After reporting same-store sales were down 11% at BurgerFi and 5% for Anthony’s Coal Fired Pizza during the third quarter, parent BurgerFi International Inc. said it is looking to close underperforming locations as it works to revitalize sales.
“Our third quarter performance is clearly unacceptable and certainly not reflective of what we believe these brands and the people in this organization can accomplish,” said CEO Carl Bachmann, who stepped into the role in July. “Having arrived at the company only 10 days into the quarter, these results are in no way indicative of the work we are doing or where we intend to take the business.”
BurgerFi International closed five underperforming restaurants during the quarter, including one company-owned BurgerFi and three franchised locations, along with one company-owned Anthony’s unit. And more might be on the chopping block as the company continues to re-evaluate its portfolio through the end of the year, he said.
Revenues for the quarter were down 9% to $39.5 million, and the Fort Lauderdale, Fla.-based company widened its net loss to $5 million, compared with a loss of $3.3 million a year ago.
At BurgerFi’s company owned units, same-store sales declined 15%, and declined 9% at franchised units. As of Oct. 2, the company included 110 BurgerFi restaurants, of which 26 were company owned and 84 franchised, as well as 59 company-owned Anthony’s.
“Over the last three months, we’ve been closely reviewing our existing portfolio in addition to our pipeline,” said Bachmann, according to a transcript on AlphaSense/Sentieo. “We need to understand where we’re successful and where we’re struggling, from a real estate, regional or market perspective.”
Going forward, BurgerFi will fill in the Eastern Seaboard in existing markets where there is strong brand awareness, he said. “We will also grow what we view as promising markets.”
So far in the fourth quarter, the company acquired two franchised units in South Florida, to accelerate growth in that core market. And in December, BurgerFi is planning to reopen a flagship restaurant and Better Burger Lab on the Upper East Side of Manhattan.
The company has also launched franchising for Anthony’s. In Miami, the company is planning its first co-branded Anthony’s-BurgerFi location with franchisee NDM Hospitality Services. That deal will bring three franchised Anthony’s locations to Florida over the next two years, including new smaller prototypes for the brand.
Bachmann also outlined a number of steps the company is taking to revitalize sales, some of which are starting to take hold.
The menu has been overhauled, with less popular and process-intense items being removed. BurgerFi has also changed its frying process to produce crisper fries, which has long been a source of complaints, Bachmann said.
And chicken has arrived.
On Nov. 1, BurgerFi added three new types of chicken wings to the menu, as well as four salad bowls. Later this month, new chicken sandwiches will be introduced in company units, including a crispy and a grilled version.
“It’s official, BurgerFi has entered the chicken wars,” said Bachmann, who previously was president of Smashburger. “A fast-casual burger brand should have a 10% to 15% chicken mix. And, until now, we had virtually none. This will allow us to open a whole new audience of chicken fans.”
The company is also accelerating the adoption of new technology, including a point-of-sale system to allow for better inventory control, which will help drive down food costs. At Anthony’s, the company is evaluating the use of handheld tablets by servers, for example.
But not all tech has been embraced. Bachmann said neither employees nor customers are happy with a new AI phone answering bot named Becky, which was added to 60 corporate Anthony’s locations last year, with the goal of handling the roughly 500,000 phone orders that come in annually.
Becky wasn’t doing a very good job, he said. And employees missed the interaction with guests. So Becky was fired.
Eliminating the “costly” system is expected to bring some savings, and Bachmann said the chain is already seeing a boost in call orders and check averages as alienated customers come back.
BurgerFi in September also launched a kids-eat-free promotion for dine in guests on Mondays. Children 12 and under can get a free kids meal with the purchase of an adult meal.
Bachmann projected the burger chain would reach positive comps by the second half of 2024.
But for the year, the company’s guidance includes projections of consolidated same-store sales declines in the low-single digits at company units. The company expects 12 to 15 new franchised restaurants to open in 2023, including one new Anthony’s.
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