BurgerFi International Inc.’s Chapter 11 bankruptcy filing on Wednesday comes as no surprise to anyone following the company since it went public in 2020.
The Ft. Lauderdale, Florida-based parent to the BurgerFi and Anthony’s Coal Fired Pizza & Wings brands has been struggling to find traction, despite investments in a turnaround that company officials continue to say is coming.
On Wednesday, the company said it has shuttered another 19 underperforming company-owned restaurants, including 10 Anthony’s and nine BurgerFi units.
The reworking of the portfolio has been an ongoing process since CEO Carl Bachmann took the helm in 2023. The company closed 14 underperforming restaurants last year, followed by another eight in the first quarter this year.
The now 93-unit BurgerFi includes 76 franchised and 17 company-owned locations. The 51-unit Anthony’s is almost entirely company-owned, with one franchise unit—a dual-branded location that opened in Florida last year.
On Wednesday, the company said the 144 restaurants that remain are continuing normal operations.
Jeremy Rosenthal, who was hired as chief restructuring officer last month, in a statement blamed the bankruptcy on the macroeconomic climate since the pandemic.
“BurgerFi and Anthony’s Coal Fired Pizza & Wings are dynamic and beloved brands, and 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,” Rosenthal said. “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.”
Bachmann, meanwhile, the former Smashburger CEO who was hired last year to get BurgerFi back on track, said he was faced with “legacy operational challenges,” including declining same-store sales, high employee turnover and a stale menu.
So how did BurgerFi get here?
It began in 2011, when the “better-burger” chain was founded in Lauderdale-by-the-Sea, Florida, by John Rosatti. The name BurgerFi referred to the concept’s plan for “BurgerFication,” or “redefining the way the world eats burgers,” with all-natural meats raised humanely and without the use of antibiotics.
In 2018, a special purpose acquisition corporation, or SPAC, named Opes Acquisition Corp. raised more than $101 million with an initial public offering. And in December 2020, that blank-check company merged with BurgerFi International LLC to create what is now BurgerFi International Inc.
At the time, the fast-casual better-burger concept had 119 franchised and company-owned units, and the plan was to grow by franchising.
In 2020, the company boasted average unit sales of $1.6 million for the burger brand. Lifestyle media maven Martha Stewart was on the board and headed the brand’s Product & Innovation Committee. (She stepped down earlier this year.)
The goal at the time was to build a multi-brand restaurant company.
So in 2021, BurgerFi International acquired the casual-dining brand Anthony’s from private-equity firm L Catterton in a $156.6 million deal. Anthony’s was known for “well-done” pizza baked in a 900-degree coal-fired oven, as well as wings, beer and wine.
It was described as an “opportunistic buy” at the time. The pizza concept was founded in 2002 in Ft. Lauderdale, and, though the chain was entirely company-owned, BurgerFi planned to grow it as a franchise brand.
But, from the beginning as a public company, BurgerFi repeatedly struggled to make timely financial disclosures, threatening to fall out of compliance with Nasdaq guidelines. The company said it needed additional time to make sure its financial statements were classified correctly, but the reports were delayed every year, including the most recent quarter. (At the end of August, the company received a notice of delisting from Nasdaq.)
Bachmann arrived in mid-2023 with a strategic plan designed to evolve the two-brand platform. One of his first pledges was to improve BurgerFi's fries. But broader efforts included an evaluation of company infrastructure, technology upgrades, other menu enhancements, setting “gold standards” and redefining the portfolio.
Two franchised units were acquired by the company, but Bachmann also saw the need to prune underperforming locations. In 2023, BurgerFi closed 14 restaurants.
But investments were also made. A new Toast point of sale system system was rolled out, for example, and servers were given hand-held tablets for taking orders. BurgerFi added chicken wings and crispy chicken sandwiches to the burger chain’s menu—briefly rebranding the chain ChickenFi in a promotional stunt.
Not all tech investments worked. The company rolled out an AI answering bot named Becky to handle phone orders for all Anthony’s locations in 2022. But Becky was later fired. The company said employees missed the interaction with guests.
Bachmann saw an opportunity in nontraditional locations for BurgerFi. A unique franchised location of BurgerFi opened last year in partnership with the Apple cinema chain, for example, offering moviegoers the opportunity to have burgers delivered to their seats.
The BurgerFi brand also returned to New York City, opening a flagship Better Burger Lab that would serve as a test site for menu innovation, where guests could get sneak peeks at new dishes and exclusive offerings.
In December, franchising for Anthony’s finally came to fruition. The first franchised Anthony’s opened in Kissimmee, Florida. It was also the first co-branded Anthony’s/BurgerFi location, and the franchisee planned two more Anthony’s locations that were scheduled to open before the end of 2025.
Despite the company’s efforts to create positive news around the brands, BurgerFi’s financial struggles remained a constant.
Bachmann said at the time the company’s struggles were not from one decision, but “death by a thousand cuts,” saying the BurgerFi brand had lost cachet and market share.
Systemwide same-store sales dropped 7% for BurgerFi and decreased 1% for Anthony’s in fiscal 2023.
In the first quarter this year, BurgerFi’s systemwide same-store sales declined 13%, which Bachmann blamed in part on bad winter weather. Even then, the CEO remained optimistic that the turnaround efforts would show results, still projecting that same-store sales for the year would be positive, in the low-single-digit range.
The company has yet to file second-quarter earnings results, but said in a preliminary report that its net loss had tripled to $18.4 million for the July 1-ended quarter, compared with a net loss of $6 million a year ago. T
But signs of impending bankruptcy had already begun.
BurgerFi in April disclosed that it had defaulted on its loan. There was a shareholder lawsuit tied to the SPAC deal that was settled in July.
That settlement cleared the way for BurgerFi to explore strategic alternatives, which the company announced in May.
At that point, the company’s debt had been acquired by TREW Capital Management, led by former Famous Dave’s CEO Jeff Crivello, who has also acquired Rubio’s debt during that chain’s bankruptcy. Rubio’s was sold to TREW when no buyers came forward.
Now it seems BurgerFi could see a similar fate.
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