BurgerFi could find itself taken over by fixer of distressed restaurant chains

With a takeover looming if it can’t pay its latest debt, the future is uncertain for Fort Lauderdale-based, fast-casual dining chain BurgerFi.

Shortly after announcing a first-quarter loss of more than $6 million, the company on May 30 said it is undergoing a “strategic review process” but offered no assurance that the process “will result in an outcome favorable to the Company or its stakeholders.”

Investment analysts interpreted the statement as the company acknowledging that a Chapter 11 bankruptcy filing is possible. Among the chain’s five Tampa Bay restaurants, three are in Hillsborough County. They are at Channelside Drive, the University of South Florida and in Westchase on Sheldon Road. One is in Pasco in Odessa at The Preserve Marketplace and another is in Bradenton’s Lakewood Ranch. A sixth location, on Central Avenue in St. Petersburg, recently closed.

It’s been quite a ride since BurgerFi debuted to stellar reviews 13 years ago selling high-quality, hormone-free Angus burgers, Chicago-style Kobe beef hot dogs, fresh-cut fries, frozen custard with choice of numerous mix-ins, and yes, craft beer and wine.

BurgerFi and its sister company, Anthony’s Coal-Fired Pizza & Wings, is owned by BurgerFi International. The company grew out of a single location in Lauderdale-by-the-Sea that was founded in 2011 by David Manero, creator of two Vic & Angelo locations.

As of April 1, the combined company operated 162 restaurants, including 27 corporate-owned and 75 franchised BurgerFi locations. All but one of the 60 Anthony’s locations are corporate owned. So far in 2024, the company has closed eight BurgerFi locations and opened four.

On Thursday, the industry website Restaurant Business Online reported that Jeff Crivello, founder of TREW Capital Management, might be planning to leverage TREW’s purchase of BurgerFi’s debt into a takeover of the company.

BurgerFi, which defaulted on a previous credit agreement in April, entered into a forbearance agreement with TREW that holds BurgerFi’s creditors at bay until at least July 31.

TREW and L Catterton, another private equity firm, each agreed to lend BurgerFi $2 million during the strategic review process.

TREW Capital Management, according to its website, “focuses on distressed legendary brands” with proven business models that require additional resources for growth.

Crivello is described on TREW’s website as a “visionary” with “deep expertise in restaurant lending and investing” and a “successful track record of implementing restructuring plans.”

Restaurant Business Online’s story on Thursday said that Crivello “has been on a buying spree in recent months,” having purchased Cowboy Jack’s, a casual-dining chain based in Minneapolis, in March.

He is now focusing on BurgerFi after TREW Capital Management purchased the debt for both companies, the story said. “As the holder of that debt, Crivello could end up with both companies by exchanging the debt for equity in the business,” the story said.

In 2017, Crivello was named the fifth CEO in a decade of Famous Dave’s, a Minnesota-based sit-down barbecue chain that had recently closed 50 underperforming locations.

After overseeing improvement at the chain, Crivello turned it into the centerpiece of a larger company called BBQ Holdings and began buying other brands in 2020, Restaurant Business Online reported in 2022.

Asked by text on Friday whether the Restaurant Business report that he was eyeing purchase of BurgerFi International was correct, Crivello texted back, “I’m the lender to the business.”

He added, “Only if they are unable to repay the loan will we operate it. BurgerFi and Anthony’s are great brands and we have a high level of confidence that they will thrive in the future.”

Asked if his statement meant that the report was incorrect, Crivello responded, “We bought the debt with an agnostic view. If they pay us back with interest, as the lender we are happy, if not we are capable and willing to own it.”

BurgerFi has struggled since going public in December 2020 and announcing its acquisition of Anthony’s the following October. It has posted net losses in each quarter since the acquisition and closed 22 BurgerFi locations over the past two years.

Its stock price has plummeted since its initial offering on the Nasdaq Capital Market — from $16 in December 2020 to 24 cents at the close of trading on Friday.

Patrons of some BurgerFi locations began noticing a downturn in quality in recent months.

South Florida resident Larry Gilbert said he was a loyal customer for years at the location near his home but “over the past year their quality tanked big time.”

It “started with French fries, which were mostly black and small pieces — inedible,” Gilbert said. “Then their burgers were consistently overcooked and lacked flavor. The last straw was getting a burger where half the bun was hard and inedible.”

Gilbert said he tried a different location that “was a bit better but not great.”

In January, CEO Carl Bachmann said the company realized it was too concentrated in Florida. He announced plans to further close underperforming restaurants and open new ones in the northern and western parts of the country.

The company also announced several initiatives to improve the quality of its offerings, including boosting the flavor of its burgers and fries.

“We have a new procedure for our hand-cut, fresh fries that results in crispier, tastier French fries, and guests’ reviews have improved as a result,” a company spokeswoman said by email on Friday.

“We have introduced a better tasting, clean-ingredient potato bun which has resulted in improved taste and positive reviews of our burger sandwiches and our new chicken sandwiches,”

She said the company has expanded availability of chicken offerings, including patties cooked sous-vide (under vacuum) resulting in a moister, more tender product that’s then hand breaded before being fried or grilled to order.

Recent online reviews of food and service at BurgerFi locations have varied widely. One patron pointed out that differences are likely a result of differing management styles at franchises run by different owners.

By Ron Hurtibise, South Florida Sun-Sentinel