Yum Brands reported mixed second-quarter earnings with adjusted earnings per share of $1.62, slightly above expectations, and revenue of $2.17 billion, just below forecasts. The company’s net income more than doubled to $853 million compared to a year ago, driven partly by new restaurant openings. Same-store sales growth reached 3% globally, with Taco Bell leading the charge at a 7% increase, while KFC and Pizza Hut posted 2% growth and a 1% decline, respectively. Notably, Yum recently sold Pizza Hut to LongRange Capital and Yum China for $2.7 billion to focus on its more profitable brands.

However, the recent cyclospora outbreak tied to Taco Bell has created significant challenges for the brand. Following a mid-July warning from the FDA linking Taco Bell’s iceberg lettuce to the outbreak, daily customer traffic plunged sharply, with same-store sales declining by 2% in the third quarter through July 27. The resulting negative publicity severely affected consumer confidence initially, leading to a steep sales drop over the weekend of July 18. Despite Yum’s reliance on Taco Bell as its primary growth driver, CEO Chris Turner described the sales impact as meaningful but temporary.

Encouragingly, sales trends for Taco Bell have begun to rebound over the last ten days, with daily sales recovering about 50% from the lows reported immediately after the outbreak. The company attributed improved customer confidence to greater public awareness that the cyclospora contamination is an industry-wide issue, not isolated to Taco Bell. Brand sentiment as observed on social media platforms has also returned to levels seen before the crisis. This positive outlook helped Yum’s stock rise over 3% on the day of the earnings announcement, following a 5% drop since the outbreak news first broke.

The cyclospora outbreak has had a broader impact beyond Taco Bell, affecting consumer trust in other fast-food chains as well. For example, Chipotle Mexican Grill reported lukewarm sales in late July due to consumer concerns about fresh lettuce, although it does not serve iceberg lettuce. The contaminated lettuce was supplied to Taco Bell by Taylor Farms, which has since issued extensive recalls. Meanwhile, federal health officials continue to investigate a second cluster of cyclospora cases, with the source still unidentified. This outbreak underscores the vulnerabilities in fresh produce supply chains during warmer months when cyclospora infections are more common.