earlier this year through a $2.7 billion deal, marking a significant development in the company’s business portfolio.

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