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BurgerFi International, Inc. (BFI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue fell 6% to $42.9M, with consolidated systemwide sales down 10% to $66.0M; net loss improved to $6.5M ($0.24 per share) from $9.2M ($0.39 per share) on lower G&A, restructuring, and share-based comp, but Adjusted EBITDA declined to $0.3M due to lost sales leverage and higher wages .
  • BurgerFi brand remained under pressure: systemwide sales -17% to $33.4M, systemwide SSS -13%; Anthony’s systemwide sales -1% and SSS -2%. Restaurant-level operating expense ratio rose 440 bps YoY to 87.8% on wage inflation and deleveraging, notably +850 bps at BurgerFi and +360 bps at Anthony’s .
  • FY2024 guidance maintained at revenue $170–$180M, Adjusted EBITDA $7–$9M, capex $2–$3M; management noted performance is “trending to the low end” but kept targets as operational initiatives roll out (inventory systems; Anthony’s new POS) .
  • Liquidity risk is elevated: non-compliance with minimum liquidity covenant triggered an event of default; all lender rights were assigned to TREW Capital in mid-April; substantial doubt about going concern disclosed pending resolution with lenders .

What Went Well and What Went Wrong

What Went Well

  • Sequential momentum within the quarter and into Q2: “slight improvement in February” and “more substantive recovery in March,” with March SSS flat at Anthony’s after adjusting for Easter; early Q2 sales “show stability” as initiatives begin to take hold .
  • Operating discipline: net loss improved to $6.5M (from $9.2M YoY) on lower G&A, restructuring, and share-based comp; consolidated food costs dollar spend fell ~$0.6M YoY and remained 26.8% of restaurant sales, reflecting cost control despite deleverage .
  • Execution on strategic priorities: rollout of inventory control systems for both brands and a new POS at Anthony’s to “lay the groundwork for expected progress” and margin improvement over time .

What Went Wrong

  • Top-line softness and deleverage: consolidated systemwide sales -10%, corporate-owned SSS -5%, franchise SSS -12%; BurgerFi systemwide sales -17% and SSS -13% drove 440 bps increase in consolidated restaurant-level expense ratio, compressing store-level profitability .
  • Wage inflation and loss of sales leverage pushed labor to 34.0% of restaurant sales (vs. 30.5% YoY), with Anthony’s contributing 91% of the increase; BurgerFi restaurant-level expense ratio surged +850 bps YoY to 95.9% .
  • Liquidity and covenant breach: minimum liquidity covenant under the Credit Agreement was not met; full assignment to TREW exposes near-term financing uncertainty and raises substantial doubt about going concern until resolved .

Financial Results

Consolidated Financials vs Prior Quarters (oldest → newest)

MetricQ3 2023Q4 2023Q1 2024
Total Revenue ($USD Millions)$39.480 $41.468 $42.879
Net Loss ($USD Millions)$(4.958) $(10.598) $(6.538)
Diluted EPS ($USD)$(0.19) $(0.40) $(0.24)
Adjusted EBITDA ($USD Millions)$0.814 $0.671 $0.258
Restaurant-Level Operating Expenses (% of Restaurant Sales)88.2% 87.5% 87.8%
Labor (% of Restaurant Sales)31.8% 31.8% 34.0%
Food, Beverage & Paper (% of Restaurant Sales)26.7% 26.7% 26.8%

Segment Revenue

Segment Revenue ($USD Millions)Q3 2023Q4 2023Q1 2024
Anthony’s$29.540 $31.092 $32.393
BurgerFi$9.940 $10.376 $10.486
Total$39.480 $41.468 $42.879

KPIs and System Metrics

KPIQ3 2023Q4 2023Q1 2024
Systemwide Sales ($USD Millions)$65.278 $65.032 $66.034
Corporate-Owned SSS Growth (%)(7)% (5)% (5)%
Franchise SSS Growth (%)(9)% (8)% (12)%
BurgerFi Systemwide Sales ($USD Millions)$35.738 $33.890 $33.385
BurgerFi Systemwide SSS Growth (%)(11)% (10)% (13)%
Anthony’s Systemwide Sales ($USD Millions)$29.540 $31.142 $32.650
Anthony’s Systemwide SSS Growth (%)(5)% (3)% (2)%
Digital Channel % of Systemwide Sales32% 32% 32%

Store Development and Footprint

MetricQ1 2024
Total Restaurants (end of period)162 (86 corporate-owned, 76 franchised)
BurgerFi Stores (end of period)102 (27 corporate-owned, 75 franchised)
Anthony’s Stores (end of period)60 (59 corporate-owned, 1 franchised)
Q1 Openings/Closures (BurgerFi)1 corporate-owned opening (NYC flagship); 1 franchised opening; 2 corporate closures; 6 franchise closures

Guidance Changes

MetricPeriodPrevious Guidance (Apr 1, 2024)Current Guidance (May 15, 2024)Change
RevenueFY 2024$170–$180M $170–$180M (trending low end) Maintained
Same-Store Sales (Corporate-Owned)FY 2024Low-single digit growth Low-single digit growth Maintained
New RestaurantsFY 202410–15 (9–14 franchised), incl. 1 franchised Anthony’s & NYC flagship 10–15 (9–14 franchised), incl. 1 franchised Anthony’s & NYC flagship (opened March) Maintained
Adjusted EBITDAFY 2024$7–$9M $7–$9M Maintained
Capital ExpendituresFY 2024~$2–$3M ~$2–$3M Maintained
Cost of Goods OutlookFY 2024Improvement via inventory adoption Continued improvement via inventory adoption Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023, Q4 2023)Current Period (Q1 2024)Trend
Technology/OperationsAnthony’s POS upgrade; inventory systems rollout planned Rollout underway for inventory systems (both brands) and Anthony’s POS platform Execution progressing
Labor/TurnoverNoted declines; Anthony’s better than benchmarks; BurgerFi improving Hourly turnover continued to decline; management turnover improving; BurgerFi approaching benchmarks Improving
Menu/InnovationExpanded BurgerFi menu (wings, salad bowls); added pasta dishes at Anthony’s NYC flagship “Better Burger Lab” opened; product/experience focus (NYC) Ongoing innovation
Same-Store SalesQ3 comps negative; CFO expected BurgerFi positive comps in early 2024 March SSS flat at Anthony’s (adj. for Easter); sales “stable” early Q2 Stabilizing at Anthony’s; BurgerFi still pressured
Liquidity/FinancingCovenant/credit agreement concerns echoed Event of default; lenders assigned to TREW; going-concern risk disclosed Deteriorated; resolution pending
Digital Mix32–35% historically 32% Stable

Management Commentary

  • “We had a difficult start to the year… experienced a softening in revenue and profitability… but saw a sequential improvement through the quarter… recovery in March at both brands, outside of Florida.” — CEO Carl Bachmann .
  • “We remain laser-focused on driving revenue growth while further enhancing operational efficiencies… five key strategic priorities… laying a solid foundation upon which to build.” — CEO Carl Bachmann .
  • “We are fully underway with the rollout of new inventory control systems for both brands and a new point-of-sale platform for Anthony’s… expected progress ahead… streamline operations… pave the way as we navigate through the recovery phase.” — CFO Christopher Jones .
  • Prior quarter frame: “Trends have improved sequentially, with March flat to slightly positive, adjusting for the Easter shift.” — CEO (Q4 release) .
  • Longer-term aspiration (Q3): “anticipate BurgerFi returning to positive comps in early 2024 and positive EBITDA by the second half of 2024.” — CFO .

Q&A Highlights

  • The Q1 2024 earnings call transcript was unavailable due to a document retrieval error (database inconsistency). No Q&A excerpts could be reviewed to identify clarifications or tone shifts .

Estimates Context

  • We attempted to retrieve Wall Street consensus via S&P Global for Q1 2024 EPS and revenue; mapping was unavailable in SPGI/CIQ for BFI, so consensus could not be obtained. Values retrieved from S&P Global were unavailable due to missing CIQ mapping.

Key Takeaways for Investors

  • Near-term: Focus on credit agreement resolution with TREW; going-concern disclosure and covenant default are likely to dominate risk perception and stock reaction until a liquidity solution is announced .
  • Operational initiatives (inventory controls, Anthony’s POS) are in-flight and can structurally lower COGS and labor inefficiencies; monitor labor ratio normalization and store-level expense ratios for signs of margin recovery .
  • Sales trajectory: Anthony’s appears closer to stabilization (March flat adj. for Easter), while BurgerFi remains under pressure; watch Q2 trend updates and any evidence of comps turning positive per prior commentary .
  • Guidance maintained but “trending to low end”: probability bias to lower bound unless sales improve; Adjusted EBITDA delivery hinges on throughput gains and wage offset via systems rollout .
  • Store portfolio actions continue (closures and selective openings); footprint optimization should support longer-term margin but may temper near-term royalties/systemwide growth .
  • Digital mix steady at ~32% offers demand channel resilience; further digital or marketing leverage could aid recovery when new menu/flagship activations gain traction .
  • Trading lens: headline liquidity risk vs. operational self-help; catalysts include any announced lender agreement, positive SSS inflection, and visible margin improvement at BurgerFi in upcoming quarters .