Federal health regulators on Friday traced a five-state cyclosporiasis outbreak that has sickened at least 1,644 people since May to shredded iceberg lettuce that a single Mexican farm supplied to Taco Bell restaurants, and the supplier, Taylor Farms de Mexico, said it would pull all iceberg from central Mexico out of the U.S. market.
The traceback closes the most acute phase of an investigation that began in early May and drops liability on Taylor Farms — the same Salinas, California-based produce giant that supplied the onions blamed for a 2024 E. coli outbreak at McDonald's. It also revives questions about how federal cuts have affected foodborne-illness detection.
What officials found
The Food and Drug Administration said Friday its traceback identified Taylor Farms de Mexico as the sole supplier and directed consumers to avoid shredded iceberg lettuce from Mexico at Taco Bell locations in Indiana, Kentucky, Michigan, Ohio and West Virginia. The Centers for Disease Control and Prevention counts 1,644 illnesses across 34 states and at least 94 hospitalizations, but state tallies run higher: Michigan alone reported more than 5,000 confirmed cases as of Friday, including 102 requiring hospitalization. Taylor Farms told Yum Brands and food distributor Sysco on Thursday to pull 5-pound bags of shredded lettuce produced at a facility in Guanajuato, Mexico, according to Reuters.
Taco Bell said it completed removal of the affected lettuce Friday. "[T]he affected ingredient has been removed from our supply chain nationwide," the chain said.
On the market
Yum Brands shares fell nearly 7 percent over the past five days. Sweetgreen, which does not use iceberg, slid nearly 13 percent on the week before rebounding more than 17 percent Friday once the CDC ruled out its ingredients; Cava dropped more than 3 percent, then rose about 2 percent. Foot-traffic data from Placer.ai showed Taco Bell visits down nearly 6 percent last week and Panera Bread down more than 7 percent. Consumer Edge said Taco Bell's year-over-year sales growth slowed to 4.2 percent in the week ended July 11, the chain's weakest pace since April.
TD Cowen analyst Andrew Charles told CNBC he expects a one-quarter drag on Yum Brands and a recovery echoing McDonald's rebound within six weeks of the 2024 onion outbreak. "Social media just leads to a lot more short-term memory loss," Charles said.
The narrow source
Taylor Farms said the "specific independent farm" flagged by the FDA accounts for less than 1 percent of the U.S. iceberg lettuce supply, and none of the company's branded salads or kits were tied to the outbreak. No deaths have been reported, and cyclosporiasis — a parasitic infection marked by watery diarrhea, weight loss and fatigue — typically runs its course in two days to two weeks, according to the CDC. Evercore ISI analysts wrote Friday that comparable scares tend to produce a "one-to-two-quarter demand air-pocket" and a stock recovery inside two quarters.
The FDA said Taylor Farms will initiate a recall and that additional brands, retailers or products could still be identified as the investigation continues.