Numerous chain restaurants have filed for bankruptcy in 2024, and it appears a new establishment has joined the ranks of those companies experiencing dire financial issues. As reported by CNN, BurgerFi filed Chapter 11 bankruptcy, due to a combination of rising food costs, higher operating expenses, and decreasing sales due to the closure of store locations. Chapter 11 bankruptcy involves the creation of a repayment plan to reorganize debt.
BurgerFi acquired Anthony’s Coal Fired Pizza & Wings in 2021, and both establishments experienced a 4% decrease in sales figures during the financial quarter ending in July 2024 compared to the same time last year (per a filing with the U.S. Securities and Exchange Commission). BurgerFi’s debt-to-asset ratio illustrates its poor financial condition, as the company claims between $50 million and $100 million in assets, while its debt is projected to range between $100 million and $500 million. The filing affects corporate-owned locations, while BurgerFi franchise locations are excluded. However, the company claims that affected locations will continue to operate during the bankruptcy process.
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Inflation A Concern For BurgerFi And Other Establishments
BurgerFi was aware that it may be headed toward a bankruptcy filing back in August 2024, when the company stated it would need financial assistance to continue operating. The restaurant is in league with many other establishments facing financial issues due to rising expenses. Recently, inflation has hit dining establishments harder than it’s impacted grocery stores, which has caused many consumers to bid farewell to dining out as restaurant prices exceed groceries. Food inflation is still taking a toll on consumers, with the Consumer Price Index for restaurant food 4.1% higher in July 2024 than it was at the same time last year (via the USDA).
Despite the concerning financial climate, BurgerFi’s chief restructuring officer Jeremy Rosenthal remains positive, telling CNN, “We are confident that this process will allow us to protect and grow our brands and to continue the operational turnaround started less than 12 months ago and secure additional capital.” Despite this positivity, it’s nonetheless quite possible that BurgerFi is one of the chain restaurants we might sadly lose in 2024.
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Source Agencies
