Share price of
El Pollo Loco Holdings, Inc.
) surged 43.5% to $34.5 on Jul 28, after it debuted on Nasdaq on
Jul 25. On Jul 24, 2014, the company had announced an initial
public offering (IPO) of 7.1 million shares at $15 per share (top
end of the marketed range of $13 to $15 per share) and began to
trade under the ticker symbol "LOCO" on Friday, Jul 25.
LOCO's share price surged more than 50% on Friday. This
California-based company raised $107 million in its U.S. initial
public offering. The company intends to use the proceeds to pay its
Shares of this fire-roasted chicken specialist company soared 125%
in the first two days of trading. We would like to remind investors
that this massive surge may be temporary and shares can experience
a decline after this huge surge.
Some analysts believe that this upsurge reflects investor
confidence in the company as it resembles the highly successful
Chipotle Mexican Grill, Inc. (
) and serves Mexican-style food in large portions. Per Motley Fool,
its comps were better than Chipotle Mexican Grill in 2012 and
2013. However, serving Mexican-style food cannot be
considered a good enough reason to believe that El Pollo Loco can
emulate the success of Chipotle Mexican in the long run.
Currently, this Mexican-style grilled chicken restaurant has over
400 locations across 5 states, with majority of them in California.
The company opened 7 new stores in 2013 and plans to open up to 16
in 2014. The company intends to expand the number of restaurants in
the range of 8% to 10% annually, including both company-owned and
franchise-based restaurants. It targets 2,300 U.S. restaurants in
The company was recently named as the best-tasting fast food
chicken restaurant in the country. Though the company has adopted
an attractive menu and strong initiatives to boost sales, El Pollo
Loco would face the same headwinds as other food chains and chicken
brands like Yum! Brands, Inc. (
) and Burger King Worldwide, Inc. (
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