Fast Casual Chain BurgerFi Files for Chapter 11 Bankruptcy #

Fast casual chain BurgerFi has filed for Chapter 11 bankruptcy after months of reporting financial distress. This development adds to the list of fast casual chains facing rough business conditions this year, with several other well-known brands also declaring bankruptcy. Even major fast food chains have reported less foot traffic and lower overall sales, turning to value meal propositions to attract customers.

BurgerFi’s bankruptcy filing indicates that all of its corporate locations will operate normally. Franchise-owned locations are exempt from the bankruptcy filing.

Many businesses in the US file for bankruptcy to wind down some operations, shed debt and save on costs. Chapter 11 bankruptcy allows companies to solve their financial problems through reorganization.

The company previously blamed store closures as the primary cause of its sales decline. Food prices have also hurt BurgerFi, with the company citing 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 reported having limited cash on hand and expected to report a significant loss for the recent quarter.

According to the bankruptcy filing, BurgerFi estimates it had between $100 million and $500 million in liabilities, but only $50 million to $100 million in assets.

BurgerFi had 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.

The chief restructuring officer stated that in the face of a drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs, the company needs to stabilize the business in a structured process. He expressed confidence that this process will allow them to protect and grow their brands, continue the operational turnaround started less than 12 months ago, and secure additional capital.

BurgerFi went public in 2020, and its stock has dropped more than 80% this year. The stock was down 22% and trading for just 14 cents in midday trading on the day of the bankruptcy filing.