Shares of chicken chain El Pollo Loco plunge on signs of slowing growth

MarketsAssociated Press

Shares of El Pollo Loco are getting torched in premarket trading Friday, on signs the fire-grilled chicken chain isn't growing as fast as expected.

Late Thursday, the company said it expects sales at stores open at least 15 months to grow 3 percent for the year, at the low end of its previous growth forecast between 3 percent and 5 percent.

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The company, whose name means "the crazy chicken" in Spanish, raised more than $107 million last year when it went public with a plan to open more stores. It now expects to open 24 restaurants in 2015, 3 fewer than it had previously expected. The chain currently serves its Mexican-style dishes in 415 restaurants in Arizona, California, Nevada, Texas and Utah.

Also late Thursday, the company posted better-than-expected earnings for its second quarter, but its revenue missed forecasts. The Costa Mesa, California-based company reported second-quarter earnings of $7.2 million, or 18 cents per share. Earnings, adjusted for non-recurring costs, were 19 cents per share. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 18 cents per share.

It posted revenue of $89.5 million in the period. Four analysts surveyed by Zacks expected $93 million.

El Pollo Loco expects full-year earnings in the range of 67 cents to 71 cents per share, but said 2 cents per share are a benefit from capitalizing development costs related to remodeling and building new restaurants. Analysts expected earnings of 70 cents per share, according to FactSet.

Shares of El Pollo Loco Holdings Inc. fell nearly 17 percent in premarket trading. Its shares closed at $18.36 Thursday, down about 42 percent in the past 12 months.