WSJ What’s News - Taco Bell Stumbles on a Lettuce Crisis

Episode Date: July 17, 2026

P.M. Edition for July 17. Taco Bell has outpaced fast-food rivals for years, but contaminated lettuce could put a damper on its growing business. Heather Haddon, who covers restaurants for the Journal, discusses how the chain is handling the situation–and why that’s crucial for its business. Plus, a new AI model from China that could rival the most cutting-edge U.S. models weighed on tech stocks today. We hear from WSJ tech columnist Christopher Mims about the challenge for Silicon Valley. And it’s the World Cup final on Sunday. WSJ sports editor Joshua Robinson tells us what he’ll be looking out for when Argentina faces off against Spain. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

A Chinese AI company is releasing an open-source model that could challenge AI giants in the U.S. I would call this Deep Seek Part 2, except I think, frankly, the threat is even bigger this time. Plus, how big a problem is the contaminated lettuce outbreak for Taco Bell? And what to watch for when a team of maestro's take on the comeback kings during Sunday's World Cup final. It's Friday, July 17th. I'm Alex O'Sullough for the Wall Street Journal. 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 U.S.

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 Hadden covers restaurants for the journal and joins me now. Heather, how is Taco Bell handling this? The company said that it was voluntarily removing, potentially impacted lettuce from select restaurants where I 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. 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? Yeah, so some third-party data we got on visits and sales show some preliminary impact. It's not that the sales I've 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. Yom 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 Young Brands will address this issue. Young Brands recently sold its Pizza Hut chain to a private equity firm. How important is it for Taco Bell to do that? succeed to YUM brands. It's very important. Taco Bell delivers a big chunk of Yom's operating profit and its system-wide sales. It's basically the crown jewel 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 a expensive to try to recover from one of these and move on. But brands eventually do. McDonald's did have that Equal Eye issue in late 2024, and it took two quarters for their U.S. same sort of sales to turn around, but eventually they did. That was WS.J reporter, Heather Haddon. Thank you, Heather. Thanks so much.

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 U.S. 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 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. U.S. oil ended the week 16% higher at more than $82 a barrel. One thing that might be pushing U.S. tech stocks lower today? The announcement from Chinese company Moonshot AI that it has launched an artificial intelligence model called Kimi K-K-3. 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 Mims. This is the biggest model ever released that is OpenWates, 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 hearts delight. This seems to be on par, performance-wise, with the best models from OpenAI and anthropic.

The release of this model follows comments from Chinese leader Xi Jinping about how open source AI models are a, quote, global public good when you mentioned that in this morning show. To me, this kind of feels like a deep seek moment when in January last year, that Chinese company released its model that threatened a lot of U.S. models. 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 Seek part two, except I think, frankly, the threat is even bigger this time. When Deep Sea 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 U.S. and elsewhere.

And that is, I think, a major wake-up call. That was WSJ Technology columnist Christopher Mims. Thanks, Christopher. Thanks for having me. 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.

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 terms of how much more growth there is for it. 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. The Hulu original series Furious is coming to Disney Plus, starring in New.

Me Rasm, Furious follows FBI agent Alice Black on the hunt for a mysterious and calculating serial killer. Both walk their own paths toward justice. And as their lives start to intertwine, the line between right and wrong begins to blur. Don't miss the three-episode premiere of the Hulu original series Furious on July 27th, only on Hulu on Disney Plus. In political news, President Trump is endorsing Lindsey Graham's sister to permanent. 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 11th 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 Labor Party. This change today is the most significant change moment in our politics for 40 years. 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's 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 U.S. 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 Bob El Mandeb right next to Yemen on their way to markets in Asia. So far, Bob 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 Al-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. Spain is a system team. They are raised from the age of nine years old to all play in the same way. The ball

does the running. 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 messy 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, leaves a sliver of opportunity for Argentina no matter what's going on. Joshua says he'll be watching for how Argentina deals with Spain's control of the ball. 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 maestroes 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. surprised too many times at this World Cup to venture a real prediction. As far as the magic maker himself, Lionel Messi, this might just be the last time you can see him play in a World Cup. 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.

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 U.S. and Europe to push back against the construction of data centers. That's in What's News Sunday. And we'll be back with our regular show on Monday morning. Today's show is produced by Danny Lewis and Anthony Bansy with supervising producer Tali Arbell.

Michael LaValle wrote our theme music. Aisha L. Muslim is our development producer. Chris Zinsley is our deputy editor. And I'm Alex Osala. Have a great weekend. And thanks for listening.