Yum Brands said Taco Bell's US same-store sales fell 4% in the fiscal third quarter, the chain's first quarterly decline since 2020.
The drop traces back to July, when a multistate cyclosporiasis outbreak linked to iceberg lettuce served at Taco Bell made diners wary of the Tex-Mex chain. US health authorities declared the outbreak was over last month after 570 hospitalizations and two deaths.
The rest of Yum's quarter held up, with adjusted earnings per share of $1.56 beating the $1.49 analysts expected and revenue of $2.05B landing in line as net sales rose 4%.
Taco Bell carries the company now
Yum completed its Pizza Hut divestiture during the quarter, closing the mainland China sale to Yum China on Aug. 7 and selling the rest to LongRange Capital on Sept. 1. That leaves Taco Bell at 38% of Yum's divisional operating profit, so a bad quarter at one chain lands harder than it used to.
Taco Bell's operating profit fell 5% to $255M, and system sales declined 2%. Internationally, Taco Bell remained a bright spot, with same-store sales up 5%.
The recovery is already underway
Sales climbed week after week from the July low, and the chain has outpaced the quick-service industry since late September, with same-store sales up about 1% so far in the fourth quarter and up 3% in the last four weeks ended Friday, finance chief Ranjith Roy said on the earnings call.
Taco Bell Sales Are Bouncing Back From the Outbreak
Taco Bell US same-store sales growth (%)
Bar chart. Same-store sales growth (%). Q3 2026: Same-store sales growth (%) -4%. Q4 2026 (QTD): Same-store sales growth (%) 1%. Last 4 Weeks: Same-store sales growth (%) 3%.
Source: Yum Brands via CNBC
Loyalty members came back fastest, helped by weekly Tuesday deals and promotions like a pink Mountain Dew Baja Blast tied to pop star Olivia Rodrigo.
Traffic from medium and light customers has returned to about 95% of prior levels, while heavy users are back to normal. CEO Chris Turner called it one of the fastest recoveries from an event like this and said customers won back spend 5% more and visit 6% more often than the ones Taco Bell lost.
KFC was the quieter story, with same-store sales up 1% on strength in China and Europe. Its US system sales shrank 6%, a market that now accounts for 12% of KFC's global sales and under 5% of divisional operating profit. KFC's operating profit still rose 9% to $425M.
With three brands left and Taco Bell as the growth engine, Yum's fourth quarter rests on whether those casual diners finish coming back.
