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Diving certificate:
- The BurgerFi management has considerable doubts about the Company’s ability to continue operations due to the Company’s liquidity position and the forecast of weak The chain said in a document filed with the U.S. Securities and Exchange Commission (SEC) last week that operating results and cash flows were positive.
- The restaurant chain could consider bankruptcy protection if it does not receive “adequate assistance” from senior lenders or an injection of liquidity, including from outside providers or through the sale of company assets.
- BurgerFi said in May that its liquidity problems forced it to Consider strategic alternativeswhich could include additional financing, a sale of all or a portion of its assets, or other measures to manage its cash flow.
Diving insight:
BurgerFi’s financial situation is getting worse.
A net loss of $18.4 million is expected for the quarter ended July 1, compared to a loss of $6 million for the same period in 2023. The increase was primarily due to lower operating income, higher general and administrative expenses, and higher restructuring costs. The company had $4.4 million in cash and cash equivalents as of August 14.
The chain also expects restaurant sales to decline by $1.8 million, or 4%, last quarter from a year ago, primarily due to sales declines at BurgerFi and sister brand Anthony’s Coal Fired Pizza and Wings. The company said it closed underperforming BurgerFi locations, but did not say how many locations were closed.
If the company’s senior lender declares that the debt is immediately due and payable, the company would be unable to repay the debt and “the lender could seize its security interests and liquidate or take possession of some or all of the assets of the company and its subsidiaries,” the filing states. This would force the company to limit or cease operations.
“There is no assurance that the Company will be able to restructure its obligations, obtain additional financing and/or sell assets on terms that will enable the Company to meet its current obligations,” BurgerFi added.
The chain had secured an emergency loan of $2.5 million from its lenders earlier this month, but this amount is far from enough to maintain operations despite mounting losses.
BurgerFi, which went public in 2020 after merging with a SPAC, has struggled in recent years as its net losses persisted. In 2022, net losses exceeded $100 million before improving to $30 million last year.
In 2023, the chain hired Carl Bachmann as CEO and Christopher Jones as CFO to restructure the company.
