News

El Pollo Loco facing shareholder lawsuit

El Pollo Loco is facing a shareholder class action lawsuit filed by The law firm of Kessler Topaz Meltzer & Check on behalf of purchasers of the El Pollo Loco common stock between May 15 and August 13, 2015.

October 20, 2015

El Pollo Loco is facing a shareholder class action lawsuit filed by the law firm of Kessler Topaz Meltzer & Check on behalf of purchasers of the El Pollo Loco common stock between May 15 and August 13, 2015, according to a press release.

The complaint alleges that El Pollo Loco and certain executive officers made a series of false and misleading statements or failed to disclose material adverse information about El Pollo Loco’s business and prospects during the Class Period, including that traffic at El Pollo Loco stores had declined substantially due to the removal of the value items from the restaurants' menu boards, and that as a result, comparable store sales were not growing at the 3–5 percent that defendants had led investors to believe they would grow in the second quarter of 2015. 

According to the complaint, on August 13, 2015, El Pollo Loco issued a press release announcing its second quarter 2015 results. The company disclosed that, contrary to its prior claims of being on track to achieve a 3–5 percent comparable store sales increase, second quarter 2015 "[s]ystem-wide comparable restaurant sales [had grown] 1.3 percent, including a 0.5 percent decrease for company-operated restaurants, and a 2.6 percent increase for franchised restaurants."

Following this news, shares of El Pollo Loco’s stock declined by $3.80 per share, or over 20 percent, to close the following day at $14.56 per share, on heavy trading volume, according to the release.