Financing

Struggling Burgerfi is exploring strategic alternatives

The owner of two fast-casual chains cited its liquidity challenges as it replaced its chairman, gave top executives incentives to stick around and sought assistance from its lenders.
Burgerfi
Burgerfi's owner is looking for a buyer amid a cash crunch. | Photo: Shutterstock.

BurgerFi on Thursday said it is exploring strategic alternatives as the company deals with a liquidity crunch and seeks temporary assistance from its lenders.

The company also said that its chairman, Ophir Sternberg, stepped down from all positions with the company. He was replaced by David Heidecorn, a partner with the private-equity firm L Catterton.

BurgerFi, which owns its flagship brand along with Anthony’s Coal-Fired Pizza, hired the investment banker Kroll Securities to evaluate strategic alternatives.

The company also said that it entered into a forbearance agreement with its lender, TREW Capital Management Private Credit. The lender, along with L Catterton, also agreed to loan up to $4 million total to help BurgerFi during the strategic review process.  

“We are committed to considering all potential strategic alternatives,” Heidecorn said in a statement. “While we are confident in the company’s current operating strategy, we are mindful of the company’s current liquidity challenges and are committed to exploring strategic alternatives that we believe would be in the best interests of the company and its stakeholders.”

The decision follows a brutal period for the company, which has struggled with weak sales coming out of the pandemic.

The company was taken public in the middle of the pandemic through a merger with the blank check company Opes Acquisition Corp., whose chairman was Sternberg. The next year it added Martha Stewart to its board of directors.

But the brand almost immediately ran into problems over reporting requirements. The next year the company acquired Anthony’s, making L Catterton one of the company’s largest shareholders.

Growth at its flagship concept stopped in 2022 and then last year the brand lured Carl Bachmann away from Smashburger to be CEO. But sales have worsened and the company began having problems with its debt.

The company in April defaulted on its credit agreement. BurgerFi closed 14 restaurants last year and another eight locations this year. Same-store sales at the burger chain plunged 13% in the first quarter. Same-store sales at Anthony’s declined 2%. The company reported a loss of $30.7 million last year and $6.5 million in the first quarter. The company had $4.1 million in cash at the end of the first quarter.

Bachmann and CFO Christopher Jones have each received retention agreements to ensure “steady leadership as the company proceeds with the strategic review.”

BurgerFi’s two brands operate 162 locations, most of which are franchised, including the 102-unit BurgerFi and the 60-location Anthony’s.

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