Earnings call transcript Q1 2023

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Conference Call Participants

Peter Saleh - BTIG

Mike Albanese - EF Hutton

Lynn Orenstein - Drexel Hamilton

Operator

Good afternoon, everyone, and thank you for participating in today's Conference Call to discuss BurgerFi International's Financial Results for the First Quarter ended April 3, 2023.

Joining us today are John Iannucci, COO and Michael Rabinovitch, CFO.

open for we'll questions. remarks, their the your lines Following

Private acquisition remind liquidity, I this statements sales, plans, plans, Before related company's Act to the may today, of forward-looking to XXXX. same-store outlook, financial as Litigation results, Anthony's everyone These of in BurgerFi's restaurant or forward-looking we begin from be contain prospects want that statements or of Reform including and may results conference defined its estimates restaurant Securities business Pizza future projected Fired sales store opening the EBITDA financial growth & operating Coal margin the Wings. call

forward-looking results Forward-looking company's subject based to words and could the plans, and could from such to, These in Factors include, the are statements the forward-looking other and discussed are ended those expects, not on by X, cause which XX-K assumptions the be, the intends, that to January be materially predicts, estimates, generally results identified and as projects, current anticipates, cause likely such with will that expectations to disclosed year similar risks annual statements can those Commission. differences in for the documents or those on limited contribute company XXXX, expressions. Form are uncertainties, files differ but believes, will actual reflected statements. and report will Securities continue, and that Exchange

or results no or qualified revision conference attributed statements this cautionary revise to except BurgerFi in company included the forward-looking by forward-looking persons by are The on entirety law. statements statements oral and call. as to these to publicly written of subsequent required undertakes their BurgerFi's acting the All behalf any expressly release obligation in

cautioned Given these such statements statements. forward-looking uncertainties, reliance on are not to undue listeners place and

discussion may measures. following financial contain non-GAAP Also, the

for earnings a discussion see measures, of quarter release and these reconciliation financial first the the non-GAAP please For XXXX.

for two be call press in the webcast A today's weeks available also replay replay release, via everyone starting be that provided will on available to well telephonic remind I link this www.burgerfi.com. also today. at as like will would the via website company's as

call a As is today's being recorded. result,

I please the turn to Iannucci. ahead. Now, go to call Bergify's COO, John, John like would over

John Iannucci

us joining in your for appreciate continued you interest and BurgerFi. today, we Thank

Let thanking for dedication this entire franchisees and team, me environment. begin and their by work our employees challenging in hard

our Before his Officer, Baines, retirement today, week, June Ian Chief X. I announced begin last effective Executive

to the interim As searches CEO, leading for an Board I forward organization a basis. on new look the

with we the life. In I talented best I've as work myself well both high-quality chapter in next two year, Ian brands growth entire On expansion. last as I his have and company, behalf the of immersed great this into potential. initiatives in driving believe wish the with Over and of margin role, teams the our Anthony's BurgerFi continued to plan

is afternoon our this performance initiatives. recap current plan to first quarter My one discuss and then

first million Following the $XX.X quarterly is the quarter's greater Mike our million revenue of X% total contribution for review the highlights for quarter reiterate of to million. growth include will our detail line in XXXX guidance that, Key and to annual $XXX growth fiscal guidance. The first towards 'XX. financials $XXX with in

$X.X XX% pronounced of improved costs in the $XX.X both and same-store stabilization $XX.X margins in brands, continued grew to operating $XX.X in sales was to of includes Consolidated flow-through million Restaurant where compared BurgerFi of Anthony's. XXXX, sales same period food by Anthony's, of which achieved. million, system-wide $XX.X Adjusted million million. million EBITDA both were more positive and

year EBITDA are confident million XXXX. remain that we Importantly, $XX track to million adjusted for our achieve on guidance we to $XX of fiscal in

operational improve both year. and goal brands for increased improvement in margin on continuing with the of remains the to focus Our execution sales

are we X% in our a saw growth. seen Florida the in Notably, sales recovery have to the we continuing Northeast, XXXX. home During Anthony's the in lagged previously our first improvement which quarter, in had see market increase locations in sales in same-store

quarter The margin top margin coupled in investment costs. margin which XXX line XXX momentum of in basis increased store sales testament of improvement ended our Anthony's were rationale. Anthony's, stable XX.X year. continued one fourth we points quarter. the procurement Sequentially, expansion. thesis basis XX.X%, period operating margin level our our from the a acquisition This with Both the translated continued has a pillars to Anthony's is same into leverage, points is At above prior underpinning with in

Looking at year. prior BurgerFi. System-wide store from X% decreased sales comparable

we marketing and the ended same prior an to increase which the XX.X%, this continue frequency. basis to of margin innovation period work While trends XXX the the from quarter store on is is with level points improving one the menu saw we year. XXXX, exiting operating experience, above improvement guest in We

operating points in fourth resulting Sequentially, and store X.X% improvements margins increased the from expenses. from pricing basis XXX controlling quarter. stable procurement, These are

best like the as has negotiating food we that an prices in a comparatively of changing suppliers the our team and also to especially of course continue the procurement price. chicken been in year. year. activities operating the but Across prices, last compared a implementing over primarily input possible and expect get to These activities of include costs to existing suppliers result result very opportunity both wings stabilization continue reduction is the margins, prior a brands, to the busy This things and beef

I would to are strategic with improve starting on of update operations, to initiatives working the Now like BurgerFi. on some we and sales you

having lot Very and which South Festival Beach of Burger Bash. launched XXXX Food Award LTO Burger We we with the Rodeo at February, Wine the Burger, fun are Barbecue Best a program. BurgerFi's In won the

Angus this As aversion launched its to brand LTO Patty and drive all-natural in burger new a XXX% The our beef Melt patties for profile. of sweet success, our a and grilled Cheese, tangy two pepper Toast have of result savory we sauce. topped crispy extended spicy between jalapenos further onions home-made Texas and products. flavor barbecue Memphis interest with jack served haystack charred with and sweet It's pieces and

Oreo ahead take America's treats. and of we Day, of make shake. chocolate cream St. celebrate their based a top was Around with shake love the is ice and and minty perfect with and guests This cookies three launched our favorite Oreo. Oreo Patrick's green to for mint Patrick's one sweetened to St. green. new our mint ways on look Day, cream custard chip, The Additionally, cream custard fun a on is flavors, flavor shake with cookies it profile of signature minty opportunity fun revamp

onions a Fi between Sauce, Texas all-natural cheese, XXX% of two May debuted Texas BurgerFi's all on new new Recently Toast. Texas Patty X, Angus and Melt pieces signature Patty pressed Toast features melted LTO. American caramelized The we Melt Toast beef,

managers, enthusiasm support And the we for supply leaders held our began, a It ways. our aligned level finally, BurgerFi person is summit brand and convention and couldn't been energy restaurant in This partners. in of late love the franchisee Florida new our to time since franchisees, April, great friends the general as have that old everyone first our was hosted to our Kissimmee, we in pandemic to strategically see and guests meet new the bring higher. ones and in

Anthony's. to turning Now

especially lagged our in has in loyalty been to increase sales, our lean XXXX. market to recovery of engagement. digital of same-store seen paying program the during as our and marketing reward This continue outside which We home have drive into in dividends Florida,

Honey LTO is a very with features Hot The new launched April, especially flavor mozzarella Anthony's when with popular pepperoni Hot signature topped being a new a Mike's pizza. a spicy. Honey. made with Italian famous pressed profile, the Mike's for of In Hot drizzle LTO fresh of thick-cut Honey with tomato Honey. paired we Mike's blend the wings Hot pizza are sweet and also with best sauce imported jumbo coal-fired brand's and topped

a its XX locations improved Proseccos. and all to wine Anthony's menu featuring new new also wines introduced

We are new this our a excited business. part as spirits menu launch wine high-margin of about and are

to Now turning development.

portfolio our and As corporate of restaurants, XX franchised BurgerFi XX XX XXX owned April Anthony's. of consists corporate-owned and X,

first in opening opened kicked Newark development franchisees corporate and restaurants new our owned. the the to January Airport. BurgerFi quarter, off locations with During of We from a we Liberty in two XXXX BurgerFi franchise transferred two franchised

to to XXXX. several in XXXX with deliver opening later and Lauderdale-Hollywood this Fort Airport growing under location the high country of across volumes this continued negotiation for strategy. into development airports to and others our in be We with year, the second International a in grow Airports year part plan continue our presence later

we featuring opened beautiful one West, new in February, a retail restaurant, BurgerFi O-Town destinations spaces. Orlando's franchised desirable In Orlando's entertainment most and of

which still open the to will be plan restaurants, For full-year, franchised one number in location. of new all Included is franchised. this we XX Anthony's new XX to

second of BurgerFi location In opened with expected location, by end. month franchised second BurgerFi one a quarter we the franchised XXXX,

to our with third we're excited first-ever with of year. BurgerFi in BurgerFi an part opened our this a location Services franchisee of and development our As co-branded in to be NDM the this existing expected year, Kissimmee, Anthony's launch Hospitality plan quarter

calls Anthony's them two with agreement for franchised next Florida over years. Our the locations three in

The be Anthony's through in to Station. Miami the World the the Anthony's NDM freestanding, Miami agreement second development both and Center open the will Brightline locations third prototype slated smaller near

have driving growth growth. early that are achieve space ahead. we and very trend closing, our white sales on with are two In high-quality to the operations with brands innings We enhancing in believe profitable we're and further on significant laser-focused story the consumer of

CFO, now Mike. and for Once who Rabinovitch, Mike ahead, our thank I'll will quarter additional team on I'd like our members to turn call commentary again, efforts all our Go to the performance. of XXXX their first over tireless provide dedication.

Michael Rabinovitch

afternoon, Thank and you, everyone. good John,

increasing quarter same-store in for revenues First is Anthony's a quarter total partially revenues were positive of $XX.X in year. million current period. last sales in from the a million same-store result $XX.X The at offset decrease by X% contributed $XX.X to Anthony's the BurgerFi. increase same sales, revenue million,

by brands' BurgerFi of in the X% store XXXX. first the for individual quarter, to last million, corporate-owned by system-wide $XX.X our addition compared sales sales. new decreased to restaurant to decrease corporate-owned year, Shifting The the a period in the sales offset BurgerFi X% driven restaurants same-store same results. increased over

sales to primarily for sales System-wide million BurgerFi in due franchise first For same-store coupled $XX.X decreased with same-store decreased to in sales the decline $XX.X compared X% million, corporate-owned underperforming quarter same-store year-ago in the X%, to closure franchises. BurgerFis, X%. and of quarter, the sales restaurant the decreased

costs, quarter, basis quarter, on in partially loss declines. input the operating of to expenses the due fixed XX.X% restaurant-level sales sales offset to to leverage for to same-store XXX points costs compared by first the decreased BurgerFi's lower prior year's primarily due XX.X%

year. were in million quarter, first XXXX. sales, to prior when the to first increase driven in the $XX.X same-store compared compared by the Anthony's. Turning to sales Restaurant in million The X% increase was $XX.X quarter of a

to year's quarter. Regarding quarter, restaurant to compared XXX first operating improved prior for XX.X% the points Anthony's expenses restaurant-level basis profitability, the

throughout improving beginning in commodity see continue stabilization net basis, are the and loss prices, of expect of a XXXX. to a wing a quarter. we noted, consolidated a On compared million margins reported to chicken John operating million quarter, year-ago first $XX.X loss in of As we especially costs, $X.X we net to the

loss $X.X compensation of general acquisition merger net amortization, $X.X million legal depreciation and integration-related costs, restructuring This of within and of year's expense, included of million expenses, share-based settlements $XXX,XXX costs, expenses. of $XXX,XXX included and million $XXX,XXX of interest administrative $X.X

in first to XX% EBITDA Adjusted in $X.X quarter. quarter first prior the compared grew million, million the to year's $X.X

the to balance on sheet. Moving

of of Our cash million loan decrease XXXX. the was compared have the by expenditures, result When million by $X The of in operations. repayments produced end offset line $XX million line available-but-undrawn at term X, liquidity April cash of was of considering cash capital credit, balance and the at our at in $XX.X X to million, quarter. credit $X January we

in compliance quarter at covenants end. also debt are with all We

Now turning XXXX to outlook. our fiscal

million million; total single-digit are new low following: which the one including restaurants, the reiterating XXXX expecting adjusted which and are of sales; we guidance, $X million, full-year. of assumes increase revenue is million $XX new the of to our $XX to EBITDA approximately XX $XXX addition Anthony's; million a to expenditures in be $XXX for XX capital same-store franchised We to

With that, operator, please for open questions. the call

Operator

you, Thank sir.

from question-and-answer go will is Peter with first Instructions] session. Our begin [Operator BTIG. question We the Please Saleh ahead. now

Peter Saleh

taking great. question. for Thanks Hey, the

on trajectory through same-store Just as the we wanted go to sales the about ask year.

that care guidance your brand particularly as single-digit just Are what suggests think to the far go some through I -- quarter? seeing share year? about second talk same-store so meaningful I you're sales here. in you you BurgerFi Can expecting seeing we what a improvement if for the the you're and low you materialize, guess, maybe

Michael Rabinovitch

calling. Hey Thanks Yes. it's Mike. for Peter, Thanks joining. for

consolidated for single-digit sales guide Our same-store a the of low basis. on year is

that so you that at comprises And XX% realize we're XX% numbers. calculation, really when Anthony's the to Anthony's same-store of looking sales

our with plan. for the being the in The negative guide. trend last certainly So our year is also by up line first is with X% numbers quarter in experienced improvement Anthony's line the in BurgerFi

So both our single guide into supporting those low together nicely of would of digits. fold

the the we how our on the answering a especially in based part initiatives and math where we the the of Kind that your Anthony's supports play, do question, our plan through second see for and year, continuing built the majority the guide, of recovery strength that year. is of in

is to-date quarter and that the first generally supporting line quarter guidance. with Second operating in still

Peter Saleh

of year? then for on give maybe just color on give little Anthony's. can there this a bit the us commodity about you costs color wings on beef even And outlook? more stable BurgerFi you and I talked decline us year-over-year down for just balance bit little more and you Could being know Great. thoughts more a or also the the

Michael Rabinovitch

question. Sure, sure. Good

Xs. the middle We were quarter, level. are costs. in from the call the to of levels. a during of the they it, improved pound a part mid-$X last that below they the high COVID, So in wings fourth on started quarter And noting significant pre-COVID And had noted, as fourth risen before chicken food range they into somewhere Anthony's, recovering our you a, actually pre-COVID year in

started purchasing quarter, tailwind that quarter. we're So our second fourth really to saw in first on and get Anthony's that quarter. the the the of a in category strong tailwind tailwind we largest seeing in continue We continue an

of behaved our our But There's the So the of has our and has supports meat we part some Anthony's here meatballs. relatively year. tomatoes in That some items, be goods. well also in our imported other they lines, also first inflating have right? also that whether toppings dried

first that the have able throughout are seeing to is continue continue and mix the year. a tailwinds of be quarter, the So hopeful it we'll still all and significant very that our we second in into benefit those to quarter

but we some significantly inflation beef are we and seeing experienced On to than better in the are BurgerFi those through February side, March modest month April, January, we the as clip year, year. last rates

comparative fourth to on So we're back our quarter looking even beef and tailwind BurgerFi. from basis procurement a a getting basis, a on on still

less a Is confidence beef. down. every it bit to in May of Maybe go a for that that and little there we'll because able tailwind? that's holiday season, up see normal starting bit for We've continue much uptick, June the year as little we're moderates beef very be then but to seen barbecue and

food our outlook has cost guide, on So the a our substantial come for initial not is off year which improvement from XXXX.

Peter Saleh

Understood.

more. few a just Maybe Okay.

Just the as you pricing can pricing or for we an update guys price the give the you the us your much more through you first in price And much in anticipating have you How comp do plans quarter? are did year? year. have on go how taking

Michael Rabinovitch

Good question.

in X%. price June. and year June in Anthony's, we took on really no the February, one recently, in additional take first, quarter We first Anthony's, price February, one increases under one very So a in modest took quarter. in last We at price mid-second increase some did one

price how in is of a to quarter, few be much being first it might X% X%. carried terms the be It might in percent. So

monitor terms to Anthony's, transactions. and want forward In of those tailwinds, going We're on enjoying certainly it every our commodity sensitive actions drive pricing costs but quarter. we to also we

So a we'll at time. quarter evaluate that X

competitor our brands. our other with larger looked and and increases doing, we options On price appropriate to the burger last were wallet, at competitors set the we Anthony's. levels to competitive We than of share brought what to we're took year be those prices BurgerFi, as better

a pricing the at we actions In in don't evaluate quarter, been good this I BurgerFi third for fourth have and And we'll would might to and quarter, any we how X% quarter. terms carrying, have X%. planned of be much first it say

tie-in, Peter, There's a but to pricing then promotions.

So and to transactions drive the use promotions traffic into we stores.

sales in can eat And of in And at see why increases so we've necessarily you those our the promotions that them put systemic don't same-store sometimes, away place. some that's completely. price

Peter Saleh

Understood. pass Thank it much. I’ll you along. very

Michael Rabinovitch

you. thank Okay,

Operator

The with next EF ahead. Albanese go Hutton. question Mike from Please is

Michael Albanese

morning, guys. you Good How are John.

John Iannucci

Good.

Michael Rabinovitch

Thanks Mike. Good. for joining

Michael Albanese

guidance. on reiterate to Yes, nice definitely you see happy a congratulations your here and quarter

from me. of ones couple a quick Just

to the peel the I just more little of think onion bit on level. unit a kind back

unit -- commodity guess updates the terms both of get something brands, level of economics, of and labor really efficiency, know kind in I had into that's at any food costs. we You kind turnover? But you labor talked before. about I

Michael Rabinovitch

Yes.

here improvements. think They're that level. the of would count. store at turnover at there's into I in I guest frequency the not the seen that the would improvements driving they're higher directional behind some I think What second is say They're a by point the not quarter train -- heading and we've material. service change in beginning going the me. first They're of the they're not level sorry, quarter,

So that frequencies with believe very pleased the that keep we're that decreasing, seeing those were. up move where they back to those getting increasing experiences from go that. and And we're as we and needle to higher continues, trend guest

Michael Albanese

for the I'm you sales past then since using But offerings. takeaway you're extending what's Thank had but... those as question, just guys Rodeo continuing it's the forward example, you the the it. next the success Burger. And have an color. in any of mean, I to guess, out you're those BurgerFi positive my LTO And I push obviously, Got some of kind LTOs? assuming lift? with notable

Michael Rabinovitch

Yes.

really I getting is and feedback is that think our the they're that marketing team welcomed. operations

love with our communicate really and the probably our a these not. really loyal but are terms really, in have of brands. with Are lift customer platform needle, really and they moving the sales you of they enjoying that incrementality? Probably the of not that Anthony's, continue appreciative they to affair both great driving customers They're us give a if and Our about loyal think Honey promotions, BurgerFi Hot really options. diversity

Michael Albanese

two more wondering And little from to franchised I don't let I'm the franchise but on my those closed opened guess assuming That's thought I Yes. in run I I four, here. room you two. to And for owned. franchise then lastly, further BurgerFi, the and essentially. location base, color them list to more need the of could within that is what you Great. maybe know. add BurgerFi the your transferred I'll bit obviously, attrition to a that, be corporate got Okay. of in Rodeo there's what, try terms like that, just I'm to then if efficiently. you base? expectation mean, -- Burger. regards I

Michael Rabinovitch

Yes.

that that very settlement, we situations. We part take So to agreed I'd and two say that of owner the and BurgerFi with had during had and mostly of legal the of He that COVID, two additions six, own the out had locations former getting the on. were number, to transfers business significant and were but And had they was litigation think, and nothing unique as more a It's shareholder. of matter a I we that. of still had. he so he that, that closed take than them he agreed -- larger operate a

of business closed that four those see the closed do were of the during there had would of is that I back tell four in were They overall terms XXXX. terms But the In you you terminations. in franchise base, health actually first what quarter.

quarter franchisees it we that the stores and and the COVID. of what finalization, throughout those is during kind first couldn't terminations, make so terminations of of And franchise XXXX saw into XXXX

it our closures. our plan many to unit we If you to year, and to development more be of kind with we're closings, the for XX expect XX, you a year about net XXXX compare projecting positive not think openings and

expecting revenue and growth So of franchise net our out system. unit we're net growth

Michael Albanese

you and segue, that it strategy continuation Thank the new XX XX of call XX I good -- really don't it. venues venues. to of I the percentage the that a of of Obviously, Got a such and locations XX, airports. guys unique I strategy? we'll to opening and as mean, know, like you, is that's what

Michael Rabinovitch

in do to the -- we non-traditional’s, there? one to From two account have John, two perspective, in

John Iannucci

Yes.

Michael Rabinovitch

Okay.

So one to two?

John Iannucci

Yes.

Michael Rabinovitch

of that And in going see a you're high-volume great you're LOI. airport plan, to development but being as see would expect development these of our going I In exposure we part in are brand -- our type there, proportion larger locations. to

Michael Albanese

Got it. Got it.

to my question anybody else in. last that I'll And Okay. it and for wants hop then leave

guys franchise that? guess mean the do and I to very summit, I'm back Just I that any broadly, glad able and get from were person. major in you takeaways

Michael Rabinovitch

comment, led let he because I'll really summit. that John

some there but intangibles good it, think very, out that were I very I'll came of let that John...

John Iannucci

from was our Yes, for being It the corporate and here. four years. franchisees participation question, Thanks and our first Mike. for thanks in our It's locations. great

to as franchise lot results we launched initiatives enthusiasm actually important, And for And were for the unify say think, a as attempted was and BurgerFi. the would as was brand, the brand the the rest the it of of we excitement and summit the so to the of excitement see we and the a good. in the pretty I what for and I a brand. from regards far we really think about -- and brand survey great It really feedback successful. be, out following I to it for received and expect We turned catalyst year to direction team

Michael Albanese

on Okay. Great. And for insight fairly color here. and all congrats again, a that quarter strong Thanks there.

John Iannucci

Hey, thank you.

Operator

go is next Drexel from question with Hamilton. Orenstein The ahead. Please Lynn

Lynn Orenstein

congrats the and your talk little on the about strategy growth Thank please much more? bit and everyone. there so Can you quarter. your Hi, kiosk a you of

Michael Rabinovitch

Yes, sure.

for joining, you thank asking and Lynn, thank the question. you So for

it last almost to on launched rolled ‘XX a out we success, the of in locations. spring So corporate its as season. the locations Based fall we three kiosks all over test in

it that adopting remote with are and engaged was some not had got up it the prior it fourth franchisees talking began just we And John it. about, of are for see and the in that a to locations got actually in who our number visibly quarter. summit of signing And franchisees

first-party a suggestive we're system the of higher our delivery interesting, sale adoption our if penetration of or of And used generation. kiosk kiosk I system-wide you X or to to gives being and about or and AI acfp.com burgerfi.com the queues, consistently digital platforms, see a at, at consumer. probably kiosks whether the take, you it take orders XX% our we're offerings it think average XX% So in-restaurant give in revenue ordering kiosk XX% providers, because add the be that third-party of very We it's restaurants. our

it's So just another complement.

go. see still the love becoming that the because a our I experience like to Now not of room all fixed. software kiosks to more critical of continue something to the on the there's and kiosk improve customer the It's augment We'd element We'd all is think see to franchises. that we reintroduce time.

it's good excited with and it. we're So very tool, a

Lynn Orenstein

That’s great. you Thank so much.

Operator

session. concludes like now At call time, remarks. closing this Iannucci Mr. back to this over our would question-and-answer I turn the for to

John Iannucci

today's I'd Thank to to for when like XXXX. look we of call, in we listening everyone August forward quarter second to with again results you, you thank Thanks our joining. and speaking report Gary. for

Operator

The conference you today's attending for concluded. has now Thank presentation.

You may now disconnect.

BurgerFi International (BFICQ) 16 May 232023 Q1 Earnings call transcript