FORT LAUDERDALE - BurgerFi International, Inc. (NASDAQ: BFI, BFIIW), the parent company of Anthony's Coal Fired Pizza & Wings and the BurgerFi restaurant chains, has filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filing, announced today, is aimed at restructuring the corporate-owned locations of both brands to preserve their value for stakeholders.
The Chapter 11 proceedings will not affect the 144 locations across the United States, Puerto Rico, and Saudi Arabia, which will continue to operate as usual. This includes both corporate and franchisee-owned outlets, with the bankruptcy filing only involving the 67 corporate-owned restaurants.
Chief Restructuring Officer Jeremy Rosenthal cited a significant drop in consumer spending post-pandemic, compounded by sustained inflation and rising food and labor costs, as reasons for the restructuring. Rosenthal expressed confidence that this process would allow for the protection and growth of the brands.
In July 2023, Carl Bachmann and Christopher E. Jones were appointed CEO and CFO, respectively, to address operational challenges and implement a strategic plan. Their efforts led to the closure of 19 underperforming corporate-owned stores and a reduction in operating costs. Despite these measures, the company deemed the Chapter 11 filing necessary to continue its operational turnaround.
Bachmann acknowledged the early positive signs from the turnaround plan but noted that the legacy challenges necessitated the bankruptcy filing. He expressed gratitude for the ongoing support from customers, vendors, business partners, and employees.
The company intends to file customary "first day" motions to maintain normal operations, including ensuring the payment of employee wages and benefits and the continuation of customer programs.
Advisors proposed for the restructuring process include Raines Feldman Littrell LLP and Force Ten Partners, with Jeremy Rosenthal as the Chief Restructuring Officer, and Sitrick And Company as the strategic communications advisor.
BurgerFi International is a multi-brand restaurant company that operates and franchises fast-casual and premium-casual dining concepts globally. The company's brands, Anthony's and BurgerFi, have received accolades for their quality food offerings.
This news is based on a press release statement from BurgerFi International.
In other recent news, BurgerFi International has been navigating a series of strategic and financial developments. The company has received two noncompliance notices from Nasdaq, one regarding a late quarterly report and the other concerning the composition of its board committees. BurgerFi has also secured an Emergency Protective Advance Agreement, receiving a $2.5 million advance from TREW Capital Management Private Credit 2 LLC.
In a settlement with Lion Point Capital, the company agreed to pay $1.35 million in installments and issue 300,000 shares of Series A Preferred Stock. Amidst these changes, BurgerFi transitioned to the Nasdaq Capital Market and appointed David Heidecorn as Chairman of the Board.
Despite a decrease in Q1 revenues to $42.9 million and a drop in restaurant-level profit margin to 12.2%, BurgerFi projects total revenue of $107 million to $180 million for fiscal year 2024, with adjusted EBITDA between $7 million and $9 million. These recent developments reflect BurgerFi's strategic and financial landscape as it navigates through its current challenges.
InvestingPro Insights
In light of BurgerFi International's recent Chapter 11 filing, a closer look at the company's financial health through InvestingPro's real-time data and insights may provide stakeholders with a clearer picture of the situation. According to InvestingPro, BurgerFi is currently operating with a significant debt burden and has been quickly burning through cash. These challenges are reflected in the company's negative P/E ratio, which stands at -0.14, indicating that investors have concerns about the company's profitability.
The data from InvestingPro also shows a market capitalization of just 3.86 million USD, which is relatively small, suggesting that the company's equity value has been substantially diminished. Additionally, BurgerFi's Price / Book multiple is at a low of 0.1 as of the last twelve months ending Q1 2024, which could be seen as a potential value opportunity for investors if the company can successfully restructure and return to profitability. However, the company's revenue has declined by 6.83% over the same period, further highlighting the financial difficulties BurgerFi faces.
Despite these challenges, BurgerFi's stock has shown a significant return over the last week, with a 26.76% price total return, according to InvestingPro. This may indicate some investor optimism regarding the potential outcomes of the restructuring process. For those interested in a deeper analysis, InvestingPro offers additional insights and tips, including the company's cash flow issues and short-term obligations exceeding liquid assets, which are critical considerations for evaluating the company's short-term financial stability.
For a comprehensive understanding of BurgerFi's financial position and future prospects, readers can find more than 15 additional InvestingPro Tips at https://www.investing.com/pro/BFI. These tips could prove invaluable for investors and other stakeholders as BurgerFi navigates through its restructuring process.
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