What happened

Shares of Chipotle Mexican Grill, Inc. (NYSE:CMG) were unraveling for the second month in a row as the burrito chain experienced another foodborne-illness incident. According to data from S&P Global Market Intelligence, the stock fell 17% last month.

The exterior of a Chipotle location, with desert plants surrounding two picture windows

Image source: Chipotle.

As the chart below indicates, the stock took a dive once news broke on July 18 of a norovirus outbreak at a Virginia location:

CMG Chart

CMG data by YCharts.

So what

Chipotle entered July on a downward trend following a disappointing guidance update in June, as the company reiterated same-store sales expectations for the year but said marketing expenses in the second quarter would be slightly higher than the year before.

The stock had already given up more than 5% by the middle of the month, but tumbled when the norovirus news broke. The incident was a cruel reminder that Chipotle may not have put the troubles from the 2015 E. coli crisis behind it; the stock immediately plunged on the reports and finished the day down 4.5%. Chipotle closed down its location in Sterling, Virginia, for several days, as the incident ended up making about 130 customers ill. Later that week, a video emerged from a Dallas location showing mice falling from the ceiling, adding more woes for the brand.

The following week, Chipotle reported its second-quarter earnings, beating expectations but earning just a shrug from the market, as the stock sold off modestly the next day. The company also said that comparable sales had fallen 5.5% in the week following the norovirus incident, a sign that customers aren't yet ready to forgive and forget.

Now what

Chipotle shares fell to a four-year low last month as a lackluster recovery and the norovirus outbreak have sucked out much of the optimism about the stock.

The company is hoping that the addition of queso to the menu, now being tested in several markets in the West, will change the narrative and give customers an incentive to return to the chain more frequently. However, the latest quarterly report shows that the comparable-sales recovery has stalled. And Chipotle stock remains expensive, with a price-to-earnings ratio of over 40 based on this year's projected earnings.

Considering that, the stock's troubles seem likely to continue.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.