Florida restaurant operator files for bankruptcy with upto $500 million debt

Photo byBurgerFi Facebook | Canva

BurgerFi International, the fast-casual restaurant operator behind both BurgerFi and Anthony’s Coal Fired Pizza, has filed for Chapter 11 bankruptcy protection, citing debt estimated between $100 million and $500 million. The move comes after the Fort Lauderdale-based company indicated in a filing with the U.S. Securities and Exchange Commission that reorganization might be necessary for the company’s survival.

On September 11, 2024, BurgerFi’s bankruptcy petition was filed with the U.S. Bankruptcy Court for the District of Delaware by Thomas Joseph Francella Jr., a partner at Raines Feldman Littrell LLP. The case is being overseen by Judge Craig T. Goldblatt.

Details of the Bankruptcy Filing

According to the 23-page petition signed by Jeremy Rosenthal, BurgerFi’s Chief Restructuring Officer, the company’s assets are valued between $50 million and $100 million. The filing lists 176 affiliates connected to the company and 114 equity security holders, indicating a complex web of relationships within the company’s ownership structure.

While BurgerFi’s filing for Chapter 11 bankruptcy affects 67 corporate-owned locations, it does not include any franchise locations, allowing most of its restaurants across the U.S., Puerto Rico, and Saudi Arabia to continue operations as usual. Rosenthal explained that the company needed this structured process to address challenges such as inflation, rising food and labor costs, and post-pandemic declines in consumer spending. The restructuring, Rosenthal said, aims to stabilize the business and build on turnaround efforts that began less than a year ago.

Financial Challenges and Unsecured Claims

As part of the bankruptcy process, BurgerFi has outlined 26 of its 50 largest unsecured claims, revealing some of the company’s key creditors. U.S. Foods, a major food distributor, tops the list with a claim of $1.7 million. Other notable claims include $675,000 owed to Lion Point Capital, a private equity firm, and $390,639.60 owed to Sysco Corp., a wholesale food supplier.

In addition to these claims, BurgerFi is dealing with debts related to rent, vendor services, and litigation. Over the past year, the company has been working to address these financial issues through a strategic review led by CEO Carl Bachmann and CFO Christopher E. Jones. Bachmann and Jones, who joined the company in 2023, identified several operational problems, including declining same-store sales, high employee turnover, and an outdated menu.

Efforts to Turn the Business Around

Despite these challenges, Bachmann expressed optimism about the company’s future. "We are confident that this process will allow us to protect and grow our brands," he said, emphasizing the operational turnaround efforts that began in the past year. These efforts included closing 19 underperforming corporate-owned stores and making significant management changes.

However, Bachmann acknowledged that legacy issues continued to weigh on the company, making the bankruptcy filing necessary. "We are grateful for the continued support of our loyal customers, vendors, business partners, and our dedicated team members, who are the heart of the company," he added.

Impact on BurgerFi’s Stock and Future Plans

The financial difficulties have had a notable impact on BurgerFi’s stock, which dropped nearly 22% after the bankruptcy announcement, trading at just 14 cents. The company is also addressing multiple delisting warnings from Nasdaq as part of its broader reorganization efforts.

Founded in 2011 by restaurateurs John Rosatti, David Manero, and Lee Goldberg, BurgerFi began as a premium burger concept in Lauderdale-by-the-Sea. In 2021, the company expanded its portfolio by acquiring Anthony’s Coal Fired Pizza & Wings, adding to its global presence. Today, BurgerFi International operates 144 locations across its two brands, but the bankruptcy filing marks a significant chapter in the company’s journey as it attempts to navigate its financial recovery.

BurgerFi’s next steps will focus on securing additional capital and continuing its operational turnaround while keeping its restaurants open and serving loyal customers.