Taco Bell removes menu items amid widening US cyclosporiasis outbreak

Yum Brands (YUM) said that its Taco Bell chain had pulled a limited number of items from select restaurant locations as a precautionary measure, even as US health officials stopped short of linking the fast-food chain to a widening outbreak of cyclosporiasis that has now spread across 34 states.

Shares of Yum fell as much as 4.5% after the Washington Post reported that federal and state health officials were investigating whether lettuce served at Taco Bell locations may have been associated with the current outbreak of the parasitic disease, which causes diarrhea, nausea, and other gastrointestinal symptoms.

"Public health officials have not confirmed a link to Taco Bell or any specific ingredient, supplier, restaurant or retailer," the chain said in a statement, adding that it would continue to monitor the situation and follow the guidance of public health authorities.

Lab-confirmed cases tied to the outbreak have risen to 1,645, the Centers for Disease Control and Prevention said Tuesday — an increase of more than 800 cases from the agency's update just one week prior. The current outbreak, which began May 1, is centered in Michigan, with Ohio and New York also reporting elevated case counts. Infections have resulted in 141 hospitalizations as of July 13, though no deaths have been reported. The CDC said it is also tracking more than 5,100 additional cases that require further analysis and confirmation.

The outbreak is unfolding against a backdrop of diminished public health surveillance capacity. Last year, the Foodborne Diseases Active Surveillance Network — a partnership involving the CDC, the US Department of Agriculture, the FDA, and 10 state health departments — stopped tracking six of eight pathogens, including cyclospora, due to funding cuts.

Food safety scares have historically inflicted significant damage on restaurant stocks. McDonald's (MCD) faced scrutiny during a cyclospora outbreak linked to salads in 2018, while Chipotle Mexican Grill (CMG) endured a series of E. coli and norovirus outbreaks across multiple states that battered both its sales and share price.

Industry analysts cautioned that the reputational risk to Taco Bell could persist even if the chain is ultimately cleared. "Perception matters as much as the facts in the early stages of a food safety investigation. Even an unconfirmed link to a foodborne illness can cause consumers to rethink where they eat," said Zak Stambor, analyst at eMarketer. "Even if the chain is ultimately cleared, the investigation could cast a shadow over the brand and weigh on sales in the near term," he added.

In Brooklyn, a Reuters reporter observed that several major grocery chains and fast-food outlets, including Taco Bell, had not posted signage or pulled products as of Tuesday. Most passersby said they had not heard of the outbreak, though one local office worker said she planned to avoid lettuce for the foreseeable future.

Cyclosporiasis can be contracted by consuming raw fruits and vegetables — or water — contaminated with feces, according to the CDC.