By Allison Morrow, CNN
New York (CNN) — Taco Bell’s parent company, Yum Brands, reported robust sales and profit in the second quarter, surpassing Wall Street’s expectations by several measures. But the earnings cover the April-June quarter, or the three months before a cyclospora outbreak plunged the company’s most important brand into a food-safety crisis.
Yum Brands’ stock, which has fallen about 8% since Taco Bell was linked to the outbreak in early July, slipped 1% in pre-market trading Thursday.
“We delivered another strong quarter with robust same-store sales and restaurant-level margin performance,” Yum Brands CEO Chris Turner said in a press release. The company didn’t mention the cyclospora outbreak in its press release, but the subject is expected to dominate an earnings call with analysts later this morning.
Yum Brands reported $853 million in net income, up from $374 million in the same quarter a year ago. Sales from all KFC, Pizza Hut and Taco Bell stores open at least one year grew 3% worldwide. For Taco Bell, the company’s growth engine in recent years, sales at existing locations grew 7%.
More than 1,900 people across nine states became ill after eating at Taco Bell, according to the US Centers for Disease Control and Prevention. Nearly 100 people have been hospitalized, and no deaths have been reported.
Taco Bell moved quickly earlier this month to minimize the damage from the outbreak. The chain has said that it immediately removed lettuce from Taylor Farms, the supplier US officials identified as the likely source of the outbreak.
Foot traffic to Taco Bell tumbled 30% in mid-July after federal health officials publicly identified the chain as part of the investigation into the parasite, according to data from Placer.ai. As of July 23, traffic had improved but was still 20% below its daily average.
To win back customers, Taco Bell last week rolled out a one-day promotion of lettuce-free menu items for $1 each. Its CEO Sean Tresvant also posted a carefully worded personal message on LinkedIn, thanking loyal customers who’ve expressed support and promising to “always act quickly and put safety first.”
The crisis is a rare stumble for Taco Bell, which in recent years has been the shining star of the fast-food business. In the first three months of this year, sales at stores open at least a year rose 8% from the same period last year. McDonald’s sales, by comparison, grew 3.8% in that time. Burger King’s rose 5.8%. Wendy’s fell 2.1%.
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