BurgerFi International Inc. has filed for Chapter 11 bankruptcy protection, following a decline in consumer spending, macroeconomic headwinds and operational challenges.
“In the face of a drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs, we need to stabilize the business in a structured process,” said BurgerFi Chief Restructuring Officer Jeremy Rosenthal.
In alignment with the restaurant industry’s recent struggles, BurgerFi has been impacted by inflation. According to the company’s balance sheet, it has a total of $200.5 million in debt, with $82.6 million categorized as current debt.
BurgerFi secured $3.5 million in debtor-in-possession financing from an affiliate of TREW Capital Management, but the bankruptcy proceedings will still move forward.
Of the 144 locations of both fast-food brands throughout the U.S., Puerto Rico and Saudi Arabia, the bankruptcy filing only applies to 67 corporate-owned locations and excludes franchisee-owned locations.
The bankruptcy comes at a time when consumer behavior has shifted since COVID-19, with a rise in online ordering and delivery. Many consumers now prefer ordering online, moving away from dining in restaurants.
Additionally, premade meal packs have become a dominant trend. The slowdown in consumer spending has not only affected BurgerFi, but also fast-food chains like McDonalds, Starbucks and more.
The stock price of BurgerFi has fluctuated in recent years, as it reached a high of $17.93 on Jan. 19, 2020, and was $0.13 as of Sept. 14. BurgerFi’s stock price has dropped significantly in 2024, with a 75.31% decline from $0.81 on Jan. 2 to $0.20 on July 24.
BurgerFi was founded in Florida in 2011 and became known as one of the highest-rated burger restaurants in the fast-food industry and widely known for its sustainability and eco-friendly practices.
As the company navigates the bankruptcy proceedings, BurgerFi CEO Carl Buchanan stated that the company will ensure the transition does not impact employees, customers or franchise partners.
“We are very pleased that we received approval of our key motions to support our continued operations including employee wages and benefits, cash management and customer programs.”
