BurgerFi Is Weighing Bankruptcy

BurgerFi, the national fast-casual burger chain, announced on August 16 that it will potentially seek bankruptcy protection. The revelation came from a statement to the U.S. Securities and Exchange Commission (SEC), entered by BurgerFi International, owner of BurgerFi as well as the Anthony's Coal Fired Pizza chain. Citing significant difficulties, BurgerFi failed to file its quarterly earnings with the SEC and noted deeper-than-expected financial losses. They are attributed to, among other factors, an increase in output expenses, a decrease in income for operations, and accumulating costs tied to restructuring the company for long-term sustainability.

It's a big blow for BurgerFi, considering multiple best-burger awards as recently as 2023, including ones from the SOBE Wine and Food Festival and two prestigious spots in USA Today Readers' Choice Awards. It's sister chain, Anthony's, has also racked up several prestigious awards, including the Best Pizza Chain in America by USA Today's Great American Bites.

However, the proverbial "writing on the wall" has been slowly scripted over several years, starting at least with the $100 million buyout of the parent company in 2020 that resulted in BurgerFi going public. Lawsuits by investors followed, as did struggling sales and store closures. More than 20 locations went out of business between 2023 and April 2024. BurgerFi staged a comeback in mid-2023 with a new industry-veteran CEO, to no apparent avail. An un-filed quarterly earnings report is expected to show net losses to the tune of $18.4 million, more than three times the net loss in the same quarter in 2023.

BurgerFi International's decision to consider bankruptcy stems in part from the snowballing effect of failing to meet liquidity requirement on a $51.3 million loan and then being unable to fulfill a $4 million forbearance timeline offered by private lenders. Given the circumstances, the majority lender, TREW Capital Management Private Credit, is entitled to liquidate assets and shutter operations. Alternatively, it could assume ownership of the two restaurant chains.

However, BurgerFi continues to look for other means of salvaging the business. Previous attempts have involved outside-the-box thinking. Mere months ago, in May 2024, the company sought to rebrand itself, at least temporarily, by offering a more diverse menu. In a seemingly abrupt departure from its very core, the chain with "burger" in its name transformed into ChickenFi and increased the number of chicken items. In the same period, it opened a Better Burger Lab in New York City for menu innovation.

The attempts to re-attain company viability were clearly insufficient, as it's now roughly three months later, and bankruptcy is very much on the table. Failing a major turnaround, customers who enjoy access to high-quality Angus beef, antibiotic-free all-natural chicken, and fries cut from fresh potatoes, will have to wait until the financial dust settles.