UPDATE: September 11, 2024: This article has been updated with additional details from BurgerFi.
Dive Brief:
- BurgerFi has declared bankruptcy, according to case records in the U.S. District Court for the District of Delaware.
- In the filing, the parent company of BurgerFi and Anthony’s Coal Fired Pizza and Wings listed itself as having between $50 million to $100 million in assets and between $100 million and $500 million in liabilities.
- BurgerFi’s bankruptcy is the latest in a stream of Chapter 11 filings this year, including Red Lobster, World of Beer, Buca di Beppo and Rubio’s.
Dive Insight:
The company will continue operations at all 144 of its stores, according to a Wednesday press release. But BurgerFi did close 19 underperforming stores following a review of its assets.
The bankruptcy is the culmination of several months of financial difficulties at BurgerFi. In May, the chain began considering strategic alternatives, including additional financing, a sale of some of its assets and other means of cash flow.
BurgerFi International has experienced several quarters of falling same-store sales and started the year off with a 13% decline in same-store sales at BurgerFi and 2% decline in comparable sales at sister brand Anthony’s Coal Fired Pizza & Wings. Net losses improved in 2023 to $30.7 million compared to a net loss of $103.4 million in 2022, but the company has continued to operate at a loss this year.
“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,” BurgerFi’s chief restructuring officer, Jeremy Rosenthal, said in a statement. The press release highlighted a stale menu and high turnover as issues compounding sliding sales.
BurgerFi hired Rosenthal as restructuring chief in August, days after it warned investors that it had substantial doubt over its ability to continue operating given its liquidity position and financial situation. At the time, the chain said it would consider bankruptcy if it didn’t receive enough relief from its senior lenders, or an injection of liquidity.
In late August, Nasdaq sent the company deficiency notices regarding its failure to file its quarterly report on time — within 45 days from the end of the quarter. Nasdaq also said the chain didn’t have the proper number of board members after three board directors resigned earlier that month.
Rosenthal expressed confidence that the Chapter 11 process would give the company a chance to turn its brands around and eventually return them to growth.
