Taco Bell feels fallout from E. coli outbreak
A Pennsylvania man who said he became sick after eating a chalupa and a quesadilla at a Taco Bell sued the owner of the Irvine-based restaurant chain Friday, joining what attorneys expect will be a growing wave of legal claims arising from an outbreak of E. coli bacteria.
Taco Bell and parent company Yum Brands Inc. can expect to face more such suits in coming weeks, lawyers say, even as investigators work to pinpoint the source of the bacteria that has sickened at least 62 people in six states.
More immediately, Yum Brands is feeling the financial fallout on Wall Street, as two analysts downgraded its stock, citing the potential effects of customers’ food safety concerns. Shares fell $1.36 to $59.72 on Friday. The stock has fallen 5.6% in the last three sessions.
On Friday, a Seattle attorney who specializes in lawsuits over restaurant-caused illness filed a case on behalf of the Pennsylvania man, who said he ate at a Taco Bell restaurant in Gilbertsville, Pa. Another suit, filed Wednesday, seeks damages for an 11-year-old boy who became hospitalized after dining at a Taco Bell in Riverhead, N.Y.
“We have been contacted by almost 20 people, and I am assuming there will be more,” said Bill Marler, the Seattle attorney.
Taco Bell reported Wednesday that a preliminary test found a strain of bacteria called E. coli O157:H7 in its green onions, which were grown by Boskovich Farms Inc. of Oxnard. The chain removed the produce from its 5,800 restaurants.
Marler previously sued Boskovich Farms in connection with a 2003 outbreak of hepatitis A also linked to tainted green onions.
But Taco Bell and the Food and Drug Administration are waiting for more conclusive results before fingering green onions as the culprit in the current E. coli cases.
“There is no data to definitely implicate or rule out any particular food item,” said Dr. David Acheson, chief medical officer at the agency’s Center for Food Safety and Applied Nutrition in College Park, Md.
He said Taco Bell’s preliminary test on green onions might be a false positive. Conducting a more accurate test, which includes growing the bacteria and obtaining genetic information on the strain, takes several days.
The FDA also is investigating other fresh produce and cheese that had been consumed by ill patients, Acheson said.
Boskovich Farms said Friday that the bulk green onions supplied to Taco Bell were grown in Oxnard. Other green onions sold for retail, wholesale and food-service packages are grown in a different region and “not in question regarding the recent illnesses,” the company said.
Although they have not identified the food source, health officials say the link between the 62 reported cases and at least 100 other suspected cases -- mostly in New Jersey and New York -- is that most of the individuals reported eating at Taco Bell.
“At this point the epidemiology is heavily pointing at this one restaurant chain,” Acheson said.
In any case, the Centers for Disease Control and Prevention in Atlanta said it expected the number of infected individuals to grow. It takes as long as a week for people to get sick after eating food contaminated with E. coli O157:H7. Forty-nine of those who have become ill have been hospitalized, seven with kidney failure.
“Illnesses are still occurring and we consider the outbreak to be ongoing,” said Dr. Christopher Braden, a Centers for Disease Control epidemiologist.
Taco Bell will pay the medical expenses of those taken ill but has yet to work out the details, said Will Bortz, a company spokesman in Irvine.
“For now we are focused 100% on the investigation,” he said. “We want to make sure we have the correct cause, and then we can move forward with steps to make sure something like this does not happen again.”
Negative publicity from the outbreak will cause Taco Bell to suffer from a “short-term, although potentially significant, negative sales impact,” Wachovia Securities analyst Jeffrey Omohundro wrote Thursday.
He lowered his rating on Yum Brands shares to “market perform” from “outperform” because of the outbreak and fears that the company had “slowing sales momentum” in its domestic business. Louisville, Ky.-based Yum also owns KFC and Pizza Hut.
Also Thursday, RBC Capital Markets Corp. analyst Larry Miller downgraded the stock to “sector perform” from “outperform” because of what he said was a fully valued share price, as well as “difficult same-store sales comparisons” from a year earlier that will now be “further hampered by food safety concerns.”
Consumers who are concerned about the safety of fresh produce can take simple steps to minimize the dangers, food safety experts say. If E. coli is present, washing the produce will remove some of it; using vinegar to do so will kill most of the bacteria. Cooking food to 160 degrees for 15 seconds will kill any E. coli O157:H7, the FDA said.