Struggling Burger Chain Takes Unexpected Legal Step

Judge's gavel beside Chapter 11 bankruptcy documents.

BurgerFi has filed for Chapter 11 bankruptcy to tackle its financial challenges, leaving the future of the beloved burger chain uncertain.

At a Glance

BurgerFi filed for Chapter 11 bankruptcy protection.
The filing occurred less than a month after expressing “substantial doubt” about its operational viability.
The restaurant industry is struggling with declining traffic and increasing interest rates.
BurgerFi’s assets are valued at $50-$75 million, while debts range from $100-$500 million.

BurgerFi Files for Chapter 11 Bankruptcy Protection

BurgerFi, a chain renowned for its high-quality, natural burgers, has filed for Chapter 11 bankruptcy protection. This move comes in response to mounting financial difficulties and aims to allow the company to restructure its debts while maintaining daily operations. The fast-casual dining industry faces significant challenges, such as unpredictable consumer spending and rising operational costs, making it hard for companies to stay afloat.

This strategic filing aims to help BurgerFi streamline its financial liabilities and emerge as a more viable entity in a competitive market. The filing was made less than a month after the company warned of “substantial doubt” about its ability to continue operating in its quarterly report.

Financial Overview

Founded in 2011 and taken public in 2020 through a special purpose acquisition company, BurgerFi’s financial woes have grown despite its initial success. Shortly after going public, the company acquired Anthony’s Coal Fired Pizza & Wings for $156.6 million, adding significant financial pressure.

BurgerFi files for Chapter 11 bankruptcy protection. The fast-casual burger restaurant and parent of Anthony’s Coal Fired Pizza warned investors of potential bankruptcy a month ago https://t.co/c8HZbuL7PA pic.twitter.com/zgzC6kdORH

— Restaurant News (@NRNonline) September 11, 2024

Operation and Leadership Changes

The company has witnessed a decline of 13% in same-store sales at its namesake burger chain and reported a revenue of $42.9 million with a net loss of $6.5 million for the quarter ending April 1. Amidst these struggles, BurgerFi operates 162 restaurants across its two brands, with about half managed by franchisees.

Jeremy Rosenthal, Chief Restructuring Officer of BurgerFi International, stated, “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.”

Future Prospects

Despite the bankruptcy filing, all 144 BurgerFi and Anthony’s Coal Fired Pizza & Wings locations will continue normal operations. However, financial challenges persist since the acquisition of Anthony’s, with sales declining by 7.5% from 2022 to 2023, necessitating the closure of several underperforming stores.

“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,” said Carl Bachmann.

BurgerFi aims to maintain day-to-day operations while addressing their financial obligations through the restructuring process, focusing on emerging stronger and more competitive in the future.