BurgerFi International (BFICQ) 16 Nov 222022 Q3 Earnings call transcript

Good afternoon, everyone. And thank you for participating in today's conference call to discuss BurgerFi International's Financial Results for the Third Quarter-ended October 3, 2022.

Joining us today are Ian Baines, CEO; and Mike Rabinovitch, CFO.

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

Before we begin today, I want to remind everyone this conference call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. prospects be liquidity, BurgerFi's sales EBITDA store operating Wings. growth may future of and or statements including Coal margin outlook, results, Fired the business opening plans, of financial forward-looking results related sales, company's estimates to its restaurant the from These projected financial acquisition restaurant Anthony's or plans, & same-store Pizza

included the December All BurgerFi subsequent company acting oral The for Securities persons revise Commission. entirety files Exchange XX-K the qualified except required risks to contribute this continue expressly differences discussed include, believes, Form reflected behalf statements the identified expectations which those in to forward-looking the estimates, revision attributed can and cautionary subject results annual based statements be these company's publicly BurgerFi's forward-looking by company year by will call. statements the results words the be, as limited in are with that but forward-looking projects, the on generally and on as XX, those written and expressions. are to actual such will intends, not expects, are by that cause to, documents or ended or report the and results similar other anticipates, disclosed likely release and plans, and statements. those to are differ XXXX, the and conference cause from statements undertakes These statements predicts, Forward-looking such or assumptions uncertainties no forward-looking that current to materially in Factors law. could to could their in on obligation of any

measures. place on uncertainties, Also, cautioned not forward-looking undue financial may discussion these statements statements. listeners contain are non-GAAP Given reliance and the following such to

available this everyone of would quarter being for to for non-GAAP remind replay the discussion today. financial via Baines. via as starting weeks www.burgerfi.com. available Ian earnings be today's in Please a provided reconciliation conference on will and also CEO, release turn I XXXX. like well is website would be recorded. to call link press the see telephonic please BurgerFi's to company's Ian? over third at I the that the will two For A webcast now measures, like note these release the event replay as

joining BurgerFi. in for Thank to employees I in and begin team, you your thanking entire interest for environment. hard and our us appreciate this would dedication continued like today and by work franchisees challenging we their their

initiatives. performance and Now, I will current our then our third quarter discuss recap

October, an $XX.X million $XX.X third revenue XX quarter in will that, the third in to comparable guidance. revenue grew quarter in update related XXXX Coal addition the continues continued of Anthony's where Pizza sales first and that increased & the November see corporate-owned Wings to time in Fired for third a uptick XXXX, began. sequentially corporate-owned total increase year. Mike the acquisition third into pandemic the Anthony's the Following and above locations. The million of was XXXX sales XXX% significant financials through were the and last I'm since quarter, new quarter the compared BurgerFi period review the to brand to provide was on the over pleased of of month our report to the of

EBITDA X% prior million wide of the System our Anthony's. of at X% million offset acquisition by restaurant increase and grew to times year-to-date year Bringing compared we a as increase third primarily $XX.X Anthony's. as comparable BurgerFi, We Our $X.X $X.X same-store decreased eight sales adjusted BurgerFi EBITDA third adjusted to at quarter almost at the X% million Anthony's. for the the decreased to decrease in to was quarter. system driven a a quarter wide which consolidated X% quarter, decrease saw X% sales consisting X%

However, as cost $X to environment, expected of now to due current the $XX the economic million full BurgerFi, projecting various a we're than sales of EBITDA pressures result the between million and lower XXXX. adjusted for in

landfall on reopen Ian within the know, September Anthony's Florida all hurricanes are of home our East made restaurants Coast. you impact the as days, on had of neutral will fully since. restaurants All Florida We in XX. state a we a and Hurricane had estimate sales, operational that majority As them our few on

percentage our sorry of slightly to I worked on the impact to the high so a on they continue percentage negative am a of I have can coast and of that enjoy had enjoy would revenues, our high like west quickly reopen of after it -- we BurgerFi's hard our express as Florida guests to However, restaurants how market. a restaurants sales teams, could and hurricane food. how proud that ensure our the

in the restaurants XX As timeline. of partners' X, franchised, consists underperforming restaurant XXX their XX portfolio and corporate-owned have their our October open of October. affected other in BurgerFi to one and original industry, construction Similar franchisee corporate-owned our to delays on Anthony's. restaurants Anthony's We restaurants, did close XX ability permitting and

third of is openings weeks December, and to restaurant, XX three opening for one restaurants our the in plan the the this bringing late our XX quarter, we nine franchises year open total franchised scheduled year-to-date by grand more and corporate-owned. During locations, We for opened coming new BurgerFi two to third a franchise quarter. final

Food Food year multi-concept We Gopuff awareness, through These year, base cross-sell locations to expand last acquiring us opportunity Gopuff a of plans original further Halls. are kitchens. open customer opened deals. total are our have capture of incremental foster growth own. Halls also new now enables no our capital brands brand Anthony's franchising we Fresh to with virtual building and and a attractive, the targets. footprint growth both XX By for growing multi-unit, eight units franchise we across by end to investments additional Year-to-date, while with our to XX opportunity Fresh This have

BurgerFi, model for which without signed first focused three behalf our of franchise asset-light years. on multi-unit expansion our look brand three capital will next to ahead, over investment facilitates our development end, similar future franchisees of are one locations we the be with we BurgerFi at this significant As growth announce To agreement Anthony's company. largest on strategy Anthony's we the also to with have of growth thrilled

long drive Co-branding expect Anthony's and fastest focused initial for Kissimmee, BurgerFi's capitalized hospitality will location the in pizzas We We their into XXXX franchisee opportunity Bringing has more leverage team to sales well result and as retail with existing growth finding a these franchisees the have through this to margins pipeline restaurants, roof. profitable brands. a on categories, operators BurgerFi organic one year over one the combining growth strong a is the runway in looking for open experience. we And Anthony's been be interested burgers is and long growing ahead. This beyond. My another are and in for believe in our and And to great both us term. location. with under of located Spring the and Florida. disciplined in co-branded incorporating of of system negotiations parties will into XXXX several

franchised. XXXX new restaurants, plan to this XX to of be XX to Looking will all which we ahead open time, at

our experience it you fresh options, what and of agency, follows Capitalizing October This this new would based identifies a of starting of positioning campaign, without connect BurgerFi quality a brand customer amplify will category. fresh Appetite tone new conjunction better the offerings, taste differentiator. preparation, BurgerFi. positioning BurgerFi am the unique as Campaign burger strengthen our a of they to to intelligence on unique in Amplify want guests guilt. Amplify announce launched flavors thrilled in campaign new chef-inspired Appetite research The your with I marked and the like further the refreshing on a study the for advertising better of other your brand's The agency BurgerFi's positioning leveraging into and premium ingredients I strategic the with all-natural in and we how quality with burger an onboarded that quarter, on Last brand on in-depth future. of a initiatives, advertising messaging unique BurgerFi's to to Now some attributes update awareness. new our you drive

through also a five the August to launched We to Cliff and burger, Pleau our BurgerFi expand continue with In ran enhance at with to for fun chef, items journey. menu Lucy burger to LTO who offerings plan menu new September industry and Juicy program with variety XX. reward LTO burger. well-known the having We partnered ideal a value wants plan more better guest innovation, which with offering anyone even themselves

financial will were returns our level enhanced believe quarter, BurgerFi and be day-to-day quarters. third a in focus result France below expectations be continue coming sales our while in restaurant to sales lower our the operations leading stronger We execution pressured. leverage to of of effective and in marketing, margins the on Now as

And a scores brand. stabilization began Our plan improve have are will to for and to operational the growth drive we see in which right place labor, continue to performance. this confident we lead we in guest satisfaction to better

to has in is increase dividends market powerful. this an increase Turning We're This home guests. been brand in same with resonating We drive continue not seen paying seeing digital demonstrates marketing marketing also believe sales into in sales. of our program to our as our are our to awareness. Florida, Anthony's, efforts where outside and reward loyalty our lean as awareness of store

Anthony's. we're improvement, of recovery result continuing sales margin this a As see at to

that optimistic long can achieved categories, commodity have not ease profitability we and margins some short in We've over levels, chicken are prices improve we begun wings. term. our our While also the to see yet pre-pandemic especially

we new benefits E-gift digital loyalty as and amongst November, launched initiatives tailwind better offers continued including into a We for the self-ordering which expect sale the fourth guest program delivery continue a cards, and platforms. the to other this BurgerFi, Across to features. rollout app improve several brands, we quarter mobile of underway have kiosks, building be experience of margins. and In increased more our and sales, to our both of a the operations features guests, enhanced and such

In marketing the as addition, possibilities. research Technology overall to improvements new engaging the and app link to guest experience. prominent also contains cross-brand of our our to and brand website BurgerFi data leverage Anthony's in allow elevate grow will part a

turning guests Kiosks order channel or a franchise-owned technology guests, our begin and available corporate-owned add to fully entering for that to XX this similarly Now redeploy those is adopt and will and to progresses. choose as by call proven orders. we is of more the specifically, a ensure Early the periods. margin BurgerFi have accuracy to This phone we the today have us out that as allow average especially to our high this indications on in our peak expect Anthony's, technology to use uptick like At kiosks, our our market ordering directly and seeing an channel. time XX to that reduce labor. we experience of helpful have during be still can upsells, they in AI as rolled seamless BurgerFis kiosks system for and are kiosks check

to I'd turning up up the Ian donate and a leading to portion November, along guests match provide to BurgerFi to to in forces their to plans Cross. and accounting donate dine-in call that of and we month BurgerFi Red Anthony's relief Mike, Before southwest and like the proceeds Marcum firms to up round $XX,XXX will donations. of or for are to with at to need share add by the able Anthony's advisory in $X with Guests meal to nation's of one and Marcum encouraging Florida. those LLP, set joined Hurricane in the to

So consumer. since on for And have innings with high significant on we the whitespace two growth brands trend closing, quality early believe we're are the with brands, in believe we they have that we ahead. both very

profitable our Rabinovitch, for Mike turn Mike. all driving achieve operations to on over enhancing our to additional third who provide Go team to performance. We call like their thank on tireless and are our the dedication. again, XXXX will commentary and members growth. efforts laser-focused quarter I'd sales Once of ahead, I'll CFO,

you, Ian and Thank good morning, everyone.

will results, XXXX. Anthony's quarter As which of the a recorded Anthony's I November X, to includes on for our speak acquired XXXX. we reminder, third

business in that year fiscal on third XX-week financials October approved and change July, each in change December acquisition XX financial I'd of of board to Anthony's. the fiscal reflected following of This order the like directors to XX a the Additionally, Monday nearest our our you X. remind our year, to to company's improve ended of to quarter the alignment is in ending processes

January on fiscal result, a now current As our year end will X, XXXX.

me detail. discussing our by financials Let start in greater

third acquired same sales the the sales year late compared million total revenues contributions sales results new approximately was The year, Anthony's compared restaurants were prior was driven BurgerFi by from to BurgerFi same $X.X $X.X last corporate-owned the decline for our X% system in restaurant Third increased $XXX,XXX XXXX. XXXX, the of from quarter by segments' increasing the the store $XX.X store for which last quarter. $XX.X in X%, to million, quarter sales. year. the last quarter This the or XXX% period million same due to million $XX.X over million year. a to to increase partially Shifting third by of offset for decreased of corporate-owned addition quarter, wide same in for

increased same For sales X% ago corporate-owned quarter sales BurgerFi, year compared the versus million, wide growth. for second decreased quarter, the franchised decreased lost costs points for to million leverage System store declines. X% by the store primarily quarter, same to in $XX.X in the fixed decreased new on BurgerFi to due XXX expenses due primarily quarter, same decline sales year restaurant the partially the in basis XX.X% compared to store operating BurgerFi's in restaurant XX.X% level and sales to XX% to store XXXX. sale prior offset due same third restaurant $XX.X

were in increase same This third in compared to X% million to was driven the by prior $XX.X quarter to $XX.X a XXXX. Anthony's. Restaurant year. specifically in when million Turning compared increase sales store the sales

points restaurant the Anthony's XXX for operating improved basis third restaurant quarter, Turning to profitability, compared to prior expenses level year quarter. the

we to quarter. stabilization costs, see improve chicken are commodity noted, the wing of Ian to to As beginning fourth and a expect in prices, margins continue especially

quarter basis, million of million loss to $X.X operating tax loss net EBITDA by made XXX% year retention in credits, the change $X.X the in million consolidated the retention of to the improvement the ago in quarter, reported increased legislation. primarily in ago Adjusted Anthony's. year CARES compared credits, the This Our net quarter. in employee employee the third tax by compared results to included Act through driven was of partially a is available also we Anthony's. third a On $X quarter. due to third results quarter $XXX,XXX a $X.X year-over-year offset of the acquisition The net million approximately

Moving the to sheet. balance

at balance at XXXX, compared $XX.X to December million million $XX.X XX, X cash October was Our XXXX.

year 'XX Moving on to fiscal outlook. our

We are for our full expectations updating the year.

low we're Gopuff as million Our and to the up the year. addition to XXXX store nine million single franchises, follows. between $XXX call million, well restaurants, operator, for as $X as kitchens to million restaurants, XX increase $XXX of $X in of same is assumes Total be new and With digit for to up between sales to please revenue that, BurgerFi, full ghost this questions. XX guidance XX the which corporate-owned company-owned capital expenditures XX year. and Adjusted $XX approximately EBITDA expecting million, a three and open for of

you. Thank

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

or out other Anything quantify sales an impact on sort of that can I be hurricane -- Anthony's bit Great. negative I it the of good Thanks. impact tease guys slightly was the and maybe if quarter? BurgerFi. on had BurgerFi a of back impact. on the just And to this just we costs to I labor? much little -- with way a you circle impact curious said aware Any neutral should we any morning. on impact wanted on how know the

although I'll we Peter. really On in little Sure, stores try still They're a stores well to Florida. Anthony's, color. our provide XX dispersed. -- have

storm enjoyed locations or some restaurants it away call other being Orlando Beach. although the we a had and in few from product days, Anthony's geographies the store the uptick impact an and and Palm so, And to closed west the people coast in as in in migrated Miami the other Anthony's saw for around

food call that So had that a probably was effect. might there's say in almost locations. a it neutral of few very a would I have been amount small wasted that

we -- between had BurgerFi terms the to I On of restaurants Tampa we think Naples. heading in same math don't have side though, south about six the

had But see well. were as so reorder I two from impacted out sales. from move days. would of think our of to food didn't to and the We a six some they X% over it their quarterly change And brand. to They rest days up they anywhere that throw quantified notable that I a or in have exceeded to in don't the don't it think decline. the a X% that be impact impact certainly

certainly a if not was worked driver. stabilize an to team influencer it it try to So a thing but the hard

Understood.

you Can store How the understand the maybe much for in in were quarter? components BurgerFi some pricing help and Okay. the Very same comps here? helpful. Anthony's traffic us maybe sales of mix of

Sure.

versus So prior which year both if brands taken QX then is and prior past QX you're had year, increases at December, June XXXX. in of again in the QX, looking in the

say So I'd a from price. the those X% cumulative would be on a to double price Anthony's it -- XX% both low had to QX. on probably to X%? BurgerFi brands perspective, two on maybe And digits, QX increases X% basis between XX%

Yeah, X%.

X%.

U.S. But a markets to So both haven restricted and year, versus price have same brands count as on other for had a BurgerFi traffic the closed manner. enjoying were Florida more time last were the we clients perspective, that in year. a throughout lift. continued the transaction Last

that, a and our bit in a had activity. But of bump in counts little transaction down. we even So traffic were without

where you to at Okay, relative us guys is the way give October. a as XXXX on BurgerFi seeing of improvement know uptick, some and you that Are And mentioned any Anthony's see BurgerFi month to you're just sales. just well? starting in the sense any for to on I - least side

very 'XX to coming enjoying we 'XX. sales with Because this because last trend Versus negative to here. second -- the is that that consumers the was same 'XX we XXXX Florida. Yes. versus were BurgerFi Give of actually flat phenomenon me year. time BurgerFi's just similar have one store

prior at XXXX decline more Anthony's October falling in XXXX. Anthony's an on XXXX. point. through And very with small our versus Anthony's this don't shift we So month to of year. The 'XX is think October for was the basis, had is a that calendar point high On that versus we're sales we store positive. the returned we worth Halloween, recovery versus that a similar benefit into fiscal continual of than But did recovered this in seeing that BurgerFi enjoy same not but

So with of in performance even without Anthony's We're the that. month October. pleased very

And very maybe more. couple then a just Great, helpful.

can bit Anthony's Just Nice announcement. talk a little you see that deals? the about franchising to

indicated You bit the Any you'll is Just understand there around marketing to of rate how be the the investment look, on on us contribution? a to adding just BurgerFi And if location? little agreement? to required the the of franchisees par? menu could give what royalty initial that you sort sense that's trying going details

Okay, sure.

other Anthony's to the the we begin order lens First, me administrative strategy. do to franchising. we a When grow listeners needed for and with several acquired things. frame we to let through it you in acquired franchising, Anthony's

and in finalized summer was One of June-July. late that Franchise this create Document, a document them was file Disclosure

of Anthony's. mentioned also had any We to existing be an deployed franchisee on that easier want are format working to new and to to that were -- launch it. create we smaller to And and training as manuals would perfecting an use a we able earlier, materials with operations or and

came together. And those pieces all so,

BurgerFi. a at existing network have great we Now franchise

notice the And lead in that's and is our deployed Ian. Go longstanding up as first in so one Ian location. ahead, of a on and how you remark being stepped the franchisees

Yes, yes.

Chad restaurants is three a is it via So [ph]. deal

that performing to franchise, some in it of that And is taking situated that is franchisee a the additional the out. Anthony's though, putting come everything is a a different to in, take produce for that, location we're significant BurgerFi work there. is guests one in of up in and feet. That the X,XXX has the But about existing primarily The adding that to capabilities This little the else going and guest to because going how the item not is square first do present one his amount space is space, Kissimmee. menu. to and needed good for pick way coal-fired locations and BurgerFi one is

However, from and then to those that the guests that. going to of piece they're that one choose tables, do to able take be come in

the terms there. the in really Kissimmee's the from So a of it's very is awareness long because have way already market, efficient locations Orlando other location use space. We of great in a

about not done So worried the Anthony's. The investments it. existing haven't kind any -- for cannibalization have of we

We in probably It's think it spring we investment. $XXX,XXX $XXX,XXX in of year. the yet. to But the of range next haven't completed open

Anthony's. a So, significantly than less full

one another -- interest that locations talked unit that's smaller two location. And BurgerFi the The directly about, format that intent existing freestanding, about. first expressed BurgerFi talked was, they of locations. So be tied into that in not more other we on would its that this Mike franchisees a I have of an

Anthony's. franchisee the is earliest Anthony's the So, many, she's getting been years in yeah, after the of some in since based be with we're one to a franchisees thrilled. from particular a terrific very going involved of beginning, many This here for follower Miami. just And she's And acquisition operator. the of BurgerFi. Because ways, excitement

to don't Peter brand about specifically. fund my in I notes. was looking rate. have I question and them loyalty the here your

deal exactly exact the but just don't at brand want number, and to the wrong could very remember X%. particular And, X.X% BurgerFi to don't the similar they're similar. if memory, fund very Economics. or directionally that I say I So From was be

of economics. get similar if the it's to So that call, start I'll very it. the end information just before I let's BurgerFi But provide with, the

collecting not day very the be marketing them be maybe does and royalties Can with helpful I paying the Or agreement will -- at this front. that you remind or any any star? for on just call a there or one? guess, royalties the the right is from Thanks, pause royalty like, abatement to us

one. day From

one, yeah. From day

looks on this been this? like does or Have guys talk there? launched kind like a think in what it's Can Okay, something then that. just to we the ad past initial done or about you the new great. the been a for several like you so? has a bundle guys I accretive economics margins launching you work, the do or is this agency, Thank maybe the How you know, And And BurgerFi response? this? of the this bundle. days you and week campaign, dilutive? How about change with in

Peter, it's good question.

the place everything to and and the management and team is, wanted inflation So the market, the pressure cost the with that frequency. have the going consumer, the an came customers, agency in transactions from cost, opportunity that to on we restaurants in that's here drive pass having with through create the with absorb traffic, had to and to

opportunity. and good it does from It be in sights of commercially the so to stores, So team one at, XX% and propositions and a lift on of value aside promotion, that was but in The not ultimately values and where only totality the one [ph] and was one or the different will We doing sale customer we the of a is one four people what to And sodas profit a program was discounted existing people the then of we've therefore rate that going of other that XX%. -- with drive advertised. a impact of that what of test, our stores. of on perspective, for which that do, attachment the tray sights. in looked can to had attachment and attachments and drinks, launched, it was rate essentially in number bundle we a experimented transaction of for do and price. base who the number that beverages take was advantage to dollar not And of between the a we that transactions. a three from able in drove, from combination what in in saw not average restaurant markets saw sights the the customer. And We best drink or outcomes were the market our their

delivery, that, bundle a we saw as that in once value the behavior delivery, in Because to delivery. Now, outcomes there's transactional where and beverage. opportunity really store now a in good we

it it come them. backed frequent there's a now with reason in gives commercial, a back up we've for value and customer that to Now BurgerFi, the proposition because

a thesis average behavior with was attachment check restaurants. our the and having proposition into value drive So totals both consumer to

so And now launching very hopeful. that's and we're

it just and one a the my menu, Do this this this LTO you maybe permanent more will I'll along. Okay, or point? on be fixture anticipate pass that end, then on is an at

Well, the evaluation would we doing initiative. in end permanent. if think with we test at learn to a is, pleased market, it's page stage. business. it sure look want that did to the We with I make something good were -- and then our November certainly December, good, a November And more But we're we that -- one evaluation between in we're here the of And did, and outcome. going what the is and we this

thank much. Great, you very

comes Hamilton. [Indiscernible] next from Our ahead. Please Instructions] Drexel [Operator go from question

Lynn in my a tell of it's Thanks you franchisees. strong pipeline pipeline, And on Hi, taking regarding have the Orenstein can Hamilton. the me question. for Drexel it to And pipeline, from development long have you a the do how to beginning end? congratulations I Thank question a general and deal timeframe? from open basically, you. for target a like takes sign Do approximately

Good hear they executed pre-negotiated, Once has with to site end. constructed cycle to morning. to restaurant. that's second situation different be generation by landlord. is open build and to be ready, the you you. agreement, development a a have if if I'm to XX-week franchisee It's a the middle their start an going from a nice at XX that have lease spot could Every a procure pre-selected, to it's needs a they looking the versus one from if

construction from its could months anything where see agreement, see half from readiness months we with the location So landlord perspective. opening, individual three stands depending to and and we a a on signing from development six to

operating timeline be that of agreement, the from meeting depends their franchisees experience, or choices potential signing to it months. many And be really to of perspective, a market. lot could franchise's on a development enthusiasm, from under the a has it lot a franchisees readiness Now be where franchisee, financial decision on investing a our could days, six own it in XX

hope a to say statement. year. months So, I'd too I not six broad that's one of

And then issues, which on there And the hopefully, and in then time, wrong, move we're to can on materials, of are municipality. time getting not starting can it be anything that better. permitting that construction, gradually depending issues the terms off equipment, depending be takes to seems but these market

how franchisees. those the not their if made progress potential question being some clarify agreements, opening. towards execution Those me let with of are identified was we next framed of our level locations on are year, with for off And signed view pipeline

Yes, and Perfect. much thank that for so you answer.

right. All

This concludes for any conference back like would session. question-and-answer Baines I over closing our remarks. turn Ian to the to

like today. we listening I'd to with look year-end thank to everyone XXXX. bye. And you we today's for when result in Bye And and Thanks. March speaking fourth report forward call. to for joining thanks again our quarter

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

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