Sweetgreen Stock Recovers After Outbreak Linked to Taco Bell
Salad chain's shares surged Friday, recouping losses from earlier in the week as regulators identified Taco Bell as the source of a cyclospora outbreak.
Sweetgreen shares jumped 15% on Friday, significantly recovering from a substantial four-day slump. The rebound followed regulatory findings that linked a widespread cyclospora outbreak to Taco Bell restaurants, thereby mitigating concerns about the salad chain's reputation.
The stock had plummeted nearly 26% from Monday through Thursday's close, as investors worried that consumers might avoid fresh produce due to the outbreak of cyclosporiasis, which sickened thousands across several U.S. states. On Friday, Sweetgreen's stock soared as much as 21%, marking its largest intraday gain since August 2024.
According to the Centers for Disease Control and Prevention and the Food and Drug Administration, the outbreak was traced to shredded iceberg lettuce served at select Taco Bell locations in Indiana, Kentucky, Michigan, Ohio, and West Virginia. Reports indicate that Taylor Farms, a California-based produce supplier, is preparing to recall ingredients connected to the outbreak.
A spokesperson for Sweetgreen stated that the company does not use iceberg lettuce on its menu and has been in close contact with its suppliers throughout the investigation. As of Friday, no Sweetgreen ingredients had been identified as part of the contaminated supply chain.
Despite Friday's gains, Sweetgreen shares remained down approximately 15% for the week. Taco Bell also saw its stock price fall about 8% during the same period, though it began to regain some losses after announcing the removal of lettuce from the implicated supplier nationwide.
The FDA reported that over 1,644 individuals suffering from cyclosporiasis indicated they had eaten at Taco Bell locations in the affected states. Regulators are working with the supplier, believed to be Taylor Farms, to determine if the contaminated lettuce was distributed to other partners.
Cyclospora is a microscopic parasite typically transmitted through contaminated food or water originating from infected feces, according to the FDA. It causes an intestinal illness known as cyclosporiasis, with symptoms including watery diarrhea, loss of appetite, weight loss, stomach pain, bloating, gas, nausea, and fatigue. Some infected individuals may be asymptomatic. The primary risk associated with cyclosporiasis is dehydration, which can lead to more severe complications, particularly for those with weakened immune systems, the elderly, and children.