Yum Brands is expected to report its second-quarter earnings before the bell on Thursday, but executives will likely face more questions about how the cyclosporiasis outbreak tied to Taco Bell is hitting its business during the current reporting period.
Since the Food and Drug Administration first linked the parasitic outbreak to lettuce served by Taco Bell, daily traffic to the chain’s locations has plunged by double digits, according to Placer.ai data
Shares of Yum have fallen 5% over the same period, dragging the company’s market value down to about $42 billion. The outbreak has sickened at least 1,947 people, with 98 hospitalizations and no deaths reported as of Friday, according to the Centers for Disease Control and Prevention. Federal health agencies have named iceberg lettuce supplied by Taylor Farms as the likely culprit.
For Yum, Taco Bell’s plummeting traffic is a bigger deal than just a brand struggling. The restaurant giant counts Taco Bell as one of its “twin growth engines,” counting on it to power its earnings and revenue along with KFC’s international business. The Mexican-inspired chain has long been the gem of Yum’s portfolio, with a passionate fan base and strong same-store sales growth every quarter, even as diners have become more value conscious.