The encyclopedia · Strategy & Leadership · Financial decision · 2024
BurgerFi went public by SPAC in 2020 and filed Chapter 11 four years later
The 2011 burger chain that went public via SPAC in 2020 filed for Chapter 11 four years later — 162 restaurants, a $156.6M buy and a 13% sales slide
BurgerFi · 2024-09-11
What happened
BurgerFi was founded in 2011 and went public in 2020 through a SPAC merger, then spent months later buying Anthony's Coal Fired Pizza & Wings for $156.6 million — a bet that fast-casual burgers and a pizza chain together could service the debt. By April 2024 the company ran 162 restaurants across the two brands.
The bet never paid off: in the first quarter of 2024 BurgerFi posted revenue of $42.9 million, a net loss of $6.5 million and a 13% decline in same-store sales at the burger chain. In August the company told investors it had "substantial doubt" about its ability to keep operating, holding just $4.4 million in cash as of August 14.
On September 10, 2024 BurgerFi filed for Chapter 11 bankruptcy protection in Delaware, listing assets of $50 to $100 million and liabilities of $100 to $500 million, expecting an $18.4 million loss for the quarter that ended July 1.
Chief restructuring officer Jeremy Rosenthal said: "In the face of a drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs, we need to stabilize the business in a structured process." Shares had fallen more than 80% in 2024, trading around 14 cents, and the company said it expected to keep operating while it worked out a sale.
Why it happened
- The SPAC route paid cash for growth: BurgerFi went public in 2020 and spent $156.6M on a second brand months later — debt the core business never earned.
- Sales turned down hard: same-store sales fell 13% in Q1 2024 and the company expected an $18.4M loss in the quarter ending July 1.
- Cash ran out: $4.4M on hand in August, a "substantial doubt" warning, and Chapter 11 a month later.
- The industry headwind was real: post-pandemic consumer spending declined while inflation and food and labor costs rose, squeezing a chain with no margin to absorb them.
The lesson
A SPAC cheque is not a strategy: BurgerFi went public, bought a second chain with the proceeds, and filed for Chapter 11 four years later with sales down 13% and cash down to $4.4M.
Sources
- CNBC | BurgerFi, the burger chain that went public during the SPAC boom, files for Chapter 11 bankruptcy protection
- CNN | BurgerFi files for Chapter 11 bankruptcy protection
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