BurgerFi Predicts Growth Despite Financial Woes And Closures

It's been a tough year for the fast-food industry. Seven years after BurgerFi's first store debut in Lexington, Kentucky, the chain's final remaining location in the city (out of three, originally) recently shuttered due to tax- and rent-related debt. In the same week, the brand's Cherry Hill, New Jersey, location closed its doors just six months after opening. 

If you haven't visited BurgerFi before, it's a fast-casual chain that serves a chef-created burger menu with a focus on clean, quality ingredients and mindful sourcing. A burger from its Brooklyn, New York, location runs for $8.87 – slightly more than the $7.29 Shackburger from a Brooklyn Shake Shack but in the same ballpark. But, like many restaurant chains, BurgerFi accrued some hefty debt from the pandemic, per Seeking Alpha; any substantial profits turned from the chain will be more of a long-term payoff than an immediate turnaround.

BurgerFi closed 15 stores in 2022 and 17 in 2021, on top of many other pandemic-related closures in 2020 (via QSR Magazine). As of 2022, the chain has 114 total remaining stores, all located exclusively in the U.S., 11 of which it opened in 2022. On a Q4 earnings call for the previous sales year, CFO Michael Rabinovitch shared that the company is admittedly anticipating a few more closures in 2023. But, all-in-all, it looks like the tide might finally be beginning to shift for BurgerFi. Here's what changed.

BurgerFi saw a company-wide 2-3% sales increase in Q1 2023, per QSR Magazine. The company also saw higher employee retention and customer satisfaction reports — positive trends that are anticipated to continue into Q2. BurgerFi has been expanding the implementation of ordering kiosks across its stores, and sales are already measurably up as customers opt to order more items, especially with its new "Make it a Meal" bundle, which adds a side and a drink to an entrée for a reduced price.

The chain cited the previous store closures as the result of staffing shortages, lack of capital, and inadequate operational knowledge. Still, BurgerFi first opened in 2011, making it a relatively early-stage company to begin with. A big hurdle that the chain cites is the unavailability of labor, which has emerged as an industry-wide issue since the pandemic. Earlier this week, the U.S. Chamber of Commerce reported that food service is among the most impacted industries in the wake of COVID-19. Its industry quit rate (which is notoriously pretty high anyway) has remained above 5% since July 2021 — a record high.

Looking forward, BurgerFi expects to opens 15 to 20 stores in 2023, including airport restaurants and two to three locations of Anthony's Coal-Fired Pizza & Wings, another brand in the company's portfolio.