Chipotle Mexican Grill Inc. profit dropped 82% in its June quarter as slowly recovering traffic at the beleaguered chain was offset by costly promotions to lure customers back after an illness outbreak last year.

In February and March during the prior quarter, Chipotle gave away over six million free burritos or bowls and 1 million orders of chips and salsa or guacamole in hopes of luring back wary customers. In the quarter the company posted its first loss as a public company.

But the freebies haven't fully eased fears.

For the latest quarter, same-store sales dropped 23.6%, less than the 29.7% retreat posted in the first quarter but worse than the 20.4% decline predicted by analysts cited by FactSet.

Analysts at Morgan Stanley have said that a full recovery of sales could take years, citing their survey results that showed about 25% of the chain's customers have stop going or aren't going as frequently.

Over all, for the second quarter, Chipotle reported a profit of $25.6 million, or 87 cents a share, far down from $140.2 million, or $4.45 a share, a year earlier.

Revenue declined to $998.4 million from $1.2 billion.

Analysts polled by Thomson Reuters expected a profit of 93 cents a share and revenue of $1.1 billion.

Shares of the company, down 38% over the past year, fell 1.9% to $410 after hours. The stock lost roughly half its value from last year's record high through last month's low.

In February, the Centers for Disease Control and Prevention declared an end to Chipotle's E. coli contamination that sickened 55 people in 11 states.

Since, Chipotle has revised food-preparation steps, installed a new loyalty rewards plan and produced a YouTube video that takes aim at competitor fast-food restaurants.

The company has had additional unwanted attention in recent weeks with the charging of its chief creative and development officer Mark Crumpacker in a New York City cocaine sting. Mr. Crumpacker was allegedly among 18 buyers indicted in the drug ring and was arraigned on seven counts of criminal possession of a controlled substance in the seventh degree, a misdemeanor. The company placed him on administrative leave. A call to his lawyer wasn't immediately returned.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

July 21, 2016 17:15 ET (21:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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