Another major player in the restaurant world has fallen victim to the economic pressures created by inflation and a post-pandemic economy. BurgerFi International, known for its gourmet burgers and Anthony’s Coal Fired Pizza & Wings brand, filed for Chapter 11 bankruptcy protection this week. The filing marks yet another sign of the financial strain the restaurant industry is enduring as inflationary pressures and shifting consumer habits reshape the market.
The company, seeking reorganization, emphasized that the move was necessary to “preserve the value” of its brands for stakeholders. Only its corporate-owned locations—17 BurgerFi and 50 Anthony’s restaurants—are included in the proceedings. Franchise locations, which remain a significant portion of the business, will not be impacted.
In a statement, Chief Restructuring Officer Jeremy Rosenthal laid out the challenges that led to this decision. He pointed to a “drastic decline in post-pandemic consumer spending” combined with “sustained inflation and increasing food and labor costs” as the primary culprits. These issues have hit many industries hard, but the restaurant sector—already reeling from pandemic-era restrictions and a shift to takeout and delivery—has been particularly vulnerable.
Despite these difficulties, BurgerFi had been implementing a turnaround strategy over the last year. CEO Carl Bachmann acknowledged that while there had been “early positive indicators,” long-standing “legacy challenges” necessitated the bankruptcy filing. Bachmann’s statement suggests that the company is confident that the restructuring process will provide the opportunity to stabilize and grow its business.
With estimated assets valued between $50 and $100 million and liabilities ranging from $100 to $500 million, BurgerFi’s financial woes are significant. However, Rosenthal expressed optimism about the road ahead, stating that the company believes the bankruptcy process will “allow us to protect and grow our brands” while securing additional capital to continue their turnaround efforts.
While the corporate restructuring proceeds, customers will see little change—both corporate and franchised restaurants will remain open for business. Franchisees operate the majority of BurgerFi locations—76 in total—along with one Anthony’s Coal Fired Pizza & Wings location. This means most of the company’s footprint will remain unaffected as the financial restructuring moves forward.
BurgerFi’s bankruptcy filing is the latest in a growing list of restaurant chains struggling to navigate the harsh economic realities of 2023. Other chains that have filed for Chapter 11 this year include Roti, Buca di Beppo, Rubio’s Coastal Grill, Red Lobster, and Tijuana Flats. Just last week, Red Lobster received court approval to exit bankruptcy, signaling a possible path forward for those willing to adapt to the new normal.
The wave of bankruptcies in the restaurant industry is a clear signal of the broader economic challenges facing American businesses. High inflation, particularly in food prices, and rising labor costs have squeezed margins for restaurants nationwide. Jonathan Carson, co-CEO of Stretto, a bankruptcy services firm, told FOX Business that 17 restaurant companies or large franchisees have filed for Chapter 11 in 2023 alone, a number that reflects the significant strain on the industry.
As BurgerFi navigates its way through Chapter 11, its customers and franchisees will be hoping that the company can successfully emerge stronger. However, with inflation and economic uncertainty showing little sign of abating, it’s clear that the road ahead for the restaurant industry—and the broader economy—remains challenging.
