BurgerFi International, a fast-casual restaurant company based in Fort Lauderdale, Florida, has filed for Chapter 11 bankruptcy protection as reported by Restaurant Business. This move comes after a challenging year marked by declining sales and mounting financial losses. The company, which owns both the BurgerFi burger chain and Anthony’s Coal-Fired Pizza, submitted its filing in a Delaware bankruptcy court on Wednesday.
Key Facts:
- BurgerFi filed for bankruptcy on September 11, 2024
- Assets: $50-100 million; Liabilities: $100-500 million
- Q2 2024 net loss: $18.4 million (up from $6 million last year)
- First quarter same-store sales dropped 13%
The bankruptcy filing reveals the extent of BurgerFi’s financial troubles. The company listed assets between $50 million and $100 million, while its estimated liabilities range from $100 million to $500 million.
The company’s history includes going public in 2020 through a reverse merger with Opes Acquisition, a special purpose acquisition company. The following year, BurgerFi merged with Anthony’s Coal-Fired Pizza.
BurgerFi’s path to bankruptcy has been apparent for some time. Investors have been purchasing the company’s debt at discounted rates from its lenders, signaling a lack of confidence in BurgerFi’s financial stability.
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The company also hired a chief restructuring officer amid a wave of resignations from its board of directors. Last month, BurgerFi publicly acknowledged that bankruptcy was a real possibility.
The company’s financial woes have been accelerating. In its most recent quarterly report, BurgerFi disclosed a net loss of $18.4 million for the quarter ending July 1. This loss is significantly worse than the $6 million loss reported for the same period last year.
The burger chain, in particular, has been struggling with weak sales. Same-store sales at BurgerFi locations declined by 13% in the first quarter of this year.
Carl Bachmann, who was brought in as CEO last year along with other new executives, had promised a turnaround in January. However, these plans were derailed by worsening industry-wide sales challenges. The company cited “significant adverse developments” as the cause of its deepening financial losses.
It’s likely that BurgerFi will be sold as part of the bankruptcy process. TREW Capital Management, which has experience in restaurant bankruptcies having acquired Rubio’s previously, has already purchased BurgerFi’s debt and provided funding to keep the company operational in recent months.
The Bigger Picture:
BurgerFi’s bankruptcy filing is part of a broader trend in the restaurant industry.
Several chains have declared bankruptcy in recent months, struggling with the aftermath of the COVID-19 pandemic, rising costs, and changing consumer habits. Many companies emerged from the pandemic in a weakened financial state, burdened by heavy debt loads and unfavorable lease terms.
The growing list of restaurant chains that have sought Chapter 11 protection in 2024 include Roti, a Mediterranean fast-casual chain; Buca di Beppo, an Italian-American restaurant; World of Beer, a tavern chain; and Rubio’s, known for its fish tacos.
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Each of these chains cited various factors contributing to their financial difficulties, including rising costs, labor challenges, and changes in consumer behavior.
