BurgerFi International, the fast-casual burger chain and parent to casual dining chain Anthony’s Coal Fired Pizza & Wings, became the latest restaurant company to file for bankruptcy this year when it filed for Chapter 11 protection September 11.
The company joined a growing list of restaurant chains that have resorted to bankruptcy protection as a means to salvage or reorganize their businesses as the industry struggles with declining traffic, high interest rates and rising food and labor costs.
Franchisors that filed for Chapter 11 protection this year include seafood giant Red Lobster and TexMex chain Tijuana Flats. More broadly, at least 10 restaurant chains have filed for bankruptcy in 2024, CNBC reported.
A number of multi-unit franchisee groups in the Arby’s, Pizza Hut, Subway and Dickey’s Barbecue Pit systems, among others, also filed for Chapter 11 protection this year.
Related: Bankruptcy Filings Spark Questions About Restaurant Franchisee Outlook
Sales at BurgerFi and Anthony’s locations fell 4 percent during the three-month period ending July 1, 2024, a year-over-year decline of about $1.8 million, according to an August 16 filing with the U.S. Securities and Exchange Commission.
BurgerFi reported assets of $50 million to $75 million and up to $500 million in debt, according to its filing in the U.S. Bankruptcy Court for the District of Delaware. For the quarter ending April 1, BurgerFi International reported revenue of $42.9 million and a net loss of $6.5 million. Same-store sales at its namesake burger chain fell 13 percent.
All 144 of the Fort Lauderdale, Florida-based company’s BurgerFi and Anthony’s locations will remain open, the company said. Its bankruptcy filing includes only the 67 corporate-owned locations; the other locations are franchised and are excluded from the bankruptcy proceedings, the company said.
BurgerFi International acquired Anthony’s for $156.6 million in 2021. It owns 17 of the 93 BurgerFi restaurants and 50 of the 51 Anthony’s locations.
“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.”
BurgerFi International’s investor relations did not immediately respond to Franchise Times’ request for additional comment.
BurgerFi’s bankruptcy filing comes less than a month after the company warned investors of the potential outcome in a 10-Q form filing with the SEC. The company received Nasdaq deficiency notices for failure to file its 10-Q for the second quarter of 2024 on August 27.
The company noted at the time “significant adverse developments that occurred with respect to the company’s business and liquidity.”
BurgerFi has been battling financial challenges since its acquisition of Anthony’s. Last year, the company named former Smashburger president Carl Bachmann as CEO and Christopher Jones as chief financial officer. Last month it brought in Rosenthal.
It was all part of the effort to turn around the company’s two brands that, according to its press release, were seeing declining same-store sales and a high employee turnover rate.
As a result, the company closed 19 underperforming corporate-owned stores this year.
BurgerFi became a public company in 2020 in a merger with Opes Acquisition. A year later, the company acquired Anthony’s.
“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 the bankruptcy filing. “We are grateful for the continued support of our loyal customers, vendors, business partners and our dedicated team members, who are the heart of the company.”