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El Pollo Loco Shares Plunge After Earnings Miss Expectations

El Pollo Loco

El Pollo Loco shares plunged 21 percent on Friday after the chain released second-quarter results that fell short of Wall Street expectations.

The Costa Mesa-based fast food chain reported $89.5 million in sales in the three months ending on July 1, up from $86.9 million in the prior year. Analysts expected sales to reach $93 million. Net income met expectations at 18 cents a share.

Shares closed at $14.56 on Friday, down $3.80 (21 percent).

Stephen Sather, El Pollo Loco chief executive, was quoted by the Los Angeles Times as having said that the chain lost its value focus on the “higher priced items.”

We employ a balance of a high/low pricing strategy. What I think happened is we temporarily overweighed this to the higher priced items.

Comparable store sales at El Pollo Loco locations open for at least one year were up 1.3 percent, but fell short of the forecasted 3.2 percent.

El Pollo Loco shares have fluctuated greatly since the company went public back in 2014. El Pollo Loco had an IPO price of $15, which briefly went above $40 last August before falling below $20 last month.

El Pollo Loco expects to open up to 24 new stores during the fiscal year with an estimated earning of $0.67 to $0.71 per share, Business Insider reported.

Restaurant chain IPOs were hot for awhile, but they’ve proven to be a mixed bag. Zoe’s Kitchen shares are up over 175 percent since its IPO in 2014. Potbelly, Inc — which went public in 2013 — saw its shares double following its IPO debut, but has since traded lower than its IPO price for over a year.

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