Chipotle Mexican Grill (CMG) - Get Report , once a darling of customers and investors alike, reported its first ever quarterly loss in the first quarter of 2016, due to the outbreak of E.Coli and norovirus viruses in its food.

As the company ramps up food hygiene and safety measures and aims to seduce disaffected customers with an attractive rewards program, will the second quarter results on July 21 kick start Chipotle's reversal? 

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In the first quarter 2016, Chipotle recorded Earnings Before Interest and Tax (EBIT) margins of -5.6%.

Although the company's margins are expected to improve on a sequential basis, compared to 19% in the second quarter of 2015, EBIT is only expected to expand to 4.4% in the same period this year.

However, the same can't be said for revenues in the second quarter, which are expected to come in at $1.05 billion, down 12.3% from same quarter a year ago.

The trend of negative same store sales growth will likely continue from the previous quarter, while reflecting some improvement on a sequential basis. Chipotle is expected to record comps growth at -20.1%, up from -29.7% in the previous quarter.

Chipotle's increased focus on food safety and hygiene has naturally led to higher costs. Not only would raw material inspection be more stringent leading to elimination of items which do not match requirements, but labor requirements and costs would also rise. The fast food chain is already increasing wages for in-store employees.

Raw material costs of food items like chicken and beef are also increasing, pressuring margins further.

In an attempt to win back old customers who have flocked to peers like Panera BreadShake Shack, Brinker International and even Taco Bell (operated by YUM! Brands), Chipotle first offered free burritos to customers and has now introduced a generous limited period loyalty program, "Chiptopia." The program allows customers who reach the highest level of the program a chance to receive free entrees and free catering for 20.

However, it remains to be seen if Chiptopia can be the game changer for Chipotle and restore its upward momentum as an investment. According to a consumer survey by Morgan Stanley, even six months after the food safety scandal, about 13% of customers said they wouldn't return to Chipotle anytime soon and 20% of customers who had returned in 2016 said they had lowered their frequency.

The E.Coli fiasco pushed Chipotle's stock price off a cliff. Over the last one year, the company's shares have fallen close to 39% and are now just above 52-week lows.

Despite Chipotle's string of measures to improve sales and rebuild its customer base, analysts expect the recovery to be slow.

Morgan Stanley downgraded the stock to Equal Weight from Overweight and lowered its price target to $405 from $500.

Investments banking firm William Blair also revised downwards its second quarter 2016 earnings estimates for Chipotle to $0.96 per share versus a previous estimate of $1 per share. Others like Maxim Group and Vetr also downgraded their ratings on the stock.

Overall, analysts forecast a 79% decline in Chipotle's earnings-per-share (EPS) in the second quarter to $0.94 from $4.5 in the second quarter of 2015. For the whole year, analysts expect Chipotle to post EPS of $4.4, slipping 72% from $15.4 in fiscal 2015. Our verdict: Stay away from this toxic stock. A turnaround this year is unlikely; there are better places for your money.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.