According to the law firm press release, El Pollo Loco develops, franchises, licenses, and operates quick-service restaurants in the United States.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information about El Pollo Loco’s business and prospects, 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 3%, much less the 3% to 5% the defendants had led investors to believe they would grow in the second quarter of 2015. As a result of these false and misleading statements and/or omissions, El Pollo Loco securities traded at artificially inflated prices during the Class Period, with the Company’s stock price reaching a high of $25.37 per share.
After the close of trading on August 13, 2015, the Company issued a release announcing its second quarter 2015 results for the three-month period ended July 1, 2015. El Pollo Loco disclosed that contrary to defendants’ prior claims of being on track to achieve 3%-5% comparable store sales increases, second quarter 2015 “[s]ystem-wide comparable restaurant sales [had grown] 1.3%, including a 0.5% decrease for company-operated restaurants, and a 2.6% increase for franchised restaurants.” On this news, the price of El Pollo Loco’s shares declined by 20% from its closing price of $18.36 per share on August 13, 2015, to $14.56 per share on August 14, 2015.
On December 8, 2015, the Court issued an Order appointing lead plaintiff and approving lead counsel. Lead Plaintiffs filed a consolidated complaint on January 29.
On July 25, 2016, the Court issued an Order granting Defendants' Motion to Dismiss without prejudice. Plaintiffs were given leave to file an amended complaint.