After first sounding an alarm roughly three months ago, the owner of the BurgerFi and Anthony’s Coal Fired Pizza & Wings chains has become part of an ever-growing list of U.S. restaurant operators seeking bankruptcy protection amid a decline in consumer spending and spiraling costs.
Fort Lauderdale, Florida-based BurgerFi International — parent of its namesake "better burger" restaurants and Anthony's Coal Fired Pizza & Wings — on Wednesday filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the district of Delaware.
All 144 BurgerFi International and Anthony's restaurants will remain open and continue normal operations, according to a company statement. The Chapter 11 filing includes only the 67 corporate-owned locations of the two chains, not franchisee-owned sites.
BurgerFi has already "aligned its footprint with current business standards" by closing 19 underperforming corporate-owned eateries and reducing related operating costs, according to the restaurant operator.
"The company's current platform is primed for success," BurgerFi said.
BurgerFi has now become part of the surge in restaurant Chapter 11 filings and location closings this year. The list includes Rubio's, Buca di Beppo, World of Beer, Roti and Tijuana Flats. In some cases, chains have been liquidated with all their restaurants shuttered. In the case of Red Lobser, it has emerged from Chapter 11 with a new owner and a smaller store fleet.
Post-pandemic declines
Most of these chains — and now BurgerFi — have cited ongoing woes from COVID-19 pandemic closings, debt, consumers cutting back on discretionary spending, as well as soaring costs for labor and other operational expenses, for their financial difficulties.
"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," Jeremy Rosenthal, BurgerFi's chief restructuring officer, said in a statement. "We are confident that this process will allow us to protect and grow our brands and to continue the operational turnaround started less than 12 months ago and secure additional capital."
Yet despite the challenging macroeconomic environment, some restaurant chains have posted sales gains in the recent quarter, most notably Chipotle Mexican Grill and Shake Shack.
BurgerFi had alerted investors to its financial difficulties earlier this year. In late May, the company announced it was exploring "strategic alternatives," and said that of last week it only had cash and equivalents of about $4.4 million. Then, in an August securities filing, BurgerFi said that based on its liquidity position and its forecast of operating results, "there is substantial doubt about the company’s ability to continue to operate as a going concern."
Attempted turnaround
If the restaurant operator doesn't "receive adequate relief from its senior lender and additional sufficient liquidity ... or from sales of the company’s assets to meet its current obligations, it may seek protection under applicable bankruptcy laws," BurgerFi said in its filing, adding that it is trying to sell some of its holdings or the entire company.
BurgerFi's board brought in Carl Bachmann as CEO and Christopher Jones as chief financial officer in July 2023 to mount a company turnaround.
"Faced with legacy operational challenges, they quickly developed and implemented a strategic plan to address foundational issues including declining same-store sales, high employee turnover and a stale menu," according to BurgerFi.
As part of that efforts the company initiated an evaluation of its operations, which is continuing.
"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," Bachmann said in a statement.
BurgerFi, a fast-casual concept, has 93 restaurants, with 76 franchised and 17 corporate-owned. Anthony's, a premium-pizza chain, has 51 restaurants, with 50 corporate-owned and one dual-brand franchise location in Kissimmee, Florida. The chain's menu is centered around cooking with a 900-degree coal-fired oven.
For the record
BurgerFi's proposed advisers are Raines Feldman Littrell, Force Ten Partners, with Jeremy Rosenthal as chief restructuring officer and Sitrick and Co. as strategic communications adviser.