Popular Burger Chain Faces Unforeseen Financial Challenges

Popular Burger Chain Faces Unforeseen Financial Challenges

BurgerFi’s Chapter 11 bankruptcy filing marks a major shift for the restaurant chain amid financial hardships.

At a Glance

  • BurgerFi filed for Chapter 11 bankruptcy protection.
  • The filing occurred less than a month after expressing doubts about continued operations.
  • BurgerFi’s assets are valued between $50 million and $75 million; debts range from $100 million to $500 million.
  • All 144 locations of BurgerFi and Anthony’s Coal Fired Pizza & Wings will continue normal operations.

BurgerFi Files for Chapter 11 Bankruptcy Protection

BurgerFi, known for its all-natural burgers, has decided to seek Chapter 11 bankruptcy protection. The restaurant chain, founded in 2011 and went public in 2020, is reeling from financial strains and intends to restructure its debts while maintaining ordinary business operations. This filing follows a period of intense fiscal challenges, reflecting broader issues faced by the fast-casual dining industry, which has been impacted by fluctuating consumer spending and rising operational costs.

Concerns about BurgerFi’s financial stability surfaced less than a month ago when the company warned investors of “substantial doubt” regarding its ability to continue operating. This alarming announcement appears to have foretold the recent filing. Adding to its woes, BurgerFi joins other notable restaurant chains like Red Lobster and Buca di Beppo in seeking bankruptcy to navigate their financial recovery.

Declining Sales and Rising Costs

BurgerFi’s financial disclosures reveal that the company’s total assets stand between $50 million and $75 million, while its total debts fall between $100 million and $500 million. The latest quarter ending April 1 showed revenue of $42.9 million but a net loss of $6.5 million. The now-closed 19 underperforming stores were part of an effort to cut costs. Same-store sales for the burger chain dropped 13%, adding to the list of financial setbacks.

“BurgerFi and Anthony’s Coal Fired Pizza & Wings are dynamic and beloved brands, and in the face of a drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs, we need to stabilize the business in a structured process,” said Jeremy Rosenthal, Chief Restructuring Officer of BurgerFi International, Inc.

Path Forward Amid Financial Restructuring

Despite the filing, the company continues to operate 162 restaurants across its two brands, with about half under franchise ownership. The filing only impacts the 67 corporate-owned locations, while the franchisee-owned locations remain unaffected. BurgerFi’s attempt to stabilize includes customary “first day” motions to ensure that employee wages and customer programs continue without disruption. The court filings related to this restructuring are available online through Stretto, Inc.

“Despite the early positive indicators of the turnaround plan initiated less than a year ago, the legacy challenges facing the business necessitated today’s filing,” stated Carl Bachmann, who became CEO earlier this year.

BurgerFi’s Chapter 11 filing marks a significant effort to streamline financially and reassert its place in a competitive market that continues to deal with external pressures such as inflation and rising operational costs.

Sources:

  1. Restaurant chain BurgerFi files for Chapter 11 bankruptcy protection
  1. BurgerFi files for Chapter 11 bankruptcy protection
  1. BurgerFi International Files for Protection Under Chapter 11
  1. BurgerFi restaurant chain files for Chapter 11 bankruptcy
  1. BurgerFi Becomes Latest Restaurant Chain to File for Chapter 11
  1. BurgerFi International declares Chapter 11 bankruptcy
  1. BurgerFi, Anthony’s Coal Fired Pizza seek Chapter 11 bankruptcy protection
  1. BurgerFi International Files for Protection Under Chapter 11
  1. BurgerFi International files for Chapter 11 bankruptcy protection