FDA Investigates New Cyclospora Outbreak, Restaurant Stocks Fall on Food Safety Concerns

The U.S. Food and Drug Administration announced on Wednesday it is investigating a new outbreak of the cyclospora parasite that has so far involved 72 cases. The agency stated that the source of this latest outbreak has not yet been identified and has not been linked to a specific product.

Market Impact

News of the investigation weighed on investor sentiment for the restaurant sector, which is highly sensitive to food safety concerns. Shares of several prominent chains declined in Wednesday trading:

• Sweetgreen Inc. (SG) fell more than 13%.
• Chipotle Mexican Grill Inc. (CMG) dropped by over 4% to a session low.
• Yum! Brands Inc. (YUM), parent of Taco Bell, declined by as much as 1.4%.

The source material noted that neither Sweetgreen nor Chipotle has been connected to any current cyclospora outbreak. Taco Bell was previously linked to cases connected to a Taylor Farms lettuce recall.

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Investigation Context

This new investigation adds to several other active cyclospora probes being conducted by the FDA. It follows a wave of cases in the Midwest that were linked to lettuce from Taylor Farms, which subsequently issued a product recall.

Cyclospora is a microscopic parasite that can cause an intestinal illness called cyclosporiasis. According to the U.S. Centers for Disease Control and Prevention (CDC), cases typically increase during the summer months due to warmer temperatures. The CDC reports that thousands of people across 41 states have been infected with the parasite this summer.