BurgerFi International, a fast-casual restaurant chain known for its “better burgers,” is facing serious financial challenges in 2024.
The company recently warned investors about a potential bankruptcy filing, joining a growing list of restaurant chains struggling in the current economic climate.
Founded in 2011, BurgerFi operates about 120 restaurants, mostly on the East Coast. The company also owns Anthony’s, a pizza and wings brand with over 60 locations.
BurgerFi went public in 2020 through a merger with a special purpose acquisition company (SPAC), a popular method for companies to enter the stock market during the pandemic.
However, this strategy hasn’t guaranteed success. Bloomberg reports that at least 21 companies that went public via SPAC mergers filed for bankruptcy in 2023 alone. Now, BurgerFi might be heading down a similar path.
The company’s recent SEC filing paints a grim picture. BurgerFi reported a $1.8 million (4%) decrease in year-over-year restaurant sales since July 3, 2023. This decline stems from lower same-store sales at both BurgerFi and Anthony’s locations, as well as the closure of underperforming BurgerFi corporate-owned restaurants.
In the filing, the company stated, “If BurgerFi International’s financial obligations cannot be sufficiently met, the company may seek protection under applicable bankruptcy laws.” This warning comes despite BurgerFi receiving $2.5 million in emergency funding earlier this month.
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BurgerFi’s struggles reflect a broader trend in the restaurant industry. Many chains are facing falling sales as inflation makes dining out feel more like a luxury than a convenience for many consumers.
In the first half of 2024, several well-known brands closed underperforming locations, including TGI Fridays, Bloomin’ Brands, Hooters, and Denny’s. Others, such as Rubio’s, Tijuana Flats, Sticky’s Finger Joint, and Red Lobster, have filed for bankruptcy.
To stay afloat, BurgerFi is exploring various options. These include seeking additional financing, selling off some of its assets, or even putting the entire company up for sale.
The market has responded negatively to this news. On Monday, BurgerFi International’s stock price dropped by more than 10%, trading at around 33 cents per share by midday.
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It remains to be seen whether BurgerFi can turn its fortunes around or if it will join the growing list of restaurant chains forced to restructure through bankruptcy.
