Updated version 2 - Yum China Group stated that after third-quarter sales were impacted by the outbreak of cyclosporiasis, Taco Bell has begun to recover.

The full text has been supplemented with details from the earnings call

Neil J Kanatt

Reuters, November 3 - Yum! Brands (YUM.N) said that same-store sales at Taco Bell are rebounding. Previously, an outbreak of cyclosporiasis across several states led to a drop in traffic at the Tex-Mex chain and an unexpectedly sharp decline in third-quarter same-store sales.

Taco Bell has continued to offer value deals such as combo meals to attract US consumers affected by inflation. Executives said on the earnings call that these promotions help draw in low-income families.

According to Placer.ai, the brand was first linked to the outbreak in early July (link), and during the peak of the outbreak, weekly traffic to its restaurants fell by as much as 20%.

Last month, US health authorities announced (link) that the outbreak was over.

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Yum! said that promotions through its loyalty program and partnerships are helping bring customers back, adding that so far this quarter, Taco Bell’s same-store sales have increased about 1%.

"Customers are actually spending 5% more per visit than those we've lost, and their visit frequency is 6% higher,” CEO Chris Turner said.

Consumer Edge analyst Michael Gunther said that the recovery is more apparent among younger customers.

The company completed the divestiture of its Pizza Hut chain in September (link), narrowing its pre-market gains, with the share price flat in early trading.

According to data compiled by London Stock Exchange Group (LSEG), Taco Bell’s same-store sales declined 4% in the reporting quarter — the first drop in about six years and a steeper fall than analysts’ expectations for a 0.9% decrease.

A focus on value strategy also helped Restaurant Brands International QSR.N, parent of Burger King, beat sales expectations last week. Main competitor McDonald’s MCD.N will report quarterly results on Wednesday.

Yum!’s overall same-store sales were flat year-on-year, below market expectations of a 0.9% gain. KFC same-store sales rose 1%, missing the expected 2.1% increase.

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Adjusted earnings per share for Yum! fell 1.3% to $1.56, but still topped the expectation of $1.49.

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