Taco Bell recorded a 4% sales decline in the third quarter following a cyclosporiasis outbreak that led to 570 hospitalizations and two deaths. The chain's downturn, combined with weaker-than-anticipated 1% growth at KFC, left Yum Brands' quarterly sales flat against projected growth. Despite the operational headwinds, Yum beat adjusted profit estimates after completing the divestiture of Pizza Hut in September. Executives highlighted that Taco Bell's domestic sales momentum recovered by late September, surpassing broader industry averages.
Key points
Severe food safety incidents can sharply depress fast-food restaurant visits even when ov…: Severe food safety incidents can sharply depress fast-food restaurant visits even when overall brand recovery begins within a few months.
Elevated inflation is driving budget-conscious consumers toward home cooking, tightening…: Elevated inflation is driving budget-conscious consumers toward home cooking, tightening competition across the quick-service restaurant industry.
Strategic divestitures and disciplined cost management can bolster corporate profits even…: Strategic divestitures and disciplined cost management can bolster corporate profits even when key restaurant divisions miss top-line sales estimates.
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The company also missed overall same-store sales targets for the quarter, as fast food chains compete aggressively for budget-conscious consumers who are leaning toward cheaper home-cooked meals amid high inflation.
Taco Bell was first linked to the outbreak in early July, resulting in an around 20% drop in weekly foot traffic at its outlets at the peak of the epidemic before the chain recovered in September and October, according to data firm Placer.ai.
"Since the end of September, Taco Bell U.S. has been outpacing the quick service restaurant industry on same-store sales growth," CEO Chris Turner said.
Shares of the company rose about 3% in premarket trading after Yum Brands, which completed the divestiture of its Pizza Hut chain in September, also beat quarterly profit estimates.
US health authorities last month declared the outbreak, which resulted in 570 hospitalizations and two deaths, was over.
Third-quarter sales at Taco Bell, which made up nearly half of the company's operating profit in 2025, fell 4% and missed analysts' expectations of a 0.9% drop, according to data compiled by LSEG.
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