In a 10-Q SEC filing, the restaurant company acknowledged ‘significant adverse developments with respect to the business and liquidity’
BurgerFi’s challenges seem to be deepening, despite recently initiating a strategic review process and securing $2.5 million in emergency funding earlier this month. On Friday, the company filed a 10-Q form with the Securities and Exchange Commission noting that it could not report its most recently quarterly report by the given deadline because of “significant adverse developments that occurred with respect to the company’s business and liquidity.”
BurgerFi estimates that its sales for the quarter ended July 1 declined by 4%, or about $1.8 million, year-over-year. The drop was driven by negative same-store sales at both BurgerFi and Anthony’s Coal Fired Pizza brands. BurgerFi also cited higher operating expenses compared to last year, mostly driven by higher wages, slower sales leverage on expenses, and higher chicken wing prices. The combination has hit profits, and BurgerFi expects a net loss of $18.4 million for the quarter, versus a net loss of $6 million for the same quarter last year.
The company anticipates losses of $3 million due to fixed assets, and $6.7 million related to right-of-use assets during the most recent quarter. As of last week, the company had approximately $4.4 million in cash and equivalents.
“Based on the company’s liquidity position … as well as the company’s current forecast of operating results and cash flows (and notwithstanding the Emergency Protective Advance Agreement …), absent any other action, there is substantial doubt about the company’s ability to continue to operate as a going concern,” the filing stated.
BurgerFi added that, in addition to reviewing strategic alternatives, it has also “been seeking additional financing, attempting to sell some or all of its assets or the entire company.” The company continues to discuss potential outcomes with its lenders, but notes there is “no assurance” a solution will be found to meet its financial obligations.
“If the company does not 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 protection under applicable bankruptcy laws,” the company wrote.
According to recent Technomic data, BurgerFi’s sales were down 7.5% from 2022 to 2023, and its unit counts were down 5.3% year-over-year, with the closure of six underperforming stores. Comparatively, the rest of the fast-casual burger sector has been on an upward growth trajectory, with average sales growth of 8%.
After acquiring Anthony’s Coal Fired Pizza in October 2021, the company’s sales stagnated rather than grew, and have been on a downward trajectory since its peak in 2021, according to Technomic data. Earlier this year, the company underwent a CEO change, with former Smashburger president Carl Bachmann now leading the company.
Contact Alicia Kelso at [email protected]
