BurgerFi International Inc., the parent company of BurgerFi and Anthony's Coal Fired Pizza & Wings, has filed for Chapter 11 bankruptcy protection in Delaware. The fast-casual restaurant chain, which listed up to $500 million in debt, cited skyrocketing operational costs as a major factor in its financial struggles.

BurgerFi Filed for Bankruptcy : Debt and Financial Woes

The bankruptcy filing comes about a month after the Florida-based company disclosed in a U.S. Securities and Exchange Commission (SEC) statement that it was facing significant financial difficulties. BurgerFi, which also owns Anthony's Coal Fired Pizza & Wings, reported sharp increases in costs related to employee wages and the rising price of chicken for its pizza and wings business.

As of August 16, BurgerFi stated it had only $4 million in cash reserves, raising doubts about its ability to remain operational. Despite these challenges, the company expressed optimism that the bankruptcy process would provide an opportunity to restructure its debt and secure new capital.

Statement of Confidence

BurgerFi, known for branding its burgers with its logo, said in a Wednesday statement that the restructuring would help the company turn around its operations. Chief Restructuring Officer Jeremy Rosenthal highlighted the negative impact of post-pandemic consumer spending declines and persistent inflation on both brands.

"BurgerFi and Anthony's Coal Fired Pizza & Wings are dynamic and beloved brands. To stabilize our business, we need to go through a structured process that allows us to continue our operational turnaround," said Rosenthal.

BurgerFi Filed for Bankruptcy : Impact on Operations

The Chapter 11 case involves only corporate-owned BurgerFi and Anthony's locations, leaving franchisee-owned locations unaffected. Both brands are expected to continue operating as usual throughout the bankruptcy proceedings. Despite the filing, BurgerFi had not yet submitted a first-day declaration, a document that typically outlines the company's debt structure and strategy during bankruptcy.

A Tough Year for BurgerFi

The past year has been financially challenging for the restaurant chain. In January, BurgerFi reported failing to meet minimum liquidity requirements under its credit agreement, with roughly $50 million in outstanding debt due by September 30. By May, the company entered into a forbearance agreement with TREW Capital Management Private Credit 2 LLC, securing a $2 million loan to stay afloat. L Catterton also agreed to provide another $2 million to help during this period.

Second-quarter sales in 2024 dropped by 4%, partly due to the closure of underperforming corporate-owned locations. In August, BurgerFi received an emergency advance of $5.2 million from its lenders, TREW and CP7 Warming Bag LP.

Looking Forward

Founded in Ft. Lauderdale, Florida, in 2011, BurgerFi has grown to over 100 locations across the U.S. The 2021 acquisition of Anthony's Coal Fired Pizza & Wings added about 60 more locations in eight states to its portfolio. With the bankruptcy filing, the company is looking to restructure its financial obligations and stabilize both brands for future growth.