In a year marked by financial turbulence for numerous chain restaurants, another name has been added to the list of struggling establishments. BurgerFi, the popular burger chain, has recently filed for Chapter 11 bankruptcy. This move comes as a result of escalating food costs, increased operating expenses, and declining sales, exacerbated by the closure of several store locations.
According to recent reports, including a filing with the U.S. Securities and Exchange Commission, BurgerFi’s acquisition of Anthony’s Coal Fired Pizza & Wings in 2021 has not alleviated the company’s financial woes. For the quarter ending July 2024, BurgerFi and its acquired brand saw a 4% drop in sales compared to the previous year. The company’s financial situation is further highlighted by its debt-to-asset ratio, with assets estimated between $50 million and $100 million and liabilities projected to range from $100 million to $500 million.
The bankruptcy filing pertains to corporate-owned locations, leaving franchise operations unaffected. Nonetheless, the company assures that affected locations will remain operational throughout the bankruptcy process.
Inflation and Rising Costs Taking Their Toll
The financial distress facing BurgerFi is not an isolated issue but part of a broader trend impacting the restaurant industry. Inflation has been particularly harsh on dining establishments, which have seen higher food prices compared to grocery stores. As a result, many consumers are opting to stay in rather than dine out, contributing to the financial strain on restaurants. The Consumer Price Index for restaurant food was 4.1% higher in July 2024 than the same month the previous year, according to data from the USDA.
While the situation remains challenging, BurgerFi’s chief restructuring officer has expressed optimism. The officer indicated confidence that the Chapter 11 process will provide the necessary framework to protect and revitalize the brand, as well as secure additional capital for future growth.
Despite this hopeful outlook, the possibility remains that BurgerFi could become one of the chain restaurants that may not survive the turbulent financial landscape of 2024.
