Beloved Chain BurgerFi May File For Bankruptcy Soon
Numerous restaurant chains, including national giants like Red Lobster, have sought bankruptcy protection in 2024. A popular fast-casual chain known for premium burgers could soon join the list.
On Aug. 16, the better-burger chain BurgerFi filed a 10-Q form with the Securities and Exchange Commission (SEC), writing that it couldn't report its most recent quarterly earnings by the deadline because of "significant adverse developments" related to the company's business and liquidity.
The document says that if BurgerFi doesn't receive "adequate relief from its senior lender and additional sufficient liquidity from potential liquidity providers or from the sale of the company's assets to meet its current obligations," it may seek bankruptcy protection.
BurgerFi expects that its sales for the quarter, which ended on July 1, dropped by 4% or about $1.8 million, year-over-year. The chain primarily attributed this decline to the decrease in same-store sales at BurgerFi and sister brand Anthony's Coal Fired Wings & Pizza, as well as the closure of underperforming corporate-owned BurgerFi restaurants.
Burgerfi closed 14 restaurants in 2023 and shuttered eight more locations during the first quarter of 2024. The chain had 102 units at the end of that quarter.
It estimated a net loss of $18.4 million for the second quarter—a notable drop from the $6 million loss during the same quarter last year. BurgerFi cited lower operating income, higher general and administrative expenses, and higher restructuring costs as primary factors driving this loss.
The company said that based on its current liquidity position and forecast of operating results and cash flow, "[…] there is substantial doubt about the company's ability to continue to operate." The chain also entered an Emergency Protective Advance Agreement with lenders for $2.5 million on Aug. 9
In May, BurgerFi announced that it was exploring strategic alternatives to improve the business. During this time, the chain entered a forbearance agreement with lender TREW Capital Management Private Credit and private-equity firm L Catterton. However, this has expired.
According to the SEC filing, BurgerFi's senior lender can now request immediate payment. If BurgerFi cannot do so, the lender can "foreclose on its security interest and liquidate or take possession of some or all of the assets of the company and its subsidiaries." Restaurant Business Magazine reported that TREW would likely seize the chain's assets and assume ownership. BurgerFi said "there is no assurance" that it will be able to meet its current obligations.
Several restaurant chains have filed for bankruptcy this summer, with World of Beer Bar & Kitchen and Buca di Beppo both filing for Chapter 11 bankruptcy this month.
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