Taco Bell Stumbles on a Lettuce Crisis

Summary

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WSJ What’s News – PM Edition

Episode: Taco Bell Stumbles on a Lettuce Crisis
Date: July 17, 2026
Host: Alex Osola

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Brief Overview

This episode centers on Taco Bell’s emerging crisis after a cyclosporiasis outbreak linked to contaminated iceberg lettuce, investigating the impact on the chain, its parent company Yum Brands, and the fast-food sector at large. Additional segments explore major moves in technology, finance, global politics, and sports, including a new open-source AI from China, market swings among major corporations, and a World Cup final preview.

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Key Discussion Points & Insights

1. Taco Bell’s Lettuce Crisis and Business Implications

• Overview:
  Taco Bell faces a food safety challenge tied to an outbreak of cyclosporiasis, a microscopic parasite, traced by federal health officials to shredded iceberg lettuce at their locations in five states.
• Response:
  • Taco Bell is “voluntarily removing potentially impacted lettuce from select restaurants where it could have been tainted to some degree.” (Heather Haddon, [01:37])
  • The outbreak began appearing in May and may involve other retailers beyond Taco Bell, though Taco Bell is in focus due to the federal announcement.
  • Other produce suppliers are responding: Taylor Fresh Foods is pulling iceberg lettuce grown in central Mexico from the US Market, though they state other products are unaffected.
• Impact on Business:
  • Preliminary data shows a slowing in Taco Bell’s sales growth, though not an outright decline ([02:21]).
    • “The sales have actually dropped compared to last year, they’re just slowing… visits data also showed some slowing of growth year over year.” (Heather Haddon, [02:21])
  • The financial importance of Taco Bell to parent company Yum Brands is emphasized:
    • “It’s basically the crown jewel of their portfolio and now their portfolio is going to be even more concentrated.” (Heather Haddon, [03:01])
    • Yum Brands will need to invest heavily in rebuilding trust through “new promotions, new deals, new menu items, more advertising… it is expensive to try to recover.” (Heather Haddon, [03:01])
  • Historical parallel: When McDonald’s faced an E. Coli issue in late 2024, US same-store sales took two quarters to recover.

Notable Quotes

• "These cases have been popping up since May, but we still don’t know if this is just a Taco Bell thing, or… many retailers and restaurants. That’s what we’re watching for." — Heather Haddon, [01:49]
• “When brands experience a food safety issue, it takes time to rebuild… but brands eventually do.” — Heather Haddon, [03:15]
• Yum Brands stock dropped 2.8% and nearly 10% for the week ([03:45]).

Timestamps

• [00:45] — Introduction of lettuce outbreak and business impact
• [01:37] — Heather Haddon on Taco Bell's response
• [02:21] — Early impacts on sales and visits
• [03:01] — Context on importance of Taco Bell to Yum Brands
• [03:45] — Financial market response and Taylor Fresh Foods’ recall

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2. Tech: Chinese Open-Source AI Challenges US Giants

• Headline:
  Chinese firm Moonshot AI releases Kimi K3, the “largest model ever released” with open weights, rivaling the best from OpenAI and Anthropic.
• Significance:
  • The move, described as a bigger threat than the previous ‘DeepSeek’ model, shakes Silicon Valley and underscores China’s growing ability to match US-led technological advances even with “far fewer resources.”
  • Kimi K3’s full open-sourcing aligns with Chinese leader Xi Jinping’s framing of open-source AI as a “global public good.”
• Implication:
  • “What we’re seeing now is, Chinese labs can produce not just good enough AI, but AI that competes with the very cutting edge… a major wake up call.” (Christopher Mims, [05:04])

Notable Quotes

• “This is the biggest model ever released that is open weights and that’s the AI version of open source. In other words, you can download it, you can use it for free, you can fine tune it to your heart’s delight.” — Christopher Mims, [05:08]
• “China can compete and make the most cutting edge models… I think, frankly, the threat is even bigger this time.” — Christopher Mims, [05:46]

Timestamps

• [05:08] — Model details and significance
• [05:46] — Historical context and perceived threat level

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3. Market Moves: Apple, Nvidia, Netflix

• Stocks:
  • Apple briefly surpassed Nvidia as the most valuable publicly traded company, but Nvidia reclaimed top spot by market close ($4.91T vs. $4.9T) ([04:20]).
  • Netflix shares fell 7.3% after reporting its slowest forecast growth since 2023, raising worries about hitting a growth ceiling ([06:25]).
    • “Executives said they have a lot more room for growth… but it kind of exasperated investors’ concerns that the company is hitting its ceiling.” (Jessica Tunkel, [06:41])
• S&P/Nasdaq:
  • Stock indexes fell for the week; Nasdaq down 1.4%, S&P down 1%.
• Oil:
  • US oil up 16% for the week amid Middle East tensions.

Notable Quotes

• “Coming up, renewed violence in the Middle East threatens Saudi Arabia’s workaround to the Strait of Hormuz.” — Alex Osola, [07:08]
• “The forecast for growth for the third quarter was the smallest year on year increase since late 2023.” — Jessica Tunkel, [06:41]

Timestamps

• [04:20] — Apple/Nvidia market move
• [06:41] — Netflix earnings discussion

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4. Political Updates

• US:
  • President Trump endorses Lindsey Graham's sister, Darlene Graham, for the August special Senate election in South Carolina ([07:55]).
• UK:
  • Andy Burnham becomes Labour leader and UK's next Prime Minister, aims to decentralize power, revamp taxes, nationalize utilities, and reform the electoral system ([08:30]).
    • “This change today is the most significant change moment in our politics for 40 years.” — Andy Burnham, [08:35]
    • Analysts predict a gradual approach due to electoral and financial obstacles.
• Middle East:
  • Rising tensions in the region risk shutting down both Strait of Hormuz and Bab el Mandeb, raising fears of a global recession if oil flows are cut ([09:30]).

Timestamps

• [07:55] — Trump’s endorsement / South Carolina
• [08:30] — Andy Burnham’s appointment and plans
• [09:30] — Middle East chokepoints and economic risk

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5. World Cup Final Preview: Argentina vs. Spain

• Teams:
  • Argentina (“the Comeback Kings”) vs. Spain (“a system team; the ball does the running”), to be held in New Jersey ([10:05]).
• Styles:
  • Spain: Relentless technical cohesion and ball control.
  • Argentina: Scrappy, emotionally driven comebacks, nine of their eleven knockout goals scored after the 75th minute.
    • “Argentina is like the monster in the monster movie. They're always going to come back… because they have Messi.” (Joshua Robinson, [11:16])
  • Messi’s potential final World Cup appearance (now age 39).
    • “He’s said it, the Argentine players have said it. And I have to say, as a fellow 39-year-old, I hear Messi say 'I’m pretty tired' and I sympathize.” (Joshua Robinson, [12:21])

Notable Quotes

• “The ball does the running. They are so technically adept that it’s impossible to get the ball off them, as France found out.” — Joshua Robinson, [10:18]
• “Messi is always capable of creating magic at a moment’s notice. And that is what leaves a sliver of opportunity for Argentina.” — Joshua Robinson, [11:41]

Timestamps

• [10:05] — World Cup overview
• [10:12] — Team style breakdown and Argentina’s comebacks
• [11:46] — Tactics to watch in the final
• [12:14] — Messi’s legacy

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Memorable Moments and Speaker Highlights

• Heather Haddon’s parallel with McDonald’s E. Coli recovery: “It took two quarters for their US same store sales to turn around, but eventually they did.” ([03:17])
• Christopher Mims’ strong warning: “This is… a major wake up call.” ([06:20])
• Joshua Robinson on Argentina as ‘monster in the monster movie’: A vivid sports metaphor for their resilience ([11:16]).
• Andy Burnham’s assertion on UK politics: “This change today is the most significant… in our politics for 40 years.” ([08:35])

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Important Segment Timestamps

• [00:45] — Taco Bell lettuce outbreak coverage
• [03:45] — Market response / produce recall
• [05:08] — Moonshot AI open-source model analysis
• [06:41] — Netflix earnings impact
• [07:55] — US/UK political updates
• [09:30] — Middle East oil choke points
• [10:05] — FIFA World Cup final preview

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This episode delivers a brisk, insightful round-up of breaking business, tech, and global headlines—with a deep dive into Taco Bell’s food safety crisis and a memorable preview of the high-stakes World Cup final.

Transcript

[A]

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[B]

A Chinese AI company is releasing an open source model that could challenge AI giants in the U.S. i would call

[C]

this deep seek part two, except I think frankly the threat is even bigger this time.

[B]

Plus, how big a problem is the contaminated lettuce outbreak for Taco Bell? And what to watch for when a team of maestros take on the Comeback Kings during Sunday's World cup final? It's Friday, July 17th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. Taco Bell for years has grown sales faster than other fast food chains in the US thanks to new menu items like Diablo Dusted Crispy Chicken Nuggets and Mountain Dew Baja Blast Pie. Now though, the microscopic parasite cyclosporiasis could threaten that. Federal health officials have linked the recent outbreak to shredded iceberg lettuce from Taco Bell locations in five states. Heather Haddon covers restaurants for the Journal and joins me now. Heather, how is Taco Bell handling this?

[D]

The company said that it was voluntarily removing potentially impacted lettuce from select restaurants where it believed it could have been tainted to some degree. These cases have actually been popping up since May, but I think we still don't know if this is just a Taco Bell thing or this is many, many retailers and restaurants things and that's what we're watching for.

[B]

Taco Bell is sort of dominating the headlines because the link has been publicized by federal health officials. I could certainly see how hearing about this would make me sort of think twice before going to Taco Bell and frankly like eating salad. In general, though I will say I had one for lunch so maybe not that much. Are we already seeing this have an impact on Taco Bell's business?

[D]

Yeah, so some third party data we got on visits and sales show some preliminary impact. It's not that the sales have actually dropped compared to last year, they're just slowing. This is just a few days in and the visits data also showed some slowing of growth year over year. Yum Brands, which owns Taco Bell, is going to report earnings later this month, but it will not include much of this period though I assume Yum Brands will address this issue.

[B]

Yum Brands recently sold its Pizza Hut chain to a private equity firm. How important is it for Taco Bell to succeed? To Yum Brands, it's very important.

[D]

Taco Bell delivers a big chunk of Yum's operating profit and its system wide sales. It's basically the crown jewel of their portfolio and now their portfolio is going to be even more concentrated. So they need Taco Bell to keep doing well. When brands experience a food safety issue, it takes time to rebuild and they have to do a lot to do that. New promotions, new deals, new menu items, you know, more advertising. It is expensive to try to recover from one of these and move on, but brands eventually do. McDonald's did have that E. Coli issue in late 2024 and it took two quarters for their US same store sales to turn around, but eventually they did.

[B]

That was WSJ reporter Heather Haddon. Thank you Heather.

[D]

Thanks so much.

[B]

Yum stock dropped 2.8% today and almost 10% for the week. Also related to the cyclosporiasis outbreak, produce supplier Taylor Fresh Foods is removing iceberg lettuce that's grown in central Mexico from the US Market. The company says that none of its other products are affected and it says that none of its Taylor Farms brand salad kits have iceberg lettuce in them. The outbreak has led to cases in more than 30 states and more than 90 people have been hospitalized. Apple briefly edged out Nvidia today to reclaim its title as the most valuable publicly traded company. But at the day's close, Nvidia was back on top with a market cap of $4.91 trillion, while Apple was at 4.9 trillion. Stock indexes closed out the week with more losses. The Nasdaq dropped 1.4% while the S&P ended down 1%. And oil prices remain on the rise with tensions in the Middle east continuing. US oil ended the week 16% higher at more than $82 a barrel. One thing that might be pushing US tech stocks lower today, the announcement from Chinese company Moonshot AI that it has launched an artificial intelligence model called Kimi K3. Moonshot plans to fully open source the model this month. To understand why this is catching much of Silicon Valley by surprise today, I'm joined now by WSJ technology columnist Christopher

[C]

Mims this is the biggest model ever released that is open weights and that's the AI version of open source. In other wor, you can download it, you can use it for free, you can fine tune it. To your heart's delight, this seems to be on par performance wise with the best models from OpenAI and Anthropic.

[B]

The release of this model follows comments from Chinese leader Xi Jinping about how open source AI models are a quote, global public good. We mentioned that in this morning's show. To me, this kind of feels like a deep Seq moment when, when in January last year that Chinese company released its model that threatened a lot of US models.

[C]

China can compete and make the most cutting edge models even though these Chinese AI companies have far fewer resources. So I would call this Deep Seq Part two, except I think frankly the threat is even bigger this time. When deepsea came out, it was like, wow, it's incredible that a Chinese lab can produce a good enough AI at all. But what we're seeing now is Chinese labs can produce not just good enough AI, but AI that competes with the very cutting edge of what is done in the US and elsewhere. And that is, I think, a major wake up call.

[B]

That was WSJ technology columnist Christopher Mims. Thanks Christopher.

[C]

Thanks for having me.

[B]

Another company whose shares took a beating today was Netflix. Its stock fell 7.3%. It's a reaction to its earnings report that came out late yesterday. WSJ Deputy Media editor Jessica Tunkel says there was one element in particular that worried investors.

[E]

The forecast for growth for the third quarter was the smallest year on year increase since late 2023. Now on the call, executives said they have a lot more room for growth and they talked about all the things that they're doing like adding video podcasts. But it kind of exasperated investors concerns that the company is hitting its ceiling in in terms of how much more growth there is for it.

[B]

Today's drop prolongs a rough stretch for Netflix's stock, which has been under pressure for weeks. Coming up, renewed violence in the Middle east threatens Saudi Arabia's workaround to the Strait of Hormuz. That's after the break.

[F]

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[B]

In political news, President Trump is endorsing Lindsey Graham's sister to permanently fill his Senate seat. Darlene Graham was appointed this week to temporarily fill the seat, and Trump said today that he asked her to run in the August 11 special election in South Carolina. The president's endorsement would give her a major advantage if she runs. Several Republicans are interested, and Darlene Graham hasn't publicly indicated whether she'll run for the full six year term. The UK Is about to get its sixth prime minister in seven years. Today, Andy Burnham, the former mayor of Manchester, was officially named the leader of the Labour Party.

[G]

This change today is the most significant change moment in our politics for 40 years.

[B]

King Charles is expected to formalize Burnham's appointment to PM on Monday. And what does Burnham want to do in the role? He says he'll lay out plans next week, but he said that he wants to decentralize political power from London, shake up the tax system, nationalize utilities, and ditch Britain's winner takes all electoral system. Analysts say that the new prime minister is likely to run up against electoral and financial realities that will force him to take a more gradual approach. And in the Middle east, control of the Strait of Hormuz is at the heart of the current fight between the US And Iran. Saudi Arabia has been able to bypass the strait with a pipeline that brings oil from the east side of the country to its west coast. From there, tankers take oil down through the choke point at Bab el Mandeb, right next to Yemen, on their way to markets in Asia. So far, Bab el Mandeb has been kept open by Saudi diplomacy with the Houthi militia in Yemen. But now tensions with the Houthis, an ally of Iran, are escalating. The Houthis have fired drones and missiles at a Saudi airport this week. The Houthis leader yesterday lashed out at Saudi Arabia. In a speech, consulting firm Capital Economics predicts that a prolonged simultaneous closure of both the Strait of Hormuz and Bob El Mandeb could push the global economy into a recession. And finally, after more than 100 matches between 48 teams across three countries, the 2026 World cup final is here. This Sunday, Argentina and Spain will face off in New Jersey, pitting the World Cup's reigning champions against the top European team. WSJ sports editor Joshua Robinson says that stylistically, the teams could not be more different.

[H]

Spain is a system team. They are raised from the age of 9 years old to all play in the same way. The ball does the running. They, they are so technically adept that it's impossible to get the ball off them, as France found out, much to its detriment. Argentina doesn't have that in its bones. But Argentina is all hard. Argentina has this conviction that they are a team of destiny here, that they have the greatest player of all time and that it is their national duty as Argentine soccer players to get Messi to the promised land. They did it once. And they are determined to do it again. Argentina's biggest weakness is they keep going behind. They have scored nine of their 11 goals in the knockout rounds. After the 75th minute, they needed extra time against Switzerland. They had to come from two goals behind against Egypt and they were behind against England until that incredible seven minute flurry. After the 85th minute it was wild. And so this is both a weakness and a strength. Argentina is like the monster in the monster movie. They're always going to come back. They will continue to bludgeon you until the very end because they have Messi. Messi is always capable of creating magic at a moment's notice. And that is what leaves a sliver of opportunity for Argentina. No matter what's going on, Joshua says

[B]

he'll be watching for how Argentina deals with Spain's control of the ball.

[H]

Do they try to come out and press them really high? Do they do the thing that they kind of did against England, which is drag the game down into the mud? Do they start fouling? Do they start going after these technical maestros who make up the Spanish team? Or do they wait by their time and hope that Spain kind of burn themselves out? I would expect Spain to shade it, but I've been surprised too many times at this World cup to venture a real prediction.

[B]

As far as a magic maker himself, Lionel Messi, this might just be the last time you can see him play in a World Cup.

[H]

He has said it, the Argentine players have said it. And I have to say, As a fellow 39 year old, I hear Messi say I'm pretty tired and I sympathize. I think it's his last World cup

[B]

though of course that's what Messi said, last World Cup. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up what's news in markets then on Sunday we'll be discussing government efforts in the US and Europe to push back against the construction of data centers. That's in what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Danny Lewis and Anthony Bansy with supervising producer Tali Arbel. Michael Lavall wrote our theme music. Aisha El Musleam is our development producer. Chris Zinsley is our deputy editor. And I'm Alex Osola. Have a great weekend and thanks for listening. Hey, this is Telus Demos and I'm Miriam Gottfried. We're reporters at the Wall Street Journal and The hosts of WSJ's take on the Week. It's a weekly show that gives listeners

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[B]

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