Yum Brands, the parent company of Taco Bell, reported its quarterly earnings on Thursday, revealing that the Mexican-style fast-food chain experienced a sales decline tied to a recent cyclospora outbreak. However, executives indicated that early signs of recovery are emerging.

Taco Bell's sales were down 2% quarter-to-date through July 27, according to Yum Brands, which also operates KFC and Pizza Hut.

"Since the U.S. food safety industry issue became front and center only two weeks ago, we saw maximum impact to sales over the weekend of July 18," said Yum Brands CFO Ranjith Roy on the company's quarterly earnings call. "It is early days, but in the subsequent week, sales declines have moderated materially, and we are seeing steady improvement in day-over-day sales trends."

Responding to an analyst's question, Roy added: "If you take the average sales for the last four days, which includes the weekend and the first two days of this week, we are halfway back to sales levels of the prior year."

The cyclospora outbreak remains under investigation by the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC), along with state and local health partners. Cyclospora cayetanensis is a microscopic parasite that causes cyclosporiasis, an intestinal infection typically transmitted through ingestion of food or water contaminated with feces. Fresh produce, particularly leafy greens and herbs, has been a recurring vehicle in past U.S. cyclospora outbreaks tracked by the CDC. Authorities have linked this outbreak to iceberg lettuce sourced from central Mexico through Taylor Farms de México.

Taylor Farms' U.S. division initiated a voluntary recall that included iceberg lettuce sold under the Taylor Fresh Foods and Marketside brands. The company has emphasized that the FDA has not identified a single confirmed positive product test result for cyclospora, following a false positive previously reported by the agency.

Cyclospora cases involving exposure to Taco Bell have been reported across nine states: Illinois, Indiana, Kansas, Kentucky, Michigan, Ohio, Oklahoma, Pennsylvania, and West Virginia.

Yum Brands CEO Christopher Turner addressed consumer sentiment directly, stating: "Our top priority is, and always will be, the safety and well-being of our consumers. With respect to the consumer sentiment, though, we've seen real improvement as consumers have understood better the nature of the issue and they understand that it is not a Taco Bell-specific issue."

Turner further noted that there has been "no change in our measures of brand love," and that some of those metrics have actually shown growth in positivity. Meanwhile, Taco Bell's share of the conversation around food safety has declined.

"The best proof point is that consumers are coming back to the restaurants on a steady basis. We've seen steady improvement in those sales trends," Turner said. He also highlighted that the chain's Tuesday launch of a Mexican pizza special generated the most transactions and loyalty sign-ups of any Taco Bell Tuesday promotion to date.

"There is no brand and no team better equipped to drive a recovery in this temporary sales impact than Taco Bell," Turner concluded.