Operations

Struggling BurgerFi shutters 8 more restaurants

After closing 14 units last year, the fast-casual burger chain continued "right-sizing" its portfolio in the first quarter, when its same-store sales plunged 13%.
BurgerFi
Despite the closures, BurgerFi International Inc. expects to open 10 to 15 new restaurants, mostly franchised, this year. | Photo: Shutterstock.

BurgerFi’s parent company closed eight more restaurants while first-quarter same-store sales at its flagship brand plunged in the first quarter, though executives insist that its turnaround efforts are taking hold.

CEO Carl Bachmann said Wednesday the closures were part of an ongoing effort to right-size the portfolio for the fast-casual burger brand. As of the end of the April 1-ended quarter, there were 102 BurgerFi units, of which 27 were company-owned and 75 were franchised. Closed during the quarter were six franchised locations and two company units.

Parent company BurgerFi International Inc. also shuttered a chunk of units during fiscal 2023, when 14 underperforming units were closed, including five franchised BurgerFi units during the fourth quarter.

“We continue to evaluate our portfolio with a close look at cash flow and profitability,” Bachmann said during the earnings call, according to a transcript on the financial services site Alpha-Sense.

BurgerFi’s systemwide same-store sales declined 13% in the first quarter.

Bachmann blamed the weather but also the challenging consumer environment that has impacted the industry as a whole. However, like other chains, BurgerFi saw trends improve sequentially through the quarter, starting with a slight improvement in February that was followed by a more substantive improvement in March—except in Florida where cooler weather affected travel and softened demand.

The upward trend through the quarter indicate that turnaround efforts are taking hold, though the real benefits will not likely be seen until the second half of the year, Bachmann said.

A focus on infrastructure, including a new inventory and labor management system, has helped stabilize turnover, reduced overtime and improved throughput, for example.

A BurgerFi unit in Florida tested the new Heinz remix machine, which customizes sauces. Based on success there, Bachmann said the machines will be rolled out to four more locations in Florida in coming months.

In March, BurgerFi opened its flagship Better Burger Lab concept in New York City, which will be a test site for menu innovation, where loyal guests can get involved in the R&D process.

“We recognize that BurgerFi has lost some of its cachet and market share over the years, not due to any one major misstep, but rather a collection of smaller issues that have impacted us over time,” said Bachmann. “The Better Burger Lab represents our commitment and thoughtful innovation as we continue exploring creative ways to elevate the better burger experience for our guests.”

One of the ways is the addition of more chicken to the menu.

With chicken sandwiches hugely popular industry-wide, BurgerFi has added both grilled and fried chicken sandwich options, and the chain will roll out a new upgraded product this summer, with the hope that chicken could become 10% to 12% of the menu mix.

At the 60-unit sister brand Anthony’s Coal Fired Pizza & Wings, meanwhile, same-store sales dropped 2% in the first quarter. But Bachmann said that concept is growing.

The almost-all-company-owned Anthony’s opened its first franchised location last year—a co-branded unit with BurgerFi. The same franchisee is planning to open a second in Miami later this year, and a third in 2025.

Bachmann said a second franchise agreement has been signed that will add three more franchised units to the Jacksonville, Florida, market by next year.

Parent company BurgerFi International Inc. said revenues declined during the quarter to $42.9 million, compared with $45.7 million a year ago, though the company narrowed its net loss to $6.5 million, compared with a loss of $9.2 million the prior year. At the end of 2023, the company said it was having trouble staying in compliance on its loan agreement.

Still, for the year, the parent company expects to add 10 to 15 new restaurants, of which nine to 14 will be franchised. Same-store sales for the year are projected to be up at corporate locations in low-single digits.

 

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