Taco Bell has a battle plan to bring customers back after a parasitic outbreak was linked to lettuce served at its restaurants. The plan includes $1 Mexican Pizzas and limited-time offers like butter chicken tacos.
While health authorities linked an outbreak of cyclospora-related illnesses to product giant Taylor Farms, the fast-food standout has been hurt by people reporting explosive diarrhea and stomach cramping after dining at the chain's locations.
The Mexican-style chain said it removed the supplier's lettuce, Taylor Farms, within 72 hours of public-health officials notifying the chain about a link between the produce and the outbreak.
Taco Bell's same-store sales were down 2% in the current quarter from mid-June through July 27, the company said Thursday. Sales were at their worst the weekend of July 18th and have improved since, Yum Brands said.
"The brand has seen a meaningful near-term sales impact," Chris Turner, chief executive of Taco Bell-parent Yum Brands, said during a Thursday investor call.
Since public authorities linked the outbreak to Taylor Farms, Taco Bell's online perception has improved, according to the company and third-party analyses. Now, the chain known for its deals and edgy marketing is cranking up its offerings again in a bid to quickly recover.
The company has introduced deep discounts, directing them to loyalty members using the chain's app. This week it sold Mexican Pizzas for $1, instead of regular prices of around $5 to $7. Enchiritos, a fusion of an enchilada and burrito, typically going for around $4, were offered for a dollar on Tuesday last week.
Taco Bell regularly promotes its "Tuesday Drops," and the latest deals have outperformed previous ones, Turner said. He expects Taco Bell to quickly move past the downturn.
The promotions, sales losses and the outbreak's concentration in states like Michigan -- where Taco Bell has a high concentration of locations -- have weighed on the chain's profit margins, Yum Brands said.
Taco Bell came into the outbreak as one of the strongest U.S. fast-food industry performers, recording a 7% same-store sales increase in the three months ended June 30. The quarter ended before widespread attention to the outbreak.
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