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BurgerFi International, Inc. (BFI)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 revenue fell to $39.5M, down 9% year over year and 9% sequentially; net loss widened to $5.0M and diluted EPS was $(0.19). Management cut FY23 guidance across revenue and Adjusted EBITDA, citing weaker comps at BurgerFi and softer performance at Anthony’s .
  • Adjusted EBITDA declined to $0.8M from $1.6M in Q3 2022, with margin pressure driven by lower sales leverage at BurgerFi; Anthony’s still contributed positive EBITDA in the quarter .
  • CEO highlighted the “biggest enhancement” to BurgerFi’s menu (wings, salad bowls; chicken sandwiches launching) and operational initiatives (turnover reduction) as the foundation for a 2024 turnaround; CFO targeted a return to positive comps in early 2024 and positive EBITDA in 2H24 .
  • FY23 outlook lowered: revenue $160–170M (from $175–180M) and Adjusted EBITDA $6–8M (from $10–12M); corporate-owned SSS now guided to a low-single-digit decline (was growth) .
  • Near-term stock narrative is dominated by guidance cuts and BurgerFi brand comp weakness, partially offset by menu refresh, cost tailwinds, and a franchising strategy for company-owned stores .

What Went Well and What Went Wrong

  • What Went Well

    • Management executed major menu expansion at BurgerFi (wings, salad bowls; chicken sandwiches imminent), reporting “resounding” customer response; Anthony’s added new pizzas and pasta, with early operational improvements translated into faster throughput and higher satisfaction scores .
    • Food, beverage and paper expense margin improved 220 bps YoY at the consolidated level, supporting gross margin resilience despite top-line pressure .
    • Anthony’s delivered positive segment EBITDA ($1.7M), supported by lower food costs; CFO expects Anthony’s comps to turn positive with POS upgrades and menu modifications, boosting EBITDA .

  • What Went Wrong

    • BurgerFi comps remained weak: systemwide SSS fell 11% YoY, with corporate-owned SSS down 15% and franchised down 9% in Q3, compressing restaurant-level margins via lost sales leverage .
    • Consolidated revenue declined 9% YoY to $39.5M and Adjusted EBITDA fell to $0.8M; net loss widened to $5.0M vs. $3.3M, driven by same-store sales declines and absence of prior gains, despite lower D&A and share-based compensation .
    • Management cut FY23 revenue guidance to $160–170M and Adjusted EBITDA to $6–8M, and revised corporate-owned SSS to a decline, reflecting more cautious demand assumptions and brand-level challenges .

Financial Results

MetricQ3 2022Q2 2023Q3 2023Consensus (Q3 2023)
Total Revenue ($USD Millions)$43.255 $45.298 $39.480 N/A (S&P Global consensus unavailable)
Net Loss ($USD Millions)$(3.332) $(6.001) $(4.958) N/A (S&P Global consensus unavailable)
Diluted EPS ($USD)$(0.15) $(0.24) $(0.19) N/A (S&P Global consensus unavailable)
Adjusted EBITDA ($USD Millions)$1.642 $2.033 $0.814 N/A (S&P Global consensus unavailable)
Restaurant-Level Operating Expenses (% of restaurant sales)87.2% 86.2% 88.2% N/A (S&P Global consensus unavailable)

Segment breakdown and KPIs:

MetricQ3 2022Q2 2023Q3 2023
Consolidated Systemwide Sales ($USD Millions)$70.627 $70.683 $65.278
Corporate-Owned Restaurant Sales ($USD Millions)$40.284 $40.808 $37.324
Franchise Restaurant Sales ($USD Millions)$30.343 $29.875 $27.954
Consolidated Systemwide SSS (%)(2)% (5)% (8)%
Corporate-Owned SSS (%)1% (3)% (7)%
Franchise SSS (%)(5)% (8)% (9)%
Digital Channel % of Systemwide Sales34% 31% 32%
Segment MetricQ2 2023Q3 2023
BurgerFi Revenue ($USD Millions)$11.567 $9.940
Anthony’s Revenue ($USD Millions)$31.860 $29.540
BurgerFi Systemwide Sales ($USD Millions)$38.823 $35.738
Anthony’s Systemwide Sales ($USD Millions)$31.860 $29.540
BurgerFi SSS (%)(10)% (11)%
Anthony’s SSS (%)1% (5)%
Digital Channel % (BurgerFi)31% 31%
Digital Channel % (Anthony’s)32% 33%
Adjusted EBITDA (BurgerFi, $USD Millions)$(0.328) $(0.903)
Adjusted EBITDA (Anthony’s, $USD Millions)$2.361 $1.717

Prior-quarter context (Q1 2023):

  • Total Revenue: $45.7M
  • Net Loss/Diluted EPS: $(9.2)M / $(0.39)
  • BurgerFi Q1 SSS: corporate-owned (6)%, franchised (3)%; Anthony’s Q1 SSS +3%

Restaurant-level cost mix:

Cost MetricQ3 2022Q2 2023Q3 2023
Food, Beverage and Paper (% of restaurant sales)28.9% 26.4% 26.7%
Labor and Related (% of restaurant sales)30.3% 31.1% 31.8%
Occupancy (% of restaurant sales)9.5% 9.6% 10.5%
Other Operating (% of restaurant sales)18.5% 19.0% 19.3%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annual Revenue ($USD Millions)FY 2023$175–180M $160–170M Lowered
Corporate-Owned Same-Store SalesFY 2023Low single-digit growth Low single-digit decline Lowered
New Franchised RestaurantsFY 202315–20 (incl. one Anthony’s) 12–15 (incl. one Anthony’s) Lowered
Adjusted EBITDA ($USD Millions)FY 2023$10–12M $6–8M Lowered
Capital Expenditures ($USD Millions)FY 2023~$2M ~$2M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2023)Current Period (Q3 2023)Trend
Menu/Product EnhancementsQ1: Focus on operational improvements; Anthony’s margins benefitting from wing cost stabilization Q2: New crispy/grilled chicken sandwiches and improved shakes planned; fix fries process Biggest BurgerFi menu enhancement executed (wings, salad bowls); chicken sandwiches launching end of month; Anthony’s added new pizza and pasta Accelerating initiatives
Labor/TurnoverQ2: Hourly turnover declined; management turnover improving Hourly turnover declined significantly; BurgerFi management turnover improved toward industry benchmarks Improving
Cost TailwindsQ1: Wing cost stabilization aiding Anthony’s margins Q2: Food cost tailwind expected into Q3/Q4 Food, beverage and paper margin +220 bps YoY; Anthony’s food cost mix improved Positive tailwind
Technology/SystemsQ1: Liquidity update and operational focus Anthony’s POS update highlighted to drive comps and EBITDA; inventory control systems rollout in 2024 (noted in later materials) Execution underway
Franchising StrategyQ2: Growing interest from franchise partners; plan to unlock Anthony’s via franchising Setting stage to franchise company-owned stores starting as early as Q1 2024 Expanding
Regulatory/LegalN/ASecurities class action lawsuit dismissed Sept 2023; case closed, not to be refiled Overhang reduced

Management Commentary

  • CEO Carl Bachmann: “We successfully executed the biggest enhancement of the BurgerFi menu in company history, adding wings and salad bowls… At the end of the month, we will also launch chicken sandwiches… We have already decreased turnover… resulting in higher consumer satisfaction scores as well as faster throughput and ticket times.”
  • CFO Christopher Jones: “We anticipate BurgerFi returning to positive comps in early 2024 and positive EBITDA by the second half of 2024… we are also setting the stage with the franchising of company-owned stores starting as early as the first quarter of 2024.”

Q&A Highlights

  • Turnaround timeline: Management emphasized sequential operational improvements and targeted timelines for comps inflection (early 2024) and EBITDA positivity (2H24), grounding investor expectations for the cadence of recovery .
  • Product strategy: Detailed focus on menu innovation at BurgerFi (wings, salads, upcoming chicken sandwiches) and at Anthony’s (new pizza/pasta), intended to drive traffic and mix uplift .
  • Cost/margin levers: Continued food cost tailwinds and operational efficiencies at Anthony’s; acknowledgment that lost leverage at BurgerFi compressed restaurant-level margins in Q3 .
  • Network optimization and franchising: Franchising of company-owned stores and planned new unit growth (including dual-brand franchise and NYC flagship) as key levers for capital-light expansion .
  • Liquidity and regulatory context: Legal overhang reduced with lawsuit dismissal, aiding management focus on execution .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2023 EPS and revenue was unavailable due to a missing CIQ mapping for BFI; as a result, we cannot assess beats/misses versus SPGI consensus for this quarter [GetEstimates error: SpgiEstimatesError]. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Guidance reset underscores near-term demand headwinds; FY23 revenue and Adjusted EBITDA lowered to $160–170M and $6–8M, with corporate-owned SSS now expected to decline, shifting the narrative toward operational turnaround rather than near-term growth .
  • BurgerFi brand remains the pressure point (Q3 SSS −11% systemwide; corporate −15%), driving lost sales leverage and higher restaurant-level expense ratios; monitoring comp trajectory into early 2024 is critical .
  • Anthony’s provides a stabilizing anchor with positive segment EBITDA and improving food cost mix, and should benefit from POS upgrades and menu changes to support comps and margins .
  • Menu innovation is a tangible catalyst: wings, salad bowls, and chicken sandwiches at BurgerFi plus new SKUs at Anthony’s aim to expand occasions and improve mix, supported by early customer response signals .
  • Structural actions (franchising company-owned locations, network optimization, NYC flagship and dual-brand openings) can enhance capital efficiency and potentially accelerate unit economics if execution is strong .
  • Cost tailwinds (food inputs) helped consolidated margins (+220 bps FB&P) but were offset by labor and sales deleverage; sustained margin recovery depends on comp improvement and throughput gains .
  • Legal/regulatory noise diminished with the class action dismissal in September, reducing distraction for management and slightly de-risking the story .

Additional Source Documents

  • Q3 2023 8‑K 2.02 and press release (full financials, guidance, and segment metrics) .
  • Q2 2023 8‑K press release (prior-quarter trend and prior guidance) .
  • Q1 2023 press release and transcript (prior-period context) .
  • Q3 2023 earnings call transcript references (for full discussion) .