Dive Brief:
- BurgerFi management has substantial doubt over its ability to continue operating due to the company’s liquidity position and forecast of weak operating results and cash flows, the chain said in a document filed last week with the U.S. Securities and Exchange Commission.
- The restaurant chain may consider bankruptcy protection if it does not receive “adequate relief” from senior lenders, or an injection of liquidity, including from outside providers or through the sale of company assets.
- BurgerFi said in May that its liquidity issues were pushing it to consider strategic alternatives, which could include additional financing, a sale of all or some of its assets, or other means of managing its cash flow.
Dive Insight:
BurgerFi’s financial situation is only getting worse.
It expects to report net losses of $18.4 million for the quarter ending July 1 compared to a $6 million loss during the same period in 2023. The increase was driven primarily due to lower operating income, higher general and administrative expenses and larger restructuring costs. The company had $4.4 million in cash and cash equivalents as of Aug. 14.
The chain also expects to report restaurant sales declines of $1.8 million, or 4% year-over-year, last quarter. This was driven largely by same-store sales declines at BurgerFi and sister brand Anthony’s Coal Fired Pizza and Wings. The company said it closed underperforming BurgerFi- corporate locations, but the filing didn’t say how many locations were shuttered.
If the company’s senior lender declares that debt is due and payable immediately, the company would be unable to repay, and “the lender could foreclose on its security interest and liquidate or take possession of some or all of the assets of the company and its subsidiaries,” according to the filing. This would require the company to curtail or cease operations.
“There is no assurance that the Company will be able to restructure its obligations, obtain additional financing, and/or sell assets on terms and conditions that will permit the Company to meet its current obligations,” BurgerFi added.
The chain secured an emergency protective advanced agreement with its lenders of $2.5 million earlier this month, but that is nowhere near enough to sustain operations with growing losses.
BurgerFi, which went public in 2020 following a merger with a SPAC, has struggled during the last few years as its net losses have persisted. In 2022, net losses topped $100 million, before improving to $30 million last year.
In 2023, the chain hired Carl Bachmann as CEO and Christopher Jones as CFO to help turn around the business.
