BurgerFi defaults on its credit agreement

The parent company of BurgerFi and Anthony's Coal Fired Pizza & Wings fell out of compliance with its loan agreement amid weak sales and financial losses. But the CEO insists turnaround efforts are taking hold.
BurgerFi restaurant
Systemwide same-store sales at BurgerFi were down 10% in the fourth quarter. | Photo: Shutterstock.

BurgerFi International Inc. on Monday said that it has defaulted on its credit agreement amid steep sales declines and financial losses, but company CEO Carl Bachmann expressed confidence that turnaround efforts will show results by the second half of this year. 

The Fort Lauderdale, Florida-based parent to both the BurgerFi and Anthony’s Coal Fired Pizza & Wings brands said it was not in compliance with covenants on a $51.3 million loan that required a certain liquidity threshold. The company is in active conversations with its lender and has delayed the filing of its 10-K report—though it is expected to be filed by the end of this week.

For the Jan. 1-ended fourth quarter, revenues declined to $41.5 million, compared with $45.2 million a year ago. Same-store sales were down 10% for BurgerFi systemwide (and down 14% at company-owned units). For Anthony’s, same-store sales declined 3%.

The company’s net loss for the quarter, however, narrowed to a loss of $10.6 million, compared with a loss of $26.2 million a year ago.

For the year, the net loss improved to $30.7 million, compared with a loss of $103.4 million in 2022. But revenues were down for the year at $170.1 million, compared with $178.7 million the prior year.

It was a challenging year for both brands, said Bachmann, a turnaround specialist who joined the company in July 2023 after helming fast-casual competitor Smashburger.

He has implemented a plan around five priorities, including a look at company infrastructure, technology upgrades, menu enhancements, setting “gold standards,” and redefining the portfolio.

That plan is starting to show results, he said. Bachmann predicted same-store sales and earnings before interest, taxes, depreciation and amortization (EBITDA) will be positive by the second half of 2024.

“I am more confident than ever that I made the right decision to join the company,” he said. “Sales and margin improvement will not happen overnight. But we are laying the foundation to grow upon.”

Fourth-quarter same-store sales improved sequentially compared with the third quarter, he noted, and trends in March were flat to slightly positive, adjusting for the Easter shift, he said.

This month, the company plans to roll out a new Toast POS and management system that will allow servers to use hand-held tablets for taking orders, and provide data on key metrics, like speed of service.

The company has been working on “right-sizing” the menu at BurgerFi, but has also launched chicken wings and grilled and crispy chicken sandwiches.

“We want to be a part of the chicken wars and have already seen a 4% to 5% lift in overall mix,” said Bachmann.

In fiscal 2023, 14 underperforming locations of BurgerFi closed, including five franchised units during the fourth quarter. But eight BurgerFi units were opened for a total of 168 restaurants, including 108 BurgerFi (28 company-owned and 80 franchised) and 60 Anthony’s (including one franchised unit).

The company also acquired two franchised units of BurgerFi in South Florida to “solidify our presence in core markets,” Bachmann said. That’s despite an overall “softer demand” in the Florida market. Stores in the Northeast and elsewhere have fared better, Bachmann said.

The BurgerFi brand has an opportunity to expand with non-traditional locations, he contends.

Last year, the Apple cinema chain opened a franchised BurgerFi unit that allows moviegoers to order from the restaurant and have burgers delivered to their seats. A second Apple cinema location is scheduled to open this year in Rhode Island, and Bachmann said, “We see an opportunity to expand to most of their locations east of the Rockies.”

Airports are also a target for BurgerFi, and a location is slated to open in the Fort Lauderdale airport later this year.

And last year the first co-branded BurgerFi/Anthony’s location opened in Kissimmee, Florida, which Bachmann said was “off to a very strong start.” Two more co-branded units are scheduled to open before the end of 2025.

In addition, the company has signed a three-unit franchise agreement for Anthony’s in Jacksonville, Florida.

So far this year, one franchised and one corporate BurgerFi opened, the latter a flagship location in Manhattan that offers a Better Burger Lab experience and exclusive limited-time offerings.

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