By Neil J Kanatt and Koyena Das
July 28 (Reuters) - Yum Brands earnings on Thursday will offer the clearest view yet of whether a growing cyclospora outbreak linked to Taco Bell has hit sales at the fast-food chain's growth driver.
The crisis is new Yum Brands CEO Chris Turner's first major challenge, weeks after the company announced the divestiture of Pizza Hut, with investors set to focus on traffic trends and management's recovery plans.
Taco Bell has posted nearly six consecutive years of sales
growth and generated nearly half of the company's operating profit in 2025, powered in part by the Tex-Mex chain's affordable meals menu that helped attract budget‑conscious consumers.
"Investors will want detail on how Yum plans to win back trust and traffic, especially considering that the source of the outbreak hasn't been fully nailed down and consumers overall remain wary of visiting QSR chains," said eMarketer analyst Rachel Wolff.
Yum shares are down about 8% since Taco Bell was first linked to the cyclosporiasis outbreak in early July, though brand experts have downplayed any long-lasting damage to the brand.
Health officials are investigating the source of the largest foodborne illness outbreak in the U.S. in recent years that has sickened thousands of people in Michigan and eight other states. The Food and Drug Administration has linked the parasite, Cyclospora, to a Taylor Farms plant in Mexico.
Sales trends at Taco Bell have dropped sharply in recent weeks, according to Consumer Edge analyst Michael Gunther, with daily sales running more than 20% below average for several consecutive days. Foot traffic at the chain slumped 29.8% as of July 18 compared with average Saturday traffic between January 1 and July 6, according to Placer.ai.
TEST FOR TURNER
The results provide investors an early assessment of Turner, a company insider appointed CEO in October last year, as he confronts the company's biggest crisis soon after announcing the $2.7 billion Pizza Hut sale.
"Every new CEO gets a defining moment; Chris Turner is finding his sooner than most," said Michael Ashley Schulman, partner at Cerity Partners.
Investors are expected to give Turner, who has previously worked at PepsiCo and consulting firm McKinsey & Co, some room as he seeks to reinvigorate growth.
Yum is also battling an industrywide slowdown, as elevated inflation encourages consumers to spend more cautiously and the growing use of GLP-1 weight-loss drugs spurs healthier eating.
The company, which typically refrains from providing forecasts beyond current-quarter sales and earnings trends at its chains on investor calls, is expected to post second-quarter comparable sales growth of about 3% and a roughly 10% rise in adjusted profit for the three months ended June 30, according to LSEG estimates.
"Wall Street has a short memory for isolated setbacks and a long memory for poor execution; that's the scorecard Chris Turner is playing against," Schulman said.
(Reporting by Neil J Kanatt in Bengaluru, additional reporting by Koyena Das; Editing by Sriraj Kalluvila)
