BurgerFi: Reports Second Quarter 2023 Results

Palm Beach / FL. (bfi) BurgerFi International Inc., owner of the BurgerFi brand (BF), and the Anthony’s Coal Fired Pizza + Wings brand (ACF), reported financial results for the second quarter ended July 03, 2023.

Highlights for the Second Quarter 2023

• Total revenue was USD 43.4 million in the second quarter 2023 compared to USD 45.3 million in the prior year period
  • Consolidated systemwide sales decreased to USD 70.7 million compared to USD 74.3 million in the prior period
  • Same-store sales growth of 1 percent at Anthony’s in the second quarter of 2023 compared to the prior period
  • Systemwide sales for BurgerFi decreased (9) percent to USD 38.8 million in the second quarter compared to the prior period
  • Systemwide same-store sales decrease of (10) percent at BurgerFi in the second quarter of 2023 compared to the prior period
• Opened three BurgerFi brand franchised restaurants in the second quarter, five BurgerFi franchised locations year to date, and expects to open an additional nine BurgerFi, including the first dual-brand franchise location.
• Hourly turnover declined significantly at both brands, with Anthony’s performing better than industry benchmarks, while BurgerFi made considerable progress and is on track to achieve similar improvements. Management turnover improved at BurgerFi, approaching industry benchmarks.
• Consolidated food, beverage and paper expense margin improved 330 basis points compared to the prior period
• Consolidated restaurant-level operating expenses increased 50 basis points compared to Q2-2022
• Net loss decreased to USD 6.0 million, or USD (0.24) per diluted share, in the second quarter 2023 compared to net loss of USD 60.4 million or USD (2.72) per diluted share compared to the prior period
• Adjusted Ebitda of USD 2.0 million in Q2-2023 compared to USD 2.6 million in the prior period

Management Commentary

Chief Executive Officer Carl Bachmann: «I am thrilled to have joined the BurgerFi organization because I believe both Anthony’s and BurgerFi are high quality brands with growth potential. My prior experience in turnaround situations at pizza and burger concepts has given me a deep understanding of how to help drive improvement and growth for these businesses. I plan to use the same proven and successful playbook here. The Company’s quarterly performance is indicative as to why I am here today as the new CEO, providing what I believe is a significant opportunity for investors. So much so that I invested heavily into BFI equity when I started, so I am firmly aligned with our shareholders.

«With only a little over a month on the job, there is no question we can do better, as the challenges both brands face are not new to the industry. To say that I have seen it all before and prevailed is not a stretch. Importantly, we are already experiencing better trends at Anthony’s, especially from our northern restaurant locations. As we progress into fall, we believe these positive trends will follow typical seasonality and spread to our southern restaurant locations as well. At BurgerFi, we have been focused on improving the products and customer experience, with several initiatives expected to reach stores during the second half of the year and directly address the biggest challenges the brand faces today. Some of these include launching a much-needed new crispy chicken and grilled chicken sandwiches and improving the milk shakes. In both instances, we currently run below industry average in terms of contribution, and combined should have a meaningful impact to topline. Perhaps the most important opportunity is in fixing the french fries, which currently accounts for a large number of customer complaints and is as simple as changing processes in the kitchen. The bottom line is that we cannot accept performance like 2Q and are committed to driving better results for all of our stakeholders. While we have limited our comments on what we have in store to drive the turnaround today, we do expect to provide a more detailed and thoughtful update by third quarter earnings or earlier.»

Chief Financial Officer Christopher Jones: «Like Carl, I am thrilled to be joining the BurgerFi team, as I see great potential for the business and have confidence in Carl and the BurgerFi team to lead the company to increased profitability and investor returns. The path to improved profitability is not a complex one. It will require improved execution at the stores and from management along with improvements on cost controls. Rewarding success when it’s earned while also demanding accountability from all members of the team will be central to this effort. Carl mentioned we are already seeing some encouraging trends, as we are cautiously optimistic that restaurant level margins will improve going forward, as we expect food costs to remain a positive tail wind, at least for the third quarter and into the fourth. Additionally, we expect Store Labor and Corporate GA to begin to improve throughout the remainder of the year, assuming the economy remains stable and trends in hourly turnover at both brands continue to improve. These trends are why we are maintaining our full year financial guidance, while also guiding towards the low end of the previously provided range. Importantly, with new leadership in place, we have also started to see growing interest from new and existing franchise partners as we look to unlock the value of the Anthony’s brand with a franchise program and reengage with the BurgerFi brand, all of which should lead to increases in topline growth.»