BurgerFi files for Chapter 11 bankruptcy
New York
CNN
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Fast casual chain BurgerFi filed for Chapter 11 bankruptcy Wednesday after months of reporting financial distress.
BurgerFi is another casualty of the rough business conditions hitting fast casual chains this year, which included Rubio's, Buca di Peppo and Red Lobster also declaring bankruptcy. Even if not filing for bankruptcy, McDonald's, Starbucks, Burger King and Wendy's have all reported less foot traffic and lower overall sales, turning to value meal propositions to attract customers.
BurgerFi, filing for bankruptcy protection in the U.S. District Court for the District of Delaware, said all of its corporate locations will operate normally. Franchise-owned locations are exempt from the bankruptcy filing, the company said in a press release.
Many businesses in the US file for bankruptcy to wind down some operations, shed debt and save on costs. A common route is Chapter 11 bankruptcy, which allows the company to solve its financial problems through reorganization.
BurgerFi previously blamed store closures as the primary cause of its sales decline. Food prices have also hurt BurgerFi, the company cited a price increase in chicken wings as well as higher wages for its increase in operating expenses.
The Florida-based chain is also the parent company of Anthony's Coal Fired Pizza and has 51 pizza stores along with its 93 burger restaurants.
This filing is not an unexpected development. In August, the company warned it was running out of cash and that it may need to file for bankruptcy in the future.
The company said it had just $4.4 million on hand as of August 14,andexpected to report a loss of $18.4 million for the quarter ending July 1 (BurgerFi still hasn't published its earnings report and did not respond to CNN's request for comment). In the same quarter in 2023, the chain reported a loss of only $6 million.
According to the bankruptcy filing Wednesday, BurgerFi estimates it had between $100 million and $500 million in liabilities, but only $50 million to $100 million in assets.
BurgerFi had also previously warned it may seek bankruptcy protection if it did not receive enough cash from its senior lender, outside providers or by selling off assets.
The company had also hired a chief restructuring officer.
"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," said Jeremy Rosenthal, chief restructuring officer, in a statement. "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."
BurgerFi (BFI) went public in 2020, and its stock has dropped more than 80% yearthis year. The stock was down 22% and trading for just 14 cents in midday trading on Wednesday.
