The core of the legal dispute centers on the company’s "concentric circle" growth model. While management touted this strategy as a way to increase store density without cannibalizing existing revenue, the complaint alleges that internal data revealed a different reality. New store openings were reportedly siphoning customer traffic from established, high-volume locations, a trend the company failed to disclose until its May 12, 2026, earnings report.

Reed Kathrein, a partner at Hagens Berman, stated the firm is investigating when management became aware that their expansion was actively eroding revenue at existing sites. By June 18, 2026, when the lawsuit was filed, the stock price had fallen to $7.72, leaving many early investors with substantial losses. Shareholders who acquired common stock between September 12, 2025, and May 12, 2026, have until August 17, 2026, to file as a lead plaintiff in the case.