SerpApi.Org
Some restaurant stocks continued to fall on Monday as investors worried about their potential exposure to a cyclosporiasis outbreak—even though there is no confirmed connection—and the impact on broader consumer behavior.
Sweetgreen shares tumbled 8.1% on Monday, resuming a four-day selloff last week. The stock price had recovered some losses last Friday after the salad chain said it doesn’t use iceberg lettuce and that none of its ingredients had been identified in the investigation.
Share prices for Chipotle Mexican Grill also fell 4.4%, while shares of Mediterranean fast-casual chain Cava Group tumbled 5.2%—even though neither companies have been named by the CDC in connection with the cyclosporiasis outbreak.
The declines suggest investors are treating the outbreak as a sector-wide demand risk: Consumers may temporarily avoid salads, bowls, and other meals containing raw produce, even at chains whose ingredients had not been implicated.
There was also substantial uncertainty about the investigation itself.
Regulators initially linked one outbreak cluster to shredded iceberg lettuce served at Taco Bell supplied by Taylor Farms de Mexico. Taylor Farms said it was voluntarily removing all the affected lettuce from the U.S. market.
But the FDA walked back its findings over the weekend, saying on Sunday that the Taylor Farms sample initially reported as positive for cyclospora was actually a false positive and that the investigation remained under way.
The shifting information left investors uncertain about whether the source had been contained and whether other restaurant chains could still be exposed. As of July 18, the CDC has reported more than 1,644 cases across Indiana, Kentucky, Michigan, Ohio, and West Virginia.
Taco Bell, the only restaurant company named by regulators so far, said it has removed the affected Taylor Farms lettuce from all of its restaurants. Stock in Yum! Brands, the owner of Taco Bell, fell nearly 10% last week, but was largely flat in Monday trading.
As of last Friday, Taco Bell restaurants were seeing 19% fewer customer visits than they typically received on the same day of the week between January 1 and July 6, according to data from Placer.ai. Foot traffic was 6.9% lower at Chipotle, 4.2% lower at Cava, and 1.4% lower at Sweetgreen.
Write to Evie Liu at [email protected]
