YUM, CMG, SG Stocks Slide — Taco Bell Traffic Reportedly Takes A Hit After Parasite Outbreak, Dragging Restaurant Peers Lower

Customer visits to Taco Bell have reportedly dropped after health officials linked a parasite outbreak to lettuce supplied by one of its vendors.

• Taco Bell's foot traffic was reportedly around 19% below its typical Friday average on July 17.
• Yum Brands removed all U.S. lettuce sourced from Taylor Farms after the cyclosporiasis outbreak was traced to Taco Bell locations.
• The reported traffic slowdown is spilling over to other restaurant chains, including Chipotle and Sweetgreen.

Shares of Yum! Brands Inc. (YUM), the parent company of Taco Bell, edged lower on Monday after a report stated that visits to Taco Bell locations have plunged following a parasite outbreak linked by authorities to lettuce supplied by one of the chain’s vendors. The impact also spread across the restaurant sector, with shares of Chipotle Mexican Grill Inc. (CMG) and Sweetgreen Inc. (SG) declining during the session.

While YUM stock closed 0.36% lower on Monday, CMG fell 3.95% and SG dropped 5.86%.

Taco Bell Traffic Drops Nearly 19%

Taco Bell's foot traffic on July 17 was nearly 19% below its average for Fridays between January 1 and July 6, based on Placer.ai data tracking customer visits through mobile devices, reported Bloomberg, The decline was significantly steeper than the overall 1.9% drop recorded across the fast-food category that day.

Placer data also showed Taco Bell's traffic declined in the four days leading up to July 17 and underperformed the average for fast-food chains throughout that period. The Bloomberg report said the Cyclospora outbreak has hurt Taco Bell, which has been Yum Brands’ biggest growth driver in recent years. Yum shares have fallen about 10% since July 10, when reports first emerged linking the chain to the outbreak.

Cyclospora is an intestinal parasite that can cause prolonged watery diarrhea, stomach cramps and other digestive symptoms.

Taco Bell has voluntarily removed all U.S. lettuce supplied by Taylor Farms after health officials traced cases of cyclosporiasis to lettuce served at Taco Bell locations.

The Food and Drug Administration initially said it had found a positive test linking cyclospora to Taylor Farms lettuce that was not part of an active recall, suggesting the recall could widen. However, the agency later said the result was a false positive and that the investigation is continuing.

Restaurant Peers Also Feel The Impact

The outbreak has also weighed on traffic across other restaurant chains, according to the Bloomberg report. Chopt, a fast-casual salad chain, saw double-digit traffic declines on July 16 and 17 compared with the same days earlier in the year. Chipotle Mexican Grill Inc. and Panera Bread also recorded traffic declines and underperformed the broader fast-casual category. Sweetgreen’s traffic also lagged the segment average, albeit to a lesser extent. Sweetgreen told Bloomberg it is not linked to the outbreak and does not serve iceberg lettuce, while Chipotle said it is closely monitoring the situation and does not believe its ingredients are associated with the outbreak.

YUM, CMG, SG Stocks: What Stocktwits Retail Sentiment Says

On Stocktwits, retail sentiment for YUM, CMG and SG remained ‘bullish,’ unchanged over the past 24 hours. Message volume was ‘normal’ for YUM, ‘high’ for CMG and ‘extremely high’ for SG, with all three remaining unchanged during the same period.

Year to date, YUM shares have fallen 3.6%, CMG stock is down 11.9% and SG shares have declined 3.2%. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.<