Taco Bell removes lettuce linked to cyclosporosis outbreak from restaurants

Taco Bell said Friday it has removed lettuce linked to a cyclosporiasis outbreak from restaurants.

The outbreak has now affected more than 1,600 people in five states, according to the Centers for Disease Control and Prevention. The infection resembles a serious stomach bug, and often begins two to three weeks after people become infected with the parasite, according to the CDC. No deaths were reported.

The agency said Thursday that its source investigations linked the outbreak to shredded iceberg lettuce served at Taco Bell locations in Indiana, Kentucky, Michigan, Ohio and West Virginia. The FDA is working with the supplier to determine whether the lettuce was sent elsewhere as well.

“Based on ongoing conversations with public health officials, and out of an abundance of caution, Taco Bell acted quickly to voluntarily remove the product from restaurants and the affected item has been removed from our supply chain nationwide,” Taco Bell said.

Parent company Taco Bell, Yum brandssaw its shares fall nearly 7% over the past five days as the company faced health concerns. Other food companies that sell fresh lettuce also saw their shares decline, such as the salad chain Sweet greenwhich is down nearly 13% this week, and the fast-casual chain rewardWhich decreased by more than 3%. Shares of Sweetgreen and Cava rose more than 17% and about 2% on Friday, respectively, on apparent relief that the CDC did not identify their ingredients as potential sources of cyclosporiasis.

While Taco Bell or other restaurant chains may take a temporary hit to sales as headlines spread about the outbreak, especially in hard-hit states, analysts said any declines in revenue or stock prices likely won’t be long. However, it remains to be seen whether the CDC identifies any other restaurant chains as potential sources of the outbreak.

According to reports, the affected lettuce at Taco Bell can be traced back to supplier Taylor Farms, which distributes the product to several restaurant chains and sells it directly in most grocery stores.

Taylor Farms, the same company linked to a McDonald’s E. Coli outbreak in 2024, said in a statement Friday that it has removed all iceberg lettuce sourced from central Mexico. The company added that none of its branded authorities or groups are linked to the outbreak.

“While FDA tracking points to a specific independent farm, which represents less than 1% of the U.S. iceberg lettuce supply, as a potential source of the outbreak, we have removed all iceberg lettuce from the area indefinitely,” the company said.

Sweetgreen and other restaurant companies issued statements this week saying they did not believe their ingredients were affected. The salad chain said it does not use lettuce on its menu.

“Since the beginning of the investigation, we have been in close contact with our suppliers to determine if any components in our supply chain have been identified as part of the investigation. To date, none have been identified,” the company said.

ChipotleAmazon, which has not seen much inventory movement this week, said in a statement Friday that shredded iceberg lettuce is not being served at its locations, and it does not believe its ingredients are linked to the outbreak.

Analysts say the outbreak likely won’t have a major impact on Yum Brands stock, especially based on the restaurants’ performance during past health scares.

This does not mean that it will not have a temporary effect. Recent data from Placer.ai found that chains that offer fresh lettuce saw traffic decline over the past week, with Taco Bell down nearly 6% and Panera Bread down more than 7%.

TD Cowen analyst Andrew Charles told CNBC he believes the impact of the cyclosporiasis outbreak will be contained in the risk quadrant for the company and culminate in a rapid recovery. He said he expects this arc to look similar with how fast they both are McDonald’s and Wendy recovered from separate E. coli outbreaks in 2024 and 2022, respectively.

“Social media just leads to more short-term memory loss,” Charles said. “Both times we saw a quarter of the effect or less. Here, the situation is also similar.”

He added that the outbreak is also limited to the toppings at Taco Bell rather than the meat itself, which is a key symptom and likely to have a greater impact on consumer behavior. The COVID-19 pandemic has also reduced the impact of food safety concerns on the broader industry over the past few years, he added.

“We’ll have to wait and see from here,” Charles said.

Analysts at Evercore ISI wrote in a note Friday that they believe the outbreak will shift from a vendor problem to a supplier problem with the spotlight moving away from Taco Bell and onto Taylor Farms instead.

“We believe this food safety issue will fade from the headlines over the coming weeks, and to the extent that it remains, it is more about the supplier than Taco Bell specifically,” the analysts wrote.

While the decline in demand in affected Midwestern states will likely last longer than in other areas of the U.S., Evercore analysts said Taco Bell could return to positive same-store sales growth within weeks, just as McDonald’s did within about six weeks in 2024. They added that’s especially so since the company has recently been “firing on all cylinders” with strong sales numbers.

“The historical playbook for food safety concerns with no confirmed brand-level link and no fatalities suggests a demand air pocket of one to two quarters and inventory tending to recover within two quarters,” the analysts wrote.

It’s a lesson in marketing and brand loyalty for Taco Bell and other restaurants as well, according to Jerry Chiaro, an assistant professor of marketing at Northwestern University. The company will need to regain customer trust, just as other restaurants like McDonald’s, Wendy’s and Chipotle have had to do in the past after health concerns.

“They have to be responsible for this,” Chiaro told CNBC. “They can’t blame anyone, even though they are in some way a victim of their suppliers’ policies, processes and food safety procedures.” “But you can’t blame that because the customer sees Taco Bell as the brand, and Taco Bell is the brand they engage with.”

Since health concerns like cyclosporiasis outbreaks occur more frequently and are par for the course for any restaurant that serves fresh food, Chiaro said the playbook is becoming more common. Because Taco Bell has already issued a statement and recalled its affected ingredients, Chiaro said it will likely follow the recovery trend for other companies

“Clear, accountable and transparent communication – and a recommitment to our health safety and food safety processes – can make them better,” he said.