Yum! Brands Says Taco Bell Recovering After Cyclosporiasis Outbreak. The Stock Rises. -- Barrons.com

By Kit Norton

Shares of Yum! Brands advanced Thursday after the fast-food giant surpassed second-quarter earnings expectations and reported that Taco Bell sales have been recovering after taking a hit from a cyclosporiasis outbreak.

Shares rose 6.2% to $161.28 on Thursday. If the move holds, it will be the stock's highest closing price since July 13.

The company on Thursday posted adjusted earnings of $1.62 a share, up from $1.44 a year ago and just above Wall Street expectations of $1.58. Revenue grew 12% to $2.17 billion, slightly missing the analyst consensus call for $2.18 billion, according to FactSet.

Same-store sales at Taco Bell grew 7% and system sales at the chain increased 9% from last year. Worldwide system sales grew 5% in the quarter. There was no update in the earnings report around the cyclosporiasis outbreak.

On the earnings call, however, CEO Chris Turner said consumer sentiment around Taco Bell already was turning positive, adding that the company is "still in the early days of recovery" from the outbreak news.

Chief Financial Officer Ranjith Roy said that Taco Bell's U.S. same-store sales growth in the current quarter through July 27 was down 2% "since the U.S. food safety industry issue became front and center only two weeks ago."

Roy added the company "saw maximum impact to sales over the weekend of July 18."

"It is early days, but in the subsequent week, sales declines have moderated materially and we are seeing steady improvement in day over day sales trends," Roy said.

Yum estimates that Taco Bell's third-quarter store level margins will range between 19% and 21%.

"These restaurant margins reflect first lower but steadily improving sales. Second, investments in promotions to remind consumers of Taco Bell's incredible value. And third, the higher concentration of Taco Bell's equity footprint in more impacted markets," Roy said.

The Food and Drug Administration on July 16 announced an investigation into the outbreak linked to lettuce served by Taco Bell. The outbreak has put pressure on Taco Bell daily traffic and on Yum! Brands stock. Shares have fallen 5% this month as of Wednesday's closing bell.

As of July 24, the cyclosporiasis outbreak, tied to iceberg lettuce sources from central Mexico, has resulted in 1,947 people being infected with at least 98 hospitalizations, according to the FDA and Centers for Disease Control and Prevention data. The data didn't reveal how many cases were suspected from Taco Bell.

Write to Kit Norton at kit.norton@barrons.com

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July 30, 2026 09:57 ET (13:57 GMT)