NEW YORK (TheStreet) -- It has been a year since Chipotle Mexican Grill (CMG) - Get Chipotle Mexican Grill, Inc. Report was hit with an E. coli outbreak that resulted in many patrons at its restaurants becoming ill and sales declining. The stock has yet to recover, is down almost 50% and Wall Street has become impatient with the company's lack of turn around, Bloomberg TV's Lisa Abramowicz reported on "Bloomberg Markets" Friday.
Abramowicz and anchor Vonnie Quinn were joined by Bloomberg News' Craig Giammona, who was on the show to talk about why Wall Street gave Chipotle a free pass when all of this first happened.
Chipotle was a "high flyer," according to Giammona, and that is why Wall Street was willing to look the other way. The fast casual Mexican dining restaurant was very popular with millennials and really had no issues until these outbreaks.
"The numbers were up and up and up, the stock, the sales. So I think there were some things unusual about how they ran the company that just escaped scrutiny for a long time because it was a success story," Giammona said.
Quinn pointed out that anybody can be "unlucky" and noted that restaurant companies have had much worse E. coli outbreaks and survived. Giammona himself would reference that in the 1990s Jack in the Box (JACK) suffered an outbreak and some of its consumers, including children, died. It took that company years to bounce back.
The thing that Wall Street is having an issue with now is how long it will take Chipotle to recover from this, Giammona said.
"Chipotle had about 500 people sick, no one died you know, some people hospitalized. So the question is, now we've seen three quarters of declining same store sales, is it going to be four? Is it going to be six? How long is it going to take for this company to get back? And can they get back," Giammona continued.
One reason the company is having such a difficult time with the outbreak is that Chipotle was built by promoting its product as fresh and healthy. "This struck at the heart of what made the brand popular," Giammona said.
Moving away from the E. coli outbreak, Abramowicz asked if there is anything else that is cause for concern about Chipotle.
"There were concerns even before this started about the supply chain. They're sourcing a certain type of meat. This is meat raised in different ways, the conventional supply chain in this country doesn't have the type of pork that they need. They were running into these issue before [the outbreak] started," Giammona added.
Shares of Chipotle were down on Friday afternoon.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CHIPOTLE MEXICAN GRILL INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.
You can view the full analysis from the report here: CMG