US Burger Chain Faces Possible Bankruptcy and Closures Amid Financial Struggles
A prominent US burger chain, BurgerFi, is the latest restaurant chain to consider bankruptcy and possible closures as it grapples with plummeting sales and mounting financial losses. Often branded as an upmarket alternative to McDonald’s, BurgerFi has enlisted the help of financial experts to explore options to salvage the business.
In a bid to avert total collapse, BurgerFi’s management is contemplating Chapter 11 bankruptcy. This legal framework would enable the company to extricate itself from the leases of its underperforming locations and liquidate assets, similar to the strategy employed by Red Lobster in the previous month.
The year has been fraught with difficulties for BurgerFi, beginning with its delisting from the Nasdaq in January. The company’s share price had fallen so drastically that it dropped below the $1 minimum threshold required by the stock exchange, sinking to just 32 cents by Monday. This financial strain was further compounded in April when the chain defaulted on a loan, highlighting the severity of its economic troubles.
In a subsequent earnings update, BurgerFi revealed that its sales for the first quarter of 2024 had decreased by 13 percent compared to the same period in the previous year. The company reported losses exceeding $6 million for the quarter, following a double-digit decline in sales during the final quarter of 2023. Compounding these issues, BurgerFi’s subsidiary, Anthony’s Pizza, which operates 60 locations, is also experiencing significant financial distress.
David Heidecorn, BurgerFi’s newly appointed chairman, announced a ‘strategic review’ of the company’s operations on Thursday. Heidecorn emphasized the commitment to exploring all potential strategic alternatives but acknowledged the substantial financial challenges facing the chain. He cautioned that the outcome of this review might not be favorable.
BurgerFi’s website boasts about its offerings, stating: “We don’t just serve great burgers. Since 2011, we’ve been serving next-level burgers made with fresh ingredients from the top suppliers across the country with an uncompromising standard for flavor and quality in everything we do.” However, these high standards have not shielded the company from the harsh realities of its financial situation.
A BurgerFi spokesperson declined to provide any additional statements regarding the company’s ongoing crisis.
BurgerFi is not alone in its struggles. The recent wave of bankruptcies and closures has affected various restaurants and retailers. Red Lobster, for instance, has shuttered nearly 100 locations and filed for bankruptcy in May. Similarly, the upscale coffee and grocery chain Foxtrot abruptly announced in early April that it would close all its stores immediately, leaving employees and customers in shock. Foxtrot, founded in Chicago in 2014, had expanded to 33 locations across Chicago, Austin, Dallas, and Washington DC.
The retail sector has also felt the impact, with Express, a well-known mall staple, filing for bankruptcy in April and announcing plans to close 95 of its outlets. This series of closures and bankruptcies reflects a broader trend of financial instability across various segments of the food and retail industries.
As BurgerFi navigates its turbulent financial waters, the outcome of its strategic review will be crucial in determining its future. Whether the chain can find a viable path forward or join the growing list of bankruptcies and closures remains to be seen. The unfolding situation at BurgerFi serves as a stark reminder of the volatile nature of the restaurant industry, particularly in challenging economic times.
