A New, Transformational Era Begins at BurgerFi

BurgerFi has spent the pandemic internally transforming itself, more so than most in the fast-casual space.

In June 2020, the company agreed to merge with OPES Acquisition Corp., a special purpose acquisition company, and go public. The decision came to fruition six months later when leadership rang the Nasdaq opening bell. Less than a year after that momentous occasion, BurgerFi announced its intentions to purchase fellow Florida-based brand Anthony’s Coal Fired Pizza & Wings for $156.6 million.

In this two-year stretch, the C-suite completely changed. CFO Michael Rabinovitch and chief technology officer Karl Goodhew came in 2021 after BurgerFi began trading on the stock market. Once the acquisition of Anthony’s finalized, Ian Baines, Patrick Renna, Michelle Zavolta, and Nadia Cronk transferred from the casual-dining brand to serve as CEO, president, chief people officer, and senior vice president of marketing, respectively.

Additionally, Ron Biskin, a veteran of TGI Fridays, Burger King, Wolfgang Puck, and Baja Fresh, joined as chief development officer, and Stefan Schnopp, with nearly 25 years of experience leading international law firms, became the new chief legal officer and corporate secretary.

Among the new leadership team’s priorities, one of the biggest is recalibrating unit growth. In May 2021, BurgerFi said it expected to open roughly 30 restaurants by the end of the year. But because of delays with construction and supply chain, the brand only mustered 16 units—10 corporate and six franchises.

For 2022, the 124-unit BurgerFi set guidance at 15–20 stores and Renna says the chain will “most likely” hit the lower end. So far this year, seven locations have opened. Out of that group, three are company-run; the rest of 2022 will be franchise debuts. The team has made it a point to pre-order equipment and work with operators to set realistic timelines, in light of the pressurized macro-economic environment.

“I think first and foremost, just setting expectations on how long it's going to take in the world we're living in today and then making sure that we're not overextending ourselves as far as how many we believe we can open, which is why we gave what we thought was conservative guidance,” says Renna, describing how BurgerFi is approaching development this year. “And it seems to be coming to fruition.”

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Leaning into franchise expansion, the company’s goal is to sign multi-unit operators—a mixture of current and new—in existing markets. BurgerFi reaches as far as Alaska and Puerto Rico, but for the short-term, the idea is to fill the home base of Florida and run through the East Coast, including building presences in Atlanta, the Carolinas, and Washington, D.C. With that said, if a well-equipped franchisee requested several locations in a market further away, BurgerFi would entertain the offer.

A handful of upcoming locations are dedicated to nontraditional locales. A location in the Buffalo Niagara Airport is set to open July 1 in partnership with Delaware North, a global foodservice and hospitality company. Another will debut in Newark Liberty International Airport on the same day. BurgerFi is also teaming up with the Air Force to open units on military bases next year.

In terms of ghost kitchens, BurgerFi has agreements with REEF Kitchens and the Chicago-based Epic Kitchens. More recently, the chain partnered with delivery platform Gopuff to fulfill orders out of a food truck in Tallahassee, Florida, in close proximity to Florida State University. Renna says the pilot went well and that BurgerFi is planning to expand the relationship.

“We believe many different nontraditional platforms will work for BurgerFi given our menu, given the speed at which we can make the product, and given our value proposition,” Renna says.

Anthony’s, which had 61 corporate stores as of March 31, is at the beginning stages of its own growth strategy. The full-service concept is planning to franchise a smaller prototype, a move used by a number of big-time companies in the casual-dining segment, like Chili’s, Outback, and IHOP. Anthony’s is still early in the process, but finalized its FDD; similar to BurgerFi, the plan will be to target multi-unit operators.

“We've gotten some early interest in some of our BurgerFi franchisees, and we've gotten some really interesting non-BurgerFi franchisees out there that are looking to add a premium casual-dining pizza brand in their portfolio,” Renna says. “So we're excited about that. We don't have any news to report on yet other than the FDD and we are out there talking to groups.”

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BurgerFi's food truck.

As BurgerFi grows its footprint, its making sure restaurants are built to handle new consumer preferences, namely the overwhelming desire for speed and convenience. In December, the fast casual rolled out Samsung kiosks powered by GRUBBRR, and the pilot led to an increase in sales, 18.5 percent average check growth, and 52 percent of guests opting into upsells. Kiosks absorbed up to 133 orders per day on average and accounted for 75 percent of total orders and 78 percent of net sales. Peter Saleh, analyst with financial services firm BTIG, said the innovation costs roughly $6,000 per location.

The test was so successful that BurgerFi launched two kiosks in 80 percent of its corporate locations (roughly 20 units). Franchisees haven’t gotten their hands on the technology yet, but Renna anticipates that happening sometime in the back half of 2022. Over time, the chain expects to gain labor savings from the machines, but in the immediate term, since the technology is so new, it’s just diverting labor. Meaning an employee normally manning a cash register remains in the front of house to explain the kiosk if guests have questions.

Additionally, BurgerFi is continuing its single-unit test of a robot server and it's still on track to test in-car ordering with new 5G vehicles coming this summer. The technology will allow customers to find locations and order with their voice while driving.

“I think BurgerFi has shown in the past that we're willing to look down the road for what we believe is coming our way and be an early adopter of some of this technology,” Renna says. “And it takes test and trial and it takes learning, but we're not afraid to jump in and look forward to say, what's going to be in place in a year, two years, three years, and how can we learn from it sooner than later? Because if it works, then we want to jump in with both feet.”

“We love technology, obviously we love the opportunities that are for our guests to order. What technology does is it just gives them many different platforms to engage with BurgerFi and get the product that they want,” he continues. “Whether it's car ordering, whether it's through kiosks, whether it's through traditional POS with the human, we are looking at all of the opportunities by which our guests can engage with the brand.”

BurgerFi’s company-run same-store sales dropped 8 percent year-over-year in the first quarter, while franchises decreased 5 percent, however, these results were in line with projections given Omicron’s impact, Rabinovitch said. Anthony’s comps lifted 13 percent against 2021, but declined 5 percent against 2019. The company believes same-store sales would’ve been flat compared to pre-pandemic levels if not for Omicron.

“We're excited about the prospect of growth,” Renna says. “We're excited about the partnerships we have in the nontraditional space and look forward to expanding on both of those in 2023.”