Those poor folks in Ohio and Michigan. Not only oppressive summer heat and thick smoke from the fires in Canada and Minnesota, now it’s Taylor Farms’ lettuce causing cyclosporiasis. As soon as Taco Bell pulled lettuce, cilantro, onion, Pico de Gallo, and guacamole from its menus, customers knew something was up and restaurant traffic took a hit. The chart below shows that traffic started to slow after the 4th, which was largely macro. The company was also on the backside of two strong LTOs that launched on June 19th. Early June was also stronger after gas prices fell.
As a “control”, we show limited-service restaurants (national brands) and the LTOs pushed Taco Bell above the control, but as menu items were removed and the outbreak and news spread, it’s dropped beneath.As to why the limited-service industry’s traffic has slowed in July, we take June to be the anomaly; it benefited from the drop in gas prices (the Feb – Apr average is +0.75%). And so, July seems to be a payback for the buoyancy.
