'Food-safety issues were more problematic for the industry prior to COVID-19,' TD Cowen analysts said, as social media now keeps consumers' attention spans short
The risk to sales for Yum Brands, Taco Bell's parent company, might not last more than a quarter if any foodborne-illness outbreak were to actually be traced to the chain, TD Cowen analysts said.
An outbreak of cyclosporiasis - a parasite-caused illness whose symptoms include explosive diarrhea - has sickened more than 1,000 people in Michigan. Now, Taco Bell is reportedly pulling some menu ingredients from a handful of restaurants in the area.
It's still not exactly known whether there's a link between the two, as reports this week indicated. But an analyst says the impact on Taco Bell and its parent company Yum Brands (YUM) would likely be limited if there was a connection.
On Wednesday, the New York Post - citing reporting a day earlier from Detroit-area radio station WWJ Newsradio - said some Taco Bell restaurants in the region had put up notices saying: "We are currently unable to sell Lettuce, Cilantro Onion, Pico de Gallo, and Guacamole due to a nationwide recall. We apologize for the inconvenience."
"Any items ordered that normally come with these items WILL NOT contain them," the notice continued.
It is not clear if anyone who ate at Taco Bell has become sick, WWJ said, as cases of cyclosporiasis rise in the state and elsewhere. No evidence has connected Taco Bell to any outbreak.
Yum Brands did not immediately respond to a request for comment.
The WWJ report said the chain was "taking action to help eliminate the spread of cyclosporaisis," as health officials in Michigan try to determine the cause and source of the outbreak. As of Thursday, that outbreak had led to 1,251 cases and 44 reports of hospitalizations in the state. Reports of sickness have emerged in other U.S. states as well.
According to the CDC, most people with healthy immune systems recover from cyclosporiasis without treatment. However, without treatment, generally done with antibiotics, people can stay sick for a few days or even more than a month, the agency said.
Shares of Yum Brands, which also owns KFC and recently agreed to sell Pizza Hut, were unchanged in extended trading Thursday, after finishing 1.7% lower during the day's regular session.
TD Cowen analysts, in a note on Thursday, said that based on other recent food-safety issues at big restaurant chains - such as at McDonald's $(MCD)$ in the fourth quarter of 2024, and at Wendy's $(WEN)$ in the second quarter of 2022 - the risk to Yum's stock might not last more than a quarter if any outbreak were to actually be traced to the chain.
"While we understand restaurant-investor apprehension around any food-safety concern, government reports are not citing Taco Bell as the source of the outbreak," they wrote.
The TD Cowen analysts also noted that the two reports this week said the items that won't be served were toppings, rather than Taco Bell's core menu items, thus mitigating the risk to sales. Checks by the analysts on Thursday also suggested the reports had not yet affected sales.
The impact of such food-safety issues hasn't always been limited. When a foodborne-illness outbreak hit Chipotle Mexican Grill $(CMG)$ more than a decade ago, sickening hundreds, the Mexican fast-casual chain's stock remained submerged for months.
Today, however, social media may be helping to keep consumers distracted, the TD Cowen analysts said.
"Food-safety issues were more problematic for the industry prior to COVID-19 as well as the broader adoption of social media that we argue has shortened consumers' attention spans," the analysts wrote. "As such, our initial thinking for the bear case is this presents risk of a [roughly] one-quarter impact based on recent analogs."
-Bill Peters
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July 09, 2026 18:31 ET (22:31 GMT)
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