The popular fast-food burger chain files for Chapter 11 bankruptcy

Fast-food restaurant chains have struggled in 2024 to generate adequate revenue as high interest rates, rising inflation and declining consumer discretionary spending weigh on their businesses.

Declining revenues have led to financial difficulties for many fast-food chains, and several filed for Chapter 11 bankruptcy in the first three quarters of the year.

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EYM Pizza, which operates about 140 Pizza Hut locations in Texas, Wisconsin and Ohio, did not have enough revenue to pay the required royalties to Pizza Hut. The shortfall in royalties led to a Pizza Hut lawsuit against the franchisee, prompting EYM to file for Chapter 11 bankruptcy protection on July 22.

Filing bankruptcy provides an automatic stay of any legal actions against the debtor during the bankruptcy proceedings.

Another fast-food franchise operator Miracle Restaurant Group, which operates 25 Arby’s restaurants in Illinois, Indiana, Texas, Mississippi and Louisiana, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Eastern District on June 20 of Louisiana, to reorganize his business. .

The franchisee filed for bankruptcy once before, in 2010, when it operated 60 Arby’s locations. The restaurant operator’s store count fell further from 45 to 25 as a combination of events hit its business, such as the Covid-19 pandemic and inflationary pressures on commodity and labor costs.

Features of the BurgerFi restaurant a burger, fries and chicken on August 20, 2024 in Arlington, Va. (Photo illustration by Tierney L. Cross/Getty Images)

Tierney L. Cross/Getty Images

BurgerFi files for bankruptcy after lawsuit fails

BurgerFi International (BFI) owner and franchisor of 144 burger and pizza restaurants across the country, filed for Chapter 11 bankruptcy protection on Sept. 11 to reorganize after a turnaround plan it implemented less than a year ago failed to managed to produce the results needed to prevent filing, according to one company. statement.

“Despite positive early indicators of the turnaround plan initiated less than a year ago, the legacy challenges facing the business necessitated today’s filing,” said BurgerFi CEO Carl Bachmann.

“We are grateful for the continued support of our loyal customers, vendors, business partners and our dedicated team members, who are the heart of the company,” Bachman said.

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The company’s two brands, BurgerFi and Anthony’s Coal Fired Pizza, have faced a sharp decline in consumer spending post-pandemic amid sustained inflation and rising food and labor costs, forcing the company to stabilize the business in a structured process, according to the company’s chief restructuring officer. Jeremy Rosenthal.

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Bachman was hired in July 2023, along with CFO Christopher E. Jones, to turn around and strengthen the company’s brands and operations. The team developed a strategic plan to address declining same-store sales, high employee turnover and an outdated menu, the release said.

BurgerFi closed 19 underperforming corporate-owned locations and cut related operating costs as part of its turnaround plan. The company currently lists 144 locations of its two brands, with 76 franchised and 17 corporate-owned BurgerFi locations and 50 corporate-owned Anthony’s Coal Fired Pizza locations and one dual-brand franchise.

The 77 franchisee-owned restaurants are not included in Chapter 11 bankruptcy.

The debtor listed total assets of $50 million to $75 million and liabilities of $100 million to $500 million in its petition, filed in the U.S. Bankruptcy Court for the District of Delaware. Its largest unsecured creditors include US Food, owed $1.68 million; Lion Point Capital, owed $675,000; and Sysco Corp., owed $390,639.

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