BurgerFi says it may file for bankruptcy
The burger wars could be facing another casualty.
Fast-casual chain BurgerFi has warned investors that it could be forced to file for bankruptcy in a filing with the Securities and Exchange Commission, saying “if the Company does not receive adequate relief from its senior lender and additional sufficient liquidity from potential liquidity providers or from sales of the Company’s assets to meet its current obligations, it may seek protection under applicable bankruptcy laws.”
The warning came as BurgerFi—which has 102 locations nationwide, along with 60 Anthony’s Coal Fired Pizza locations—failed to file its latest quarterly earnings report. The company said it expects to report a net loss of $18.4 million, however, compared to a net loss of $6 million a year ago. Higher salaries and slower sales, along with the rising price of chicken wings, are blamed for the decline.
BurgerFi says it estimated its cash on hand to be $4.4 million and noted, based on liquidity position, “there is substantial doubt about the Company’s ability to continue to operate as a going concern.” It’s currently in the process of seeking a buyer for some or all of its assets.
BurgerFi first indicated things weren’t going well in May, saying it was pursuing “strategic alternatives” due to its cash flow problems. On Aug. 9, it received $2.5 million in emergency funding from a lender, but warned that might not be enough to pay its bills.
The company’s stock was down 27% to just 27 cents per share in midmorning trading Tuesday. In July of 2020, it traded for nearly $18 per share.
The chain’s troubles come as several fast-food chains have slashed prices in recent months to win back customers who have grown frustrated with rising prices. This year has seen plenty of claims of “McFlation,” which followed reports of about $8 chicken sandwiches and $18 Big Mac meals. McDonald’s CEO Joe Erlinger addressed that in July, issuing a public letter to counter what he called the “viral social posts and poorly sourced reports that McDonald’s has raised prices significantly beyond inflationary rates.”
