Dive Brief:
- BurgerFi saw a severe contraction in sales in Q1 2024, with same-store sales down 13% year over year at the burger brand and down 2% at Anthony’s Coal Fired Pizza & Wings, according to the company’s earnings release. Systemwide sales fell by 17% at BurgerFi and 1% at Anthony’s.
- BurgerFi also closed a net six stores, with the brand’s unit count falling from 108 on Jan. 1 to 102 on April 1. Anthony’s unit count was unchanged at 60.
- CEO Carl Bachmann attributed the declines to “a challenging consumer environment,” which, he said, also impacted competitors. Bachmann said the severity of BurgerFi’s sharp drop in sales was due to “unfavorable weather in key markets.”
Dive Insight:
Despite the sales drop, BurgerFi is projecting revenue between $170 and $180 million for the year, according to the earnings release. That level would be roughly in line with BurgerFi’s total revenues for the last two years, according to its most recent 10-K.
Christopher Jones, the CFO at BurgerFi, said BurgerFi and Anthony’s were “underway with the rollout of new inventory control systems for both brands and a new point-of-sale platform for Anthony’s,” and that those technologies would allow BurgerFi to streamline its operations and recover from the sales slump. Operating expenses as a fraction of sales across the two brands increased as a result of hourly labor cost increases and “lower leverage on sales,” with Anthony’s expenses rising 3.6% and BurgerFi’s a staggering 8.5%.
The sales decline lapped a difficult quarter, as Q1 2023 saw BurgerFi’s same-restaurant sales fall by 6% at company-owned BurgerFi locations and 3% at franchised BurgerFi units. Same-store sales grew 3% at Anthony’s in Q1 2023.
According to the earnings release, the company’s labor turnover has improved marginally, with Anthony’s hourly turnover comparable to the rest of the industry, and BurgerFi’s still worse, but approaching industry benchmarks. Bachmann said the headline figures for same-store sales concealed some better news.
“We saw a sequential improvement through the quarter, beginning with a slight improvement in February followed by a more substantive recovery in March at both brands, outside of Florida,” Bachmann said in the earnings release. However, 86 of the company’s 162 restaurants are located in Florida.
The 102-unit burger chain has been looking for ways to boost its flagging fortunes for a while. In October, BurgerFi signed an agreement with Apple Cinemas to open a unit in a movie theater in upstate New York following a tough quarter for sales. The company has been looking to take advantage of co-branding since 2022. Bachmann joined the company in 2023 from Smashburger, with a mandate to bolster its sales and operations.
