BurgerFi announced Thursday it’s now exploring strategic alternatives to move the business forward as sales and unit growth continue to falter.
The company’s board of directors formed a special committee and retained Kroll Securities as its financial adviser during the evaluation process. BurgerFi said there are no assurances that the strategic review process will result in an outcome favorable to the company or shareholders.
As part of the move, executive chairman Ophir Sternberg resigned from his position and was replaced by board member David Heidecorn, who is also a senior adviser and former partner of L Catterton. The private equity firm has served as one of the largest shareholders since 2021 when it sold Anthony’s Coal Fired Pizza & Wings to BurgerFi.
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“We are committed to considering all potential strategic alternatives,” Heidecorn said in a statement. “While we are confident in the company’s current operating strategy, we are mindful of the company’s current liquidity challenges and are committed to exploring strategic alternatives that we believe would be in the best interests of the company and its stakeholders.”
BurgerFi—which went public in late 2020 via a special purpose acquisition company—has struggled to gain traction in the post-COVID environment. The chain’s same-store sales fell 8 percent in 2023 and 9 percent in 2022. In Q1 of this year, comps dropped 13 percent and systemwide sales decreased 17 percent. Also, unit count is now 102 restaurants after closures of 14 stores in 2023 and eight stores in Q1 alone. The fast casual is close to falling below the 100-unit threshold for the first time since 2018.
The chain revealed earlier this year that it defaulted on a credit agreement with $51.3 million outstanding. The action occurred because the company didn’t meet a minimum liquidity requirement. BurgerFi noted Thursday that it entered a forbearance agreement with TREW Capital Management Private Credit. Also, L Catterton and TREW agreed to lend up to $2 million each to help BurgerFi during the strategic review process.
BurgerFi also received a delisting notice from Nasdaq in January because it wasn’t meeting the minimum stock price requirement of $1 per share. The fast casual hasn’t been above $1 per share since early December. It closed Thursday at 36 cents per share.
BurgerFi CEO Carl Bachmann and CFO Chris Jones signed retention agreements to ensure leadership stability while the brand weighs its options.
Bachmann joined the company in July 2023 to provide a spark. Since then, BurgerFi has operated under a five-point plan focusing on updating infrastructure and technology, enhancing the menu, redefining the store footprint, implementing gold standards, and strengthening brand awareness. Although sales have been down, Bachmann has maintained optimism and told investors recently that he’s “more confident than ever that joining the company was the right decision.”
