Taco Bell is removing lettuce linked to a cyclosporiasis outbreak from its restaurants

Taco Bell has removed lettuce linked to the cyclosporiasis outbreak from its restaurants, it said Friday.

The outbreak has currently affected more than 1,600 people in five states, according to the Centers for Disease Control and Prevention. The infection is similar to a bad stomach bug and usually appears two to three weeks after people are infected, according to the CDC. No deaths were reported.

On Thursday, the agency said its investigation into the source linked the iceberg lettuce outbreak to Taco Bell locations in Indiana, Kentucky, Michigan, Ohio and West Virginia. The US Food and Drug Administration is working with the supplier to determine if the lettuce was shipped elsewhere, as well.

“Based on ongoing discussions 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 ingredient has been removed from our inventory nationwide,” Taco Bell said.

Taco Bell’s parent company, Yum Brandshas seen its stock sink nearly 7% in the past five days as the company faces health scares. Other food companies that sell fresh lettuce also saw shares fall, such as salad chains The green of the grasswhich is down about 13% this week, and the usual fast chain Cavawhich sank more than 3%. Shares of Sweetgreen and Cava rose more than 17% and nearly 2% on Friday, respectively, due to apparent relief that the CDC did not identify their ingredients as potential sources of cyclosporiasis.

While Taco Bell or other restaurant chains may grab headlines for the outbreak, especially in states hit hard by it, analysts say any drop in revenue or stock prices likely won’t be extended. However, it remains to be seen if the CDC identifies any other restaurant chains as 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 many restaurant chains and sells directly to many grocery stores.

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

“While FDA traceback indicated one private farm, representing less than 1% of US lettuce, as the potential source of the outbreak, we removed all iceberg lettuce from the region permanently,” the company said.

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

“Since the beginning of the investigation, we have been in close contact with our suppliers to find out if there are any ingredients that we have identified as part of the investigation. So far there are none,” said the company.

Chipotlewhich hasn’t seen much stock movement this week, said in a statement Friday that frozen iceberg lettuce is not being shipped to its facilities, and that it does not believe its ingredients are related to the outbreak.

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

That doesn’t mean it won’t have a short-term impact. Recent data from Placer.ai found that chains serving fresh lettuce saw a drop in foot traffic over the past week, with Taco Bell down nearly 6% and Panera Bread down more than 7%.

TD Cowen analyst Andrew Charles told CNBC that he believes the impact of the cyclosporiasis outbreak will be contained to the company’s quarterly risk and reach the conclusion of a quick recovery. He said he expects the arc to look as fast as both McDonald’s again Wendy recovered from separate outbreaks of E . Coli in 2024 and 2022, respectively.

“Social media leads to short-term memory loss,” Charles said. “We’ve seen both times of a quarter or less of impact. Here, it’s the same setup.”

He added that the outbreak was limited to Taco Bell’s ingredients rather than the meat itself, which is a valuable offering and likely had a major impact on consumer behavior. The Covid-19 pandemic has also dampened the impact of food safety concerns on the wider industry over the past few years, he added.

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

Evercore ISI analysts wrote in a note Friday that they believe the outbreak will shift from a retailer issue to a supplier issue as the spotlight shifts from Taco Bell to Taylor Farms instead.

“We think that in the coming weeks this food safety issue will fade from the headlines and, to the extent that it still holds, stick more with the supplier than Taco Bell directly,” the analysts wrote.

While lower demand in the affected Midwest states will last longer than elsewhere in the US, Evercore analysts say Taco Bell could return to positive same-store growth within weeks, just as McDonald’s did within six weeks in 2024. That’s especially since the company has recently been “firing on all cylinders” with strong sales numbers.

“The historic playbook of food safety scares with no proven link to product quality and no deaths, points to a one- to two-quarter demand air bag and a stock that typically recovers within two quarters,” the analysts wrote.

It’s a study in marketing and brand loyalty for Taco Bell and other restaurants, too, according to Gerry Chiaro, associate professor of marketing at Northwestern University. The company will need to regain customer trust, just as other restaurants such as McDonald’s, Wendy’s and Chipotle have had to in the past after health scares.

“They have to take responsibility for it. They can’t blame anyone, even though in a way, they are a victim of their supplier’s policies and procedures and food safety measures,” Chiaro told CNBC. “But you can’t blame it because the customer sees Taco Bell as a brand, and Taco Bell is what they associate with.”

Because health scares like cyclosporiasis outbreaks happen so often and are par for the course for any restaurant that serves fresh food, Chiaro said the playbook has become more common. And because Taco Bell has already issued a statement and pulled its contaminated ingredients, Chiaro said it is likely to follow the recovery trend of other companies.

“Clear communication, accountability, transparency, commitment to our health safety and our food safety practices – we can make it better,” he said.