BurgerFi filed for Chapter 11 bankruptcy in a Delaware court, listing between $50 million and $100 million in assets and between $100 million and $500 million in liabilities. This filing followed a year of financial decline including a net loss of $18.4 million in the quarter ending July 1, 2024, which was worse than the $6 million loss from the previous year.
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The bankruptcy filing only impacts the 67 corporate-owned stores of both BurgerFi and Anthony’s Coal Fired Pizza & Wings. Franchisee-owned locations, which make up the bulk of the company’s footprint remain unaffected by the bankruptcy process.
This decision allows the company to maintain its focus on stabilizing corporate operations without disrupting the larger franchise network.
The restaurant chain brought in new leadership in July 2023. Carl Bachmann was appointed as Chief Executive Officer (CEO), while Christopher E. Jones took over as Chief Financial Officer (CFO).
This leadership duo was tasked with addressing the operational and financial challenges including declining same-store sales, high employee turnover and an outdated menu.
Under their direction, the company went on a strategic turnaround plan aimed at revitalizing both the BurgerFi and Anthony’s brands.
As part of the turnaround effort, the company implemented a top-to-bottom evaluation of its operations. This review resulted in the closure of 19 underperforming corporate-owned stores.
By consolidating operations and reducing operating costs, the company sought to realign its business with industry standards and position itself for success.
Despite these early positive steps, legacy issues continued to weigh down the company’s performance leading to the bankruptcy filing.
The restaurant chain has made it clear that all 144 locations will remain open and continue operating as usual. The company has filed customary first day motions in the Chapter 11 case to ensure that operations proceed without interruption.
These motions subject to court approval include provisions for the timely payment of employee wages and benefits, the continuation of customer loyalty programs and the honoring of rewards and gift cards at participating locations.
The restaurant chain has assembled a team of advisors to guide the company through the bankruptcy process. This includes Raines Feldman Littrell LLP and Force Ten Partners with Jeremy Rosenthal serving as the company’s Chief Restructuring Officer.
Sitrick and Company has also been brought in as a communications advisor to help navigate the public and stakeholder communications throughout the restructuring.
In August 2024, the company reported that it had only $4.4 million in cash on hand as of mid-August, and it expected to report a loss of $18.4 million for the quarter ending July 1, 2024. This contrasts with a $6 million loss for the same quarter in 2023.
In the quarter ending April 1, 2024, BurgerFi reported revenue of $42.9 million with a net loss of $6.5 million. Same-store sales, which measure the performance of locations open for a year or more, dropped by 13% at BurgerFi’s namesake burger chain.
According to the bankruptcy filing, BurgerFi reported assets valued between $50 million and $100 million. However, its liabilities are higher, estimated to be between $100 million and $500 million.
The restaurant chain’s stock, which has plummeted over the past year saw an additional 22% decline to just 14 cents per share after the bankruptcy announcement. The company’s stock has fallen by more than 80% in 2024.
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Several fast-casual and casual dining chains have been impacted by a mix of inflation, changing consumer behavior and operational costs.
Other Brands that have Filed for Bankruptcy this Year Include:
- Red Lobster
- Buca di Beppo
- Rubio’s Coastal Grill
- Tijuana Flats
- Roti
According to Jonathan Carson, co-CEO of bankruptcy services firm Stretto, a total of 17 restaurant operators including both corporate-owned chains and large franchisees have filed for bankruptcy so far in 2024.
The restaurant industry has seen a rise in financial distress across chains, independents and franchisees alike, with many citing lower customer traffic, inflation and high interest rates as challenges.
The restaurant chain had launched a turnaround strategy in 2023. This effort included a focus on restructuring the business, reducing costs, and improving operational efficiency. Despite some early positives, the challenges of declining consumer demand and high costs forced the company to seek Chapter 11 bankruptcy protection.
The restaurant chain also hired Jeremy Rosenthal as its Chief Restructuring Officer (CRO) to head these efforts. In a statement following the bankruptcy filing, Rosenthal expressed confidence that the company’s reorganization through bankruptcy would allow it to stabilize and grow its brands while securing additional capital.
BurgerFi has made it clear that it intends to protect the value of both its burger chain and its pizza subsidiary. Corporate-owned locations will continue to operate as usual during the bankruptcy proceedings and the company’s franchisees will remain unaffected.
BurgerFi owns Anthony’s Coal Fired Pizza & Wings, a pizza chain with 51 locations. This acquisition, completed in 2021 for $156.6 million and it was aimed at diversifying the company’s portfolio and tapping into the growing demand for pizza and wings.
BurgerFi’s substantial liabilities will need to be restructured or renegotiated to give the company a chance to regain financial stability. To fund its operations and growth, BurgerFi will need to attract additional capital either from its senior lender, outside investors or by selling off assets.
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