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BurgerFi International, Inc. (BFI)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 revenue was $41.47M, down 8.3% YoY, while EPS was $(0.40); Adjusted EBITDA was $0.67M as lost leverage on sales pressured margins despite lower food costs .
  • Anthony’s showed sequential improvement in same‑store sales and traffic vs Q3, aided by holiday performance; BurgerFi comps remained negative, with corporate SSS down 14% and franchise SSS down 8% .
  • 2024 outlook introduced: revenue $170–$180M, low‑single digit corporate SSS growth, Adjusted EBITDA $7–$9M, capex $2–$3M, and 10–15 new restaurants including the NYC BurgerFi flagship and one franchised Anthony’s .
  • Company disclosed non‑compliance with minimum liquidity covenant on ~$51.3M credit facility and is engaging lenders; uncertainty around outcome may be a stock reaction catalyst .

What Went Well and What Went Wrong

What Went Well

  • Sequential improvement at Anthony’s in Q4 (SSS down 3% YoY but improving vs Q3 and strong holiday performance), with management noting March trends “flat to slightly positive” adjusting for Easter .
  • Cost discipline: consolidated food, beverage and paper expense margin improved 42 bps YoY in Q4; for FY23, improvement was 240 bps YoY .
  • Strategic investments to drive margin expansion: inventory control systems and a new POS platform at Anthony’s to enhance efficiencies and data visibility .

What Went Wrong

  • Top line softness: consolidated revenue fell 8.3% YoY to $41.47M; consolidated systemwide sales fell to $65.0M (from $71.6M), driven by negative BurgerFi comps and softer Anthony’s comps .
  • Margin pressure from lower sales leverage: restaurant‑level operating expenses as % of restaurant sales increased, notably at BurgerFi (+660 bps YoY in Q4), constraining EBITDA .
  • Liquidity/covenant breach risk: the company was not in compliance with minimum liquidity covenants on its credit agreement, creating near‑term financing uncertainty .

Financial Results

MetricQ4 2022Q2 2023Q3 2023Q4 2023
Revenue ($USD Millions)$45.235 $43.427 $39.480 $41.468
Net Loss ($USD Millions)$(26.161) $(6.001) $(4.958) $(10.598)
EPS ($USD)$(1.18) $(0.24) $(0.19) $(0.40)
Adjusted EBITDA ($USD Millions)$2.630 $2.033 $0.814 $0.671
Restaurant-Level Operating Expenses (% of restaurant sales)86.1% 86.2% 88.2% 87.5%

Segment breakdown (Anthony’s vs BurgerFi)

MetricQ3 2023Q4 2023
Anthony’s Revenue ($USD Millions)$29.540 $31.092
BurgerFi Revenue ($USD Millions)$9.940 $10.376
Anthony’s Systemwide Restaurant Sales ($USD Millions)$29.540 $31.142
BurgerFi Systemwide Restaurant Sales ($USD Millions)$35.738 $33.890
Anthony’s Corporate-Owned SSS Growth (%)(5)% (3)%
BurgerFi Corporate-Owned SSS Growth (%)(15)% (14)%
BurgerFi Franchise SSS Growth (%)(9)% (8)%
Digital Channel % of Systemwide Sales (Anthony’s/BurgerFi)33% / 31% 34% / 31%

KPIs and trend

KPIQ2 2023Q3 2023Q4 2023
Consolidated Systemwide Restaurant Sales ($USD Millions)$70.683 $65.278 $65.032
Corporate-Owned Restaurant Sales ($USD Millions)$40.808 $37.324 $39.386
Franchise Restaurant Sales ($USD Millions)$29.875 $27.954 $25.646
Digital Channel % of Systemwide Sales31% 32% 32%
Total Locations (BurgerFi + Anthony’s)174 169 168

Consensus vs Actual (Q4 2023)

MetricConsensusActualSurprise
Revenue ($USD Millions)$40.00 $41.47 +$1.47M (Beat)
EPS ($USD)$(0.19) $(0.40) $(0.21) (Miss)

Note: S&P Global consensus was unavailable via our GetEstimates tool; third‑party sources are cited above.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annual RevenuesFY2023$175–$180M (Q2 guide) $160–$170M (Q3 update) Lowered
Corporate-Owned Same-Store SalesFY2023Low single‑digit growth (Q2 guide) Low single‑digit decline (Q3 update) Lowered
New Franchised RestaurantsFY202315–20 incl. one Anthony’s (Q2 guide) 12–15 incl. one Anthony’s (Q3 update) Reduced
Adjusted EBITDAFY2023$10–$12M (Q2 guide) $6–$8M (Q3 update) Lowered
CapexFY2023~$2M (Q2 guide) ~$2M (Q3 update) Maintained
Annual RevenuesFY2024N/A$170–$180M New
Corporate-Owned Same-Store SalesFY2024N/ALow single‑digit growth New
New RestaurantsFY2024N/A10–15, incl. 1 franchised Anthony’s + NYC corporate flagship New
Adjusted EBITDAFY2024N/A$7–$9M New
CapexFY2024N/A$2–$3M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2023)Previous Mentions (Q3 2023)Current Period (Q4 2023)Trend
Menu enhancement (BurgerFi)Launch new crispy/grilled chicken; fix fries; improve milkshakes “Biggest enhancement” adding wings and salad bowls; launching chicken sandwiches Continued product work; sequential demand indicators improving Improving product/experience trajectory
Menu enhancement (Anthony’s)Focus on cost and execution; early improvements in northern stores Added Chicken Alfredo & Artichoke Pizza, pastas; stronger throughput/ticket times Sequential SSS and traffic improvement; strong holidays Sequential recovery
Labor/turnoverDeclines expected; reduce training labor Hourly turnover declined significantly; management turnover improving Hourly turnover continued to decline; Anthony’s better than benchmarks; BurgerFi approaching Improving
Technology (inventory/POS)Not specifiedUpdated POS at Anthony’s planned Inventory systems both brands; new POS at Anthony’s to drive efficiencies and margins Operationalizing efficiencies
Digital & delivery31–33% of sales 32–33% of sales 31–34% of sales by brand; 32% consolidated Stable penetration
Credit agreement/liquidityNot addressedNot addressedBreach of minimum liquidity covenant; lender discussions ongoing Elevated financing risk
Development/flagshipNot addressedFirst dual-brand franchise and NYC flagship planned NYC flagship opened in March; 10–15 new restaurants guided for 2024 Executing mixed development plan

Management Commentary

  • CEO: “2023 was a challenging year… I implemented five key strategic priorities… which should ultimately drive long‑term, profitable growth.” And, “Anthony’s had a 3% decrease in same‑store sales… sequential improvement… encouraging performance during the Christmas holidays… March flat to slightly positive, adjusting for the Easter shift.”
  • CFO: “Top line softness pressured margins… declines in payroll and corporate expense dollars… inventory control systems at both brands and a new POS platform at Anthony’s… greater margin expansion opportunity… as we come out of the recovery.”
  • Q3 setup (for trajectory): “Successfully executed the biggest enhancement of the BurgerFi menu… adding wings and salad bowls… launch chicken sandwiches… decreased turnover… reduced training labor… higher consumer satisfaction scores… faster throughput and ticket times.”
  • Q2 plan: “We cannot accept performance like 2Q… launch much‑needed new crispy and grilled chicken sandwiches… improve milkshakes… fix the french fries.”

Q&A Highlights

  • Participants included BTIG; the call focused on Q4/FY23 results and FY2024 outlook (revenues, comps, EBITDA, development plans) .
  • Management emphasized operational efficiency initiatives (inventory systems, Anthony’s POS) and sequential comp improvements at Anthony’s, while acknowledging continued softness at BurgerFi .
  • Liquidity and covenant non‑compliance were addressed, with ongoing discussions with lenders and no assurance on outcomes at this time .

Estimates Context

  • S&P Global consensus estimates were unavailable through our data tool for BFI’s Q4 2023.
  • Third‑party sources indicate EPS of $(0.40) missed consensus by $0.21, and revenue of $41.47M beat consensus by $1.47M, implying stronger‑than‑expected sales despite margin headwinds .

Key Takeaways for Investors

  • Revenue resilience vs consensus with a sales beat, but EPS miss underscores margin sensitivity to comp declines and lost sales leverage; near‑term trading likely focuses on comp trajectories and margin recovery pace .
  • Anthony’s is showing sequential improvement and is likely the near‑term margin/Sales stabilizer; monitor continued traffic/SSS recovery and POS rollout benefits .
  • BurgerFi comps remain negative; watch impact of menu upgrades (wings, salads, chicken) and operational fixes (fries, throughput) on mix and margins in 1H24 .
  • 2024 outlook points to modest growth with Adjusted EBITDA expansion; execution on inventory/POS and cost controls is key to achieving $7–$9M Adjusted EBITDA and low‑single digit corporate comps growth .
  • Liquidity/covenant breach adds financing overhang; outcome of lender discussions could be a stock‑moving catalyst—risk management and potential refinancing actions bear close scrutiny .
  • Development rationalization continues (store closures, selective franchising, NYC flagship); expect disciplined growth to support brand equity and unit economics .
  • Digital channel remains stable at ~32% of systemwide sales, providing a consistent demand channel while operational improvements aim to lift in‑store leverage .