BurgerFi Reports Second Quarter 2023 Results

FORT LAUDERDALE, Fla., Aug. 16, 2023 (GLOBE NEWSWIRE) -- BurgerFi International, Inc. ( BFI, BFIIW) (“BurgerFi” or the “Company”), owner of one of the nation’s leading fast-casual “better burger” dining concepts through the BurgerFi brand, and the high-quality, casual dining pizza and wings concept under the name Anthony’s Coal Fired Pizza & Wings (“Anthony’s”) brand, today reported financial results for the second quarter ended July 3, 2023.

Highlights for the Second Quarter 2023

• Total revenue was $43.4 million in the second quarter 2023 compared to $45.3 million in the prior year period
  • Consolidated systemwide sales decreased to $70.7 million compared to $74.3 million in the prior period
  • Same-store sales growth of 1% at Anthony’s in the second quarter of 2023 compared to the prior period
  • Systemwide sales for BurgerFi decreased (9)% to $38.8 million in the second quarter compared to the prior period
  • Systemwide same-store sales decrease of (10)% 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 the prior period
• Net loss decreased to $6.0 million, or $(0.24) per diluted share, in the second quarter 2023 compared to net loss of $60.4 million or $(2.72) per diluted share compared to the prior period
• Adjusted EBITDA¹ of $2.0 million in the second quarter 2023 compared to $2.6 million in the prior period
  

Management Commentary

Carl Bachmann, Chief Executive Officer of BurgerFi stated, “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.”

Bachmann continued, “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.“

Christopher Jones, Chief Financial Officer of BurgerFi, added, “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 G&A 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.”

Second Quarter 2023 Key Metrics¹ Summary

Second Quarter 2023 Financial Results

Total revenue in the second quarter of 2023 decreased 4% to $43.4 million compared to $45.3 million in the year-ago quarter, primarily driven by a decrease in same-store sales at BurgerFi partially offset by the additional revenue from new restaurants opened during the period and an increase in same-store sales at Anthony’s. For the BurgerFi brand, same-store sales decreased (15)% and (8)% in corporate-owned and franchised locations, respectively. For the Anthony’s brand, same-store sales for the second quarter increased 1% over the prior year period.

Restaurant-level operating expenses for the second quarter of 2023 were $35.2 million compared to $36.2 million in the second quarter of 2022. For the BurgerFi brand, restaurant-level operating expenses, as a percentage of sales, increased 500 basis points for the second quarter of 2023, compared to the second quarter of 2022, primarily due to lower leverage on sales. For the Anthony's brand, restaurant-level operating expenses, as a percentage of sales, improved 60 basis points for the second quarter of 2023, compared to the second quarter of 2022, driven primarily by lower food, beverage and paper costs coupled with a slight increase in same-store sales.

Net loss in the second quarter was $6.0 million compared to a net loss of $60.4 million in the year-ago quarter, primarily due to reduced impairment charges, lower general and administrative expenses, lower depreciation and amortization expenses, offset by higher restructuring costs and loss on change in value of warrant liability.

Adjusted EBITDA in the second quarter of 2023 decreased $0.6 million to $2.0 million compared to $2.6 million in the second quarter of 2022, driven by lost leverage on sales at BurgerFi partially offset by higher same-store sales and lower food costs at Anthony’s. See the definition of Adjusted EBITDA, a financial measure that is a non-generally accepted accounting principle in the United States (“GAAP”), and the reconciliation to the most comparable GAAP measure below.

Restaurant Development

As of July 3, 2023, the Company operated and franchised 174 total restaurants of which 114 were BurgerFi (27 corporate-owned and 87 franchised) and 60 were corporate-owned Anthony’s. During the second quarter 2023, there were three franchised BurgerFi restaurants opened, and one franchise closure.

Year to date, BurgerFi opened five franchised locations with an additional four franchised locations expected by third quarter end. For the third quarter to date, the Company closed two underperforming corporate stores, one Anthony’s and one BurgerFi store, as we align our geographic footprint to better serve our customers.

2023 Outlook

Management is updating its outlook for the fiscal year 2023:

Management now believes that it will come in at the low end of the previous stated guidance.

Conference Call

The Company will hold a conference call today, August 16, 2023, at 8:30 a.m. Eastern time to discuss its second quarter 2023 results.

Date: Wednesday, August 16, 2023
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: 1-833-816-1403
International dial-in number: (412) 317-0496
Conference ID: 10181664

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

The conference call will be broadcast live and available for two weeks for replay on the Company’s Investor Relations website at ir.burgerfi.com.

Key Metrics Definitions

The following definitions apply to the terms listed below:

“Systemwide Restaurant Sales” is presented as informational data in order to understand the aggregation of franchised stores sales, ghost kitchen and corporate-owned store sales performance. Systemwide Restaurant Sales growth refers to the percentage change in sales at all franchised restaurants, ghost kitchens and corporate-owned restaurants in one period from the same period in the prior year. Systemwide Restaurant Same-Store Sales growth refers to the percentage change in sales at all franchised restaurants, ghost kitchens, and corporate-owned restaurants after 14 months of operations. See definition below for “Same-Store Sales”.

“Corporate-Owned Restaurant Sales” represent the sales generated only by corporate-owned restaurants. Corporate-Owned Restaurant Sales growth refers to the percentage change in sales at all corporate-owned restaurants in one period from the same period in the prior year. Corporate-Owned Restaurant Same-Store Sales growth refers to the percentage change in sales at all corporate-owned restaurants after 14 months of operations. These measures highlight the performance of existing corporate-owned restaurants.

“Franchise Restaurant Sales” represent the sales generated only by franchisee-owned restaurants and are not recorded as revenue, however, the royalties based on a percentage of these franchise restaurant sales are recorded as revenue. Franchise Restaurant Sales growth refers to the percentage change in sales at all franchised restaurants in one period from the same period in the prior year. Franchise Restaurant Same-Store Sales growth refers to the percentage change in sales at all franchised restaurants after 14 months of operations. These measures highlight the performance of existing franchised restaurants.

“Same-Store Sales” is used to evaluate the performance of our store base, which excludes the impact of new stores and closed stores, in both periods under comparison. We include a restaurant in the calculation of Same-Store Sales after 14 months of operations. A restaurant which is temporarily closed, is included in the Same-Store Sales computation. A restaurant which is closed permanently, such as upon termination of the lease, or other permanent closure, is immediately removed from the Same-Store Sales computation. Our calculation of Same-Store Sales may not be comparable to others in the industry.

“Digital Channel” % of systemwide sales is used to measure performance of our investments made in our digital platform and partnerships with third party delivery partners. We believe our digital platform capabilities are a vital element to continuing to serve our customers and will continue to be a differentiator for the Company as compared to some of our competitors. Digital Channel as percentages of Systemwide Restaurant Sales are indicative of the sales placed through our digital platforms and the percentage of those digital sales when compared to total sales at all our franchised and corporate-owned restaurants.

“Adjusted EBITDA,” a non-GAAP measure, is defined as net loss before goodwill impairment, lease termination recovery, share-based compensation expense, depreciation and amortization expense, interest expense (which includes accretion on the value of preferred stock and interest accretion on related party note), restructuring costs, merger, acquisition and integration costs, legal settlements, store closure costs, loss (gain) on change in value of warrant liability, income tax expense (benefit) and (gain) loss on sale of assets.

Unless otherwise stated, Systemwide Restaurant Sales, Systemwide Sales growth, and Same-Store Sales are presented on a systemwide basis, which means they include franchise restaurants and company-owned restaurants. Franchise restaurant sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and brand royalty revenues are calculated based on a percentage of franchise sales.

About BurgerFi International ( BFI, BFIIW)

BurgerFi International, Inc. is a leading multi-brand restaurant company that develops, markets, and acquires fast-casual and premium-casual dining restaurant concepts around the world, including corporate-owned stores and franchises. BurgerFi International is the owner and franchisor of the two following brands with a combined 174 locations.

BurgerFi. BurgerFi is among the nation’s fast-casual better burger concepts with 114 BurgerFi restaurants (87 franchised and 27 corporate-owned) as of July 3, 2023. BurgerFi is chef-founded and committed to serving fresh, all-natural and quality food at all locations, online and via first-party and third-party deliveries. BurgerFi uses 100% American Angus Beef with no steroids, antibiotics, growth hormones, chemicals or additives. BurgerFi's menu also includes high-quality Wagyu Beef Blend Burgers, Antibiotic and Cage-Free Chicken offerings, Hand-Cut Sides, and Frozen Custard Shakes. BurgerFi was named "The Very Best Burger" at the 2023 edition of the nationally acclaimed SOBE Wine and Food Festival and “Best Fast Food Burger” in USA Today’s 10Best 2023 Readers’ Choice Awards for its BBQ Rodeo Burger, "Best Fast Casual Restaurant" in USA Today's 10Best 2023 Readers' Choice Awards for the third consecutive year, QSR Magazine's Breakout Brand of 2020 and Fast Casual's 2021 #1 Brand of the Year. In 2021, Consumer Reports awarded BurgerFi an “A Grade Angus Beef” rating for the third consecutive year. To learn more about BurgerFi or to find a full list of locations, please visit www.burgerfi.com. Download the BurgerFi App on iOS or Android devices for rewards and 'Like' or follow @BurgerFi on Instagram, Facebook and Twitter. BurgerFi® is a Registered Trademark of BurgerFi IP, LLC, a wholly-owned subsidiary of BurgerFi.

Anthony’s. Anthony’s was acquired by BurgerFi on November 3, 2021 and is a premium pizza and wing brand that operates 60 corporate-owned casual restaurant locations, as of July 3, 2023. Known for serving fresh, never frozen and quality ingredients, Anthony’s is centered around a 900-degree coal-fired oven with menu offerings including “well-done” pizza, coal-fired chicken wings, homemade meatballs, and a variety of handcrafted sandwiches and salads. Anthony’s was named “The Best Pizza Chain in America” by USA Today's Great American Bites and “Top 3 Best Major Pizza Chain” by Mashed in 2021. To learn more about Anthony’s, please visit www.acfp.com.

About Non-GAAP Projected Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the measure Adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use this non-GAAP financial measure for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting, and analyzing future periods. This non-GAAP financial measure also facilitates management’s internal comparisons to our historical performance and liquidity as well as comparisons to