Q1 2024 BurgerFi International Inc Earnings Call
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Operator: Good morning, and thank you for participating in today's conference call to discuss Burgerfi International's financial results for the first quarter ended April 1, 2021. Joining us today are Carl Bachmann, CEO, and Chris Jones, CFO.
Good morning, and thank you work dissipating and today's conference call to discuss Burger Fi International's financial results for the first quarter ended April one 2024.
Well yesterday or Carl Bachmann, CEO, Chris Jones CFO.
Operator: Following their remarks, we'll open up the lines for your questions. Before we begin, I want to remind everyone that this conference call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be related to BurgerFi's estimates of its future business outlook, including total revenue, store openings, costs, restaurant level profit margins, adjusted EBITDA, and capital expenditures, among other items. Forelooking statements generally can be identified by words such as anticipate, believes, estimate, expects, intends, plans, predicts, projects, will be, will continue, or will likely result in or similar expressions.
Speaker Change: Following their remarks, we'll open the lines for your questions.
Speaker Change: Before we begin I want to remind everyone. This conference call may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995. These forward looking statements related to Burger fives estimates of its future business outlook, including Tau.
Speaker Change: Revenue store openings cost restaurant level profit margins, adjusted EBITDA and capital expenditures among other items.
Speaker Change: Like you said, Mr. Only community that it can be identified by words, such as anticipates believes estimates expects intends plans predicts projects will be will continue will likely result in similar expressions.
Operator: These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause a company's actual results to differ materially from those reflected in the forward-looking statement. Factors that cause or contribute to such differences include, but are not limited to, those discussed in the annual report on Form 10-K for the year ended January 1, 2024, and those disclosed in other documents that the company files with the Securities and Exchange Commission.
Speaker Change: These forward looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause the company's actual results to differ materially from those reflected in the forward looking statements.
Speaker Change: Factors that could cause or contribute to such differences include but are not limited to those discussed in annual report on Form 10-K for the year ended January one 2024 and that was disclosed with other talk him into the company filed with Securities and Exchange Commission.
Operator: All subsequent written and oral forward-looking statements attributed to Burgerfi or persons acting on Burgerfi's behalf are expressly qualified in their entirety by the cautionary statements included in this conference call. The company undertakes no obligation to revise or publicly release the results of any revision to these four lease statements except as required by law. Given these statements and uncertainties, listeners are cautioned not to place any reliance on such forward-looking statements. Also, the following discussion will contain non-GAAP financial measures.
Speaker Change: All subsequent written and oral forward looking statements attributed to Parker fire person is actually no broker fives behalf are expressly qualified in their entirety by the cautionary statements included in this conference call.
Speaker Change: Company undertakes no obligation to revise or publicly release the results of any revision to these forward looking statements except as required by law.
Speaker Change: Given these statements and uncertainties listeners are cautioned not to place undue reliance on such forward looking statements.
Speaker Change: Also following discussion of Hollywood discussion well contained.
Speaker Change: non-GAAP financial measures.
Operator: For discussion and reconciliation of these non-GAAP financial measures, please see the earnings release for the first quarter of 2024. I'd also like to remind everyone that this call today will be available via telephonic replay for two weeks starting today. A webcast replay will also be available via the link provided in today's press release as well as the company's website at www.burgerfi.com. Now, I'd like to turn the conference over to Burgerfi's CEO, Carl Bachmann. Carl, go ahead.
Speaker Change: For a discussion and reconciliation of these non-GAAP financial measures. Please see the earnings release for the first quarter of 2024.
Speaker Change: I would also like to remind everyone that this call today will be available via telephone replay for two weeks starting today webcast replay will also be available via the link provided in today's press release as well as the company's website at Www Dot Parker five dot Com now I would like to turn conference with a Burger five CFO CEO Karl Bachman Carl go ahead.
Carl J. Bachmann: Thank you all for joining us today. I'd like to start by expressing my gratitude to our entire team, including our franchisees and employees, for their unwavering dedication and hard work as we pursue our business recovery. As we briefly shared on our last earnings call, we had a difficult start to the year, but we do not view our quarterly performance as indicative of these brands' long-term potential. Like so many of our industry peers, we experienced a softening in revenue and profitability as a result of a challenging consumer environment, but we also contend with unfavorable weather in key markets.
Carl J. Bachmann: Thank you all for joining us today I'd like to start by expressing my gratitude to our entire team, including our franchisees and employees for their unwavering dedication and hard work as we pursue our business recovery.
Carl J. Bachmann: As we briefly shared on our last earnings call, we had a difficult start to the year, but do not view our quarterly performance as indicative of these brands have long term potential.
Carl J. Bachmann: Like so many of our industry peers, we experienced the softening in revenue and profitability as a result of a challenging consumer environment, but also contended with unfavorable weather in key markets.
Carl J. Bachmann: Notably, however, we saw sequential improvement throughout the quarter, beginning with a slight improvement in February, followed by a more substantial recovery in March at both brands outside of Florida. March same-store sales were flat at Anthony's, adjusting for the Easter calendar shift, and sales were shown stability during the second quarter to date, as we expect to see our initiatives begin to take hold.
Carl J. Bachmann: Notably however, we saw sequential improvement throughout the quarter, beginning with a slight improvement in February followed by a more substantial recovery in March at both brands outside of Florida March same store sales were flat in anthonys adjusting for the Easter calendar shift and sales have shown stability during the second quarter today.
Carl J. Bachmann: <unk> as we expect to see our initiatives begin to take hold.
Carl J. Bachmann: Both brands fared better in the Northeast due to a combination of normalized trends versus the pandemic, seasonably cooler Florida weather that affected travel to the Sunshine State, and, like many of our peers, overall softer demand in Florida. Looking ahead, we remain laser focused on driving revenue growth while further enhancing operational efficiencies to increase profitability using the five key strategic priorities that we implemented since last July. I will now update you on the progress we are making on these key strategic priorities. Beginning with infrastructure, a key priority for us over the last year has been strengthening our infrastructure with a focus on our most important asset, our people.
Carl J. Bachmann: Both brands fared better in the northeast due to a combination of normalized trends versus the pandemic seasonably cooler, Florida weather that affected travel to the Sunshine state. Unlike many of our peers overall softer demand in Florida.
Carl J. Bachmann: Looking ahead, we remain laser focused on driving revenue growth, while further enhancing operational efficiency to increase profitability using the five key strategic priorities that we implemented since last July.
Carl J. Bachmann: I will now update you on the progress we are making on these key strategic priorities beginning with infrastructure a key priority for us over the last year, it's been strengthening our infrastructure with a focus on our most important asset our people building.
Carl J. Bachmann: Building the right team and fostering a strong culture of camaraderie across both brands has been paramount. We have made progress on stabilizing restaurant teams, as overall, the company is 95% staffed to par, while benefiting from considerably reduced turnover. With improved retention and turnover numbers at BurgerFi in line with the industry, and Anthony significantly better than the industry, we will see improvements in overtime and training costs. In addition, this results in better execution and throughput, all leading indicators that our recovery has begun.
Carl J. Bachmann: Building, the right team and fostering a strong culture of camaraderie across both brands has been Paramount.
Carl J. Bachmann: We have made progress on stabilizing restaurant teams is overall the company is 95% staffed to par while benefiting from considerably reduce turnover.
Carl J. Bachmann: With improved retention and turnover numbers FERC refi in line with the industry and Anthony significantly better than the industry, we will see improvement in overtime and training cost.
Carl J. Bachmann: In addition, this results in better execution and throughput all lead indicators that our recovery has begun.
Carl J. Bachmann: Technology is another area where we are enhancing our infrastructure. Earlier this year, we implemented an inventory management platform at Burgerfi, with a rollout currently underway at Anthony's. This system enables centralized inventory and labor management across all corporate-owned locations, driving greater efficiency and operational excellence.
Speaker Change: Technology is another area, where we are enhancing our infrastructure.
Speaker Change: Earlier this year, we implemented an inventory management platform at Burger pie with a rollout currently underway it Anthony.
Speaker Change: Our system enables centralized inventory and labor management across all corporate owned locations driving greater efficiency and operational excellence.
Carl J. Bachmann: Here we believe that we'll see at least 200 BIF improvement in cause for both found or brands which have never operated with these sort of systems. At Anthony's, we are also in the process of rolling out the Toast POS and management system across all 59 corporate-owned locations. Initial installations have had their typical challenges of any new platform, but with most of these behind us, we are accelerating the rollout.
Speaker Change: We believe that we will see at least 200 bps improvement in Cogs at both founder brands, which have never operated with these sort of systems.
Carl J. Bachmann: We expect this initiative to be completed by the end of the third quarter, with half of our Anthony's portfolio online by June, and we will have initial insight into the impact on the business. This PLS system includes handheld tablets for servers to beam orders directly to the kitchen, increasing accuracy and table turn times. The Toast platform represents a substantial upgrade over Anthony's previous paper ticket system and will provide us with robust analytics to optimize speed of service.
Anthony: And Anthony we are also in the process of rolling out the coast.
Speaker Change: POS in management system across all 59 corporate owned locations.
Speaker Change: Actual installations have had their typical challenges of any new platform.
Speaker Change: With most of these behind US we are accelerating the rollout. We expect this initiative to be completed by the end of the third quarter with half of our Anthony its portfolio online by June and then initial insight into the impact to the business.
Speaker Change: This system includes handheld tablets for servers, the beam orders directly to the kitchen, increasing accuracy and table turn times.
Speaker Change: This platform represents a substantial upgrade over anthonys previous paper ticket system that will provide us with robust analytics to optimize speed of service.
Carl J. Bachmann: These infrastructure initiatives are laying the groundwork for sustainable sales growth and margin expansion as we continue executing our strategic plan. Next is taste and quality. We are continuously focused on improving the taste and quality of our products at both brands. During the quarter, we were the first brand to debut the innovative Heinz Remix machine at our Lauderdale-by-the-Sea Florida Burger Pie. This machine allows our guests to create their own custom condiment concoctions to enjoy with fresh-cut fries, hand-beer-battered onion rings, and more.
Speaker Change: Infrastructure initiatives are laying the groundwork for sustainable sales growth and margin expansion as we continue executing our strategic plan.
Speaker Change: This taste and quality, we are continuously focused on improving the taste and quality of our products at both brands.
Speaker Change: During the quarter, we were the first brand to debut the innovative Heinz remixed machine at our Lauderdale by the C, Florida Burger pie.
Speaker Change: This machine allows our guests to create their own custom condiments concoctions to enjoy with fresh cut fries and beer battered on you ranked and more yesterday are seeking unique and personalized dining experiences.
Carl J. Bachmann: Guests today are seeking unique and personalized dining experiences. By being the first restaurant to showcase the Heinz Remix machine, we're delivering something truly distinctive to our guests. This test in Lauderdale-by-the-Sea is also providing our culinary team invaluable insights into evolving consumer taste. Based on its success, we plan to roll out additional Heinz Remix machines at our Delray Beach, Pembroke Pines, West Boca Raton, and West Palm Beach locations over the coming months.
Speaker Change: By being the first restaurant to showcase behind remix machine.
Speaker Change: During something truly distinctive to our guests.
Speaker Change: This Saturday Lauderdale by the <unk> is also providing our culinary team invaluable insights into evolving consumer tastes based on its success, we plan to rollout additional Heinz remix machines at our Delray Beach, Pembroke Pines, West Boca Raton, and West Palm Beach locations over the coming months at the end of March.
Carl J. Bachmann: At the end of March, we unveiled our new Better Burger Lab concept in New York City. By transforming our New York City location into a public test kitchen, we now have a dedicated innovation hub right in the heart of New York City, the culinary capital of the world. The Better Burger Lab will serve as the launchpad for new menu innovations that we plan to test and potentially introduce system-wide across our BurgerFi locations.
Speaker Change: <unk>, we unveiled our new better Burger lab concept in New York City by transforming our New York City location into a public test kitchen. We have now we now have a dedicated innovation hub right in the heart of New York City, the culinary capitals of the world.
Speaker Change: The better Burger lab will serve as the launch pad for new menu innovations that we plan to test and potentially introduce system wide across our burger by locations.
Carl J. Bachmann: Currently, guests visiting the lab can get a preview of new items like our fried chicken sandwich before it rolls out to the broader franchise system. We also have unique offerings like the Breakfast Everything Bagel Burger and a New York City Hot Dog that are only available at this New York City test location.
Speaker Change: Currently guests visiting our lab can get a preview of new items like our fried chicken sandwich before it rolls out to the broader franchise system.
Speaker Change: Also have unique offerings like the breakfast everything bagel Burger and our New York City Hot dogs that are only available at this New York City test location.
Carl J. Bachmann: Our Burgerfi loyalty members will also be invited to exclusive tasting events at the lab to sample new products and provide real-time feedback. This allows our most loyal guests to get involved in the R&D process by suggesting new flavor and ingredient combinations. We recognize that BurgerFi has lost some of its cachet and market share over the years, not due to any one major misstep but rather a collection of smaller issues that have impacted us over time.
Speaker Change: Our Burger by loyalty members will also be invited exclusive tasting event that the lab the sample new products that provide real time feedback. This allows our most loyal guests to get involved in the R&D process.
Speaker Change: Suggesting new flavor ingredient combinations.
We recognize the Burger <unk> has lost some of its cachet and market share over the years not due to any one major misstep, but rather a collection of smaller issues that have impacted us over time, the better Burger lab represents our commitment to thaw.
Carl J. Bachmann: The Better Burger Lab represents our commitment to thoughtful innovation as we continue exploring creative ways to elevate the Better Burger experience for our guests. On Anthony's side, at the end of April, we launched the inaugural Italian Shrimp Festival. We added six new shrimp dishes to the menu to serve as our new LTO. Seafood holds a revered place in Italian culinary traditions, and it has been missing from our menu for some time.
Speaker Change: Full innovation as we continue exploring creative ways to elevate the better Burger experience for our guests.
Speaker Change: On Anthony side at the end of April we launched the inaugural Italian Shrimp Festival.
Speaker Change: We added six new shrimp dishes to the menu to serve as our new LTE O B.
Speaker Change: <unk> holds a revere place an Italian culinary traditions and this has been missing from our menu for some time.
Carl J. Bachmann: Our next initiative revolves around developing gold standards, drawing from my prior leadership experiences and feedback from employees and guests at both brands. I've identified what our gold standards should be, and we've begun holding ourselves accountable to them, positioning us to drive long-term sales growth. As a result of the work we are undertaking to uphold these gold standards, our third-party audit scores are already improving. We have seen an improvement in feedback from both brands. Anthony's now scoring 4.49 on a five-point scale, and Burgerfi is at 4.38. New guests look at ratings, and you are not even in the consideration set if you are under a four.
Speaker Change: Our next initiative revolves around developing gold standards.
Speaker Change: Drawing from my prior Alicia experiences and feedback from employees and guests at both brands.
Speaker Change: I have identified what our gold standard should be and we began holding ourselves accountable to them positioning us to drive long term sales growth as a result of the work we are undertaking to uphold these gold standards are third party audit scores are already improving.
Speaker Change: We are seeing an improvement in feedback from both brands. Anthony now is growing $4 49 on a five point scale and Burger fired up for three eight new guests look at ratings and you are not even in the consideration set under a poor.
Carl J. Bachmann: Our next priority is telling the world about our brands through an enhanced marketing strategy that's already responding with customers. We continue to have fun around different holidays to drive brand trial. On Tax Day, we offered guests at both brands 15% off their check. On National Beer Day, we hosted an all-day hoppy hour where we offered a $10 cheeseburger and a draft beer at Burgerfi and $15 cheese pizza and draft beer at Anthony's. And just last week, we offered 20% off to all teachers and nurses in connection with Teachers and Nurses Appreciation Week.
Speaker Change: Our next priority is telling the world about our brands through an enhanced marketing strategy is already resonating with customers. We continue to have fun around different holidays to drive brand trial. My tax day, we offered guests at both brands, 15% off their check on National Birr Day, we hosted an all day happy hour, where we offered a $10 cheaper.
Speaker Change: We're going to draft beer Burger pie at $15 cheese Pizza and draft beer It Anthony and just last week, we offered 20% off to all teachers and nurses in connection with teachers and nurses appreciation week.
Carl J. Bachmann: Finally, I'll end with Step 5, Defining the Portfolio, which is about both store development and optimization. As of April 1st, our portfolio consisted of 102 BurgerFi restaurants, 27 corporate-owned and 75 franchised, and 60 Anthony's, 59 corporate-owned and 1 franchised. As we continued to right-size our portfolio, we closed 6 underperforming franchised and 2 corporate-owned BurgerFi restaurants during the first quarter. We continue to evaluate our portfolio with a close look at cash flow and profitability.
Speaker Change: Finally, I'll end with step by defining the portfolio, which is about both store development and optimization.
Speaker Change: As of April 1st our portfolio consisted of 102 Burger by restaurants, 27, corporate owned and 75 franchised and 16, Anthony 59, corporate owned and one franchise as we continue to rightsize our portfolio, we closed six underperforming franchise and two corporate owned <unk>.
Speaker Change: Five restaurants during the first quarter, we continue to evaluate our portfolio with a close look on cash flow and profitability.
Carl J. Bachmann: Starting with Anthony's during the quarter, we signed our second franchise agreement, this time for three Anthony's in the Jacksonville, Florida area. We expect these restaurants to open in 2025. After the successful launch of our inaugural co-branded Ampions location in late 2023, our partners, NDM Hospitality Services, will open their second co-branded location in the Miami World Center Development near the Miami Brightline Station by the end of this year. Their third location is slated for 2025.
Speaker Change: Starting with Anthonys during the quarter, we signed our second franchise agreement. This time for three Anthony in the Jacksonville, Florida area. We expect these restaurants to open in 2025.
Speaker Change: After the successful launch of our novel co branded Anthony is location in late 2023 partners MDM Hospitality services, who opened their second co branded locations in the Miami World Center development, the Miami Brightline station by the end of this year. Our third location is slated for 2025.
Carl J. Bachmann: Turning to BurgerFi last quarter, we opened our first franchise BurgerFi inside an Apple Cinema in Rochester, New York. We view non-traditional spaces as becoming an important part of our development story as they represent a great opportunity to grow the brand and get people excited about BurgerFi again, with a smaller footprint and lower startup costs. To date, we opened a second franchise, BurgerFi, inside an Apple Cinema, this time in their Warwick, Rhode Island location.
Turning to Burger by last quarter, we opened our first franchise Burger Fi inside an apples turnabout in Rochester, New York, We view non traditional spaces, becoming an important part of our development story as they represent a great opportunity to grow the brand and get people excited about certify again with a smaller footprint and lower start up costs to date.
Speaker Change: <unk> opened a second franchise broker by Napa cinema. This time within their Warwick, Rhode Island location.
Carl J. Bachmann: As I mentioned earlier, in late March, we reopened our flagship corporate-owned Burger Pi restaurant and first-ever Better Burger Lab on the Upper East Side of Manhattan. Looking ahead, our development efforts are focused on recruiting well-capitalized franchisees who possess substantial experience in the restaurant, retail, and hospitality industries. Over the long term, we plan to grow the brands in metropolitan cities along the I-95 corridor, as these are the market areas where both brands have demonstrated strong performance.
Speaker Change: As I mentioned earlier in late March we reopened our flagship corporate on Burger by restaurant and first ever better Burger lab on the upper east side of Manhattan.
Speaker Change: <unk> ahead, our development efforts are focused on recruiting well capitalized franchisees, who possess substantial experience in the restaurant retail and hospitality industries.
Over the long term, we plan to grow the brands within Metropolitan cities, along the I 95 corridor. As these are the market areas, where both brands have describe straight at strong performance.
Carl J. Bachmann: In conclusion, I am more confident than ever that joining this company was the right decision. Achieving sales and margin improvements will not happen overnight, but we are laying a solid foundation to build upon. We are making highly strategic decisions following a straightforward formula. We must deliver wins for our guests, our team members, and our shareholders and franchisees. With that, I will now turn the call over to our CFO, Chris Jones, who will provide commentary on our first quarter 2024 performance and discuss our guidance. Go ahead, Chris.
Speaker Change: In conclusion, I am more confident than ever that joined the company was the right decision.
Speaker Change: Achieving sales and margin improvements will not happen overnight, but we are laying a solid foundation to build upon we are making highly strategic decisions. Following a straightforward formula we must deliver wins for our guests our team members and our shareholders and franchisees with that I will now turn the call over to our CFO Chris Jones.
Christopher Emlyn Jones: Who will provide commentary on our first quarter 2020 for performance and discuss our guidance.
Christopher Emlyn Jones: Go ahead, Chris.
Christopher Emlyn Jones: Thank you, Carl, and good morning everyone, and while not yet evident in our financials, we are working very hard every day implementing a strong long-term strategy that we believe will drive top-line growth and expand margins over time. During the first quarter, we continue to see top-line softness and pressured margins. We still have a lot of work to do to drive efficiencies but are cautiously optimistic that we will start to see some of this positive leverage in the back half of 2024. Now, briefly looking at the first quarter.
Christopher Emlyn Jones: Thank you Carl and good morning, everyone and while not yet evident in our financials. We are working very hard every day implementing a strong long term strategy that we believe will drive topline growth and expand margins over time.
Christopher Emlyn Jones: During the first quarter, we continued to see top topline softness and pressured margins.
Christopher Emlyn Jones: We still have a lot of work to do to drive efficiencies. We're cautiously optimistic that we will start to see some of these positive leverage in the back half of 2024 brief.
Christopher Emlyn Jones: Total revenues were $42.9 million, decreasing 6% from $45.7 million for the same quarter last year. Anthony's corporate-owned restaurants contributed $32.4 million to total revenues in the quarter. The decrease in revenue is primarily attributable to decreases in same-store sales at both brands coupled with the closure of underperforming BurgerFi corporate-owned locations. This was partially offset by additional revenues from two acquired BurgerFi restaurants from franchisees during 2023. The restaurant level profit margin was 12.2% for the first quarter of 2024, compared to 16.6% in the same quarter last year.
Christopher Emlyn Jones: Briefly looking at first quarter total.
Christopher Emlyn Jones: The decrease was primarily related to lost sales leverage and higher wages. However, we expect to see an improvement in restaurant-level profit margins over the next three quarters as we accelerate the rollout of inventory control systems and labor management systems at both brands. Shifting to our individual brand results, Anthony's corporate-owned restaurant sales were $32.4 million in the first quarter, compared to $33.1 million in the prior year. The decrease was driven by a 2% decrease in same store sales.
Christopher Emlyn Jones: Total revenues were $42 9 million decreasing 6% from $45 7 million for the same quarter last year, Anthony corporate owned restaurants contributed $32 4 million of total revenues in the quarter.
Anthony: The decrease in revenue was primarily attributable to decreases in same store sales at both brands coupled with the closure of underperforming Burger by corporate owned locations.
Anthony: This was partially offset by additional revenues from two acquired broker by restaurants for franchisees during 2023.
Anthony: Restaurant level profit margin was 12, 2% for the first quarter of 2024 compared to 16, 6% in the same quarter last year.
Anthony: The decrease was primarily related to lost sales leverage and higher wages. However, we expect to see an improvement in restaurant level profit margins over the next three quarters as we accelerate the rollout of inventory control systems and labor management systems at both brands.
Anthony: Shifting to our individual brand results Anthonys corporate owned restaurant sales were $32 4 million in the first quarter compared to $33 1 million in the prior year. The decrease was driven by a 2% decrease.
Anthony: And same store sales as noted earlier our performance improved throughout the period with March comps roughly flat once adjusting for the Easter shift.
Christopher Emlyn Jones: As noted earlier, performance improved throughout the period, with March comms roughly flat, once adjusting for the Easter shift. Like many of our peers, we have seen softer performance in the Southern region, primarily Florida, versus operations in the Mid-Atlantic and the North. These trends have continued in the second quarter.
Speaker Change: Like many of our peers, we have seen softer performance in the southern region, primarily Florida versus operations, the mid Atlantic and the north.
Speaker Change: These trends have continued into the second quarter.
Christopher Emlyn Jones: Anthony's restaurant level operating margin was 14.3 percent for the first quarter of 2024 compared to 17.9 percent in a period prior to your quarter. This was due to higher wing prices year over year, lost leverage on fixed costs due to lower sales, and most notably, labor, specifically hourly labor. One of the benefits associated with shifting to the Toast POS will be the transition to more automated controls with respect to store labor schedules. Today, all the schedules have shifted to online scheduling, giving restaurant staff and management access to their schedules via their smartphones, along with more dynamic scheduling.
Speaker Change: Anthony its restaurant level operating margin was $14 three for the first quarter of 2024 compared to 17.9 per se in the period.
Speaker Change: Prior year quarter.
Speaker Change: This was due to higher wing prices year over year lost leverage on fixed costs due to lower sales and most notably laid a believer specifically hourly labor.
Speaker Change: One of the benefits associated with shifting to the U S will be the transition to a more automated and controls with respect to store labor schedules today, all the schedules have shifted to online scheduling given restaurant staff and management access to reschedule the smartphones more.
Speaker Change: More dynamic scheduling over the coming weeks and months, we expect to see meaningful improvement from these programs with regionals and store managers have the tools to improve efficiency within their stores schedules.
Christopher Emlyn Jones: Over the coming weeks and months, we expect to see meaningful improvement from these programs as regionals and store managers have the tools to improve their efficiency within their store schedules. According to Burgerfi, corporate-owned restaurant sales were $8.5 million in the first quarter compared to $10.2 million in the prior year. System-wide sales for Burgerfi in the first quarter decreased 17% to $33.4 million, compared to $40.3 million in the year-ago quarter, primarily due to the closure of underperforming corporate stores, coupled with declines in same-store sales.
Speaker Change: Turning to Burger five corporate owned restaurants sales were $8 5 million in the first quarter compared to $10 2 million in the prior year.
Speaker Change: System wide sales for Burger by the first quarter decreased 17% to $33 4 million compared to $40 3 million in the year ago quarter, primarily due to the closure of underperforming corporate stores, coupled with declines in same store sales.
Christopher Emlyn Jones: Burgerfi's system-wide same-store sales decreased 13% for the first quarter of 2024 compared to the same period of the prior year. For corporate-owned Burgerfi, same-store sales decreased 16%, and franchise restaurant same-store sales decreased 12%. Burgerfi's and Restaurant Level Operating Margin was 4.1 for the first quarter of 2024 compared to 12.6 in the first quarter of 2023. This was largely the result of lost leverage on fixed costs due to the same-store sales decline.
Speaker Change: Burger by system wide same store sales decreased 13% from the first quarter of 2024 compared to the same period the prior year.
Speaker Change: Burger by same store sales decreased 16% and franchise restaurants same store sales decreased 12%.
Speaker Change: Certifying restaurant level operating margin was four one for the first quarter of 2024 compared to $12 six in the first quarter of 2023. This was largely the result of lost leverage on fixed costs due to the same store sales decline. However, despite the overall challenged top line. The team remains focused on improving profitability with overall gross margins of Burger.
Christopher Emlyn Jones: However, despite the overall challenge to the top line, the team remained focused on improving profitability, with overall gross margins of Burgerfi improving 115 basis points as the restaurants continue to benefit from the ongoing implementation of the inventory management system. We expect these trends to continue going forward, and as previously noted, expect to see similar improvements for Anthony's later in the year.
Improving 115 basis points as the restaurants continue to benefit from ongoing implementation of inventory management system.
Speaker Change: These trends to continue going forward as previously noted we expect to see similar improvements for Anthonys later in the year.
Christopher Emlyn Jones: Returning to consolidated results, we reported a net loss of $6.5 million in the first quarter compared to a net loss of $9.2 million in the year-ago quarter. The quarter's reduction in net loss is primarily due to lower share-based compensation expense, lower general administration expense, and lower restructuring costs. Adjusted EBITDA was $258,000 in the quarter compared to $2.6 million in the prior year's first quarter, reflecting the impact of lower sales of both brands and lost leverage on fixed costs and labor for both brands and lost royalty and franchise fees at Burgerfi.
Speaker Change: Returning to consolidated results, we reported a net loss of $6 5 million in the first quarter compared to a net loss of $9 2 million in the year ago quarter. The quarter's reduction in net loss was primarily due to lower share based compensation expense lower general administration expense and lower restructuring costs adjusted.
Speaker Change: EBITDA was 258000 in the quarter compared to $2 6 million in the prior year first quarter, reflecting the impact of lower sales at both brands and lost leverage on fixed costs and labor, both brands and lost royalty and franchise fees of Burger fine.
Christopher Emlyn Jones: Moving on to the balance sheet, our cash balance at April 1st, 2024 was $4.1 million compared to $7.6 million at January 1st, 2024. The decrease in cash of $3.4 million was primarily due to decreased cash from operating activities of $2.9 million and investing activities of $0.8 million, partially offset by cash provided by financing of $300,000. Cash use and operating activities were primarily related to the decline, and adjusted EBITDA and timings of payment included. Cash outflows for investment activities were $800,000, primarily due to capital expenditures. Cash provided by financing activities of $300,000 was due primarily to contributions from non-controlling interests of $500,000.
Speaker Change: Moving onto the balance sheet, our cash balances at April one 2024 was $4 1 million compared to $7 6 million at January one 2024.
Speaker Change: The decrease in cash of $3 4 million was primarily due to decreased cash from operating activities with $2 9 million in investing activities.
Speaker Change: 8 million, partially offset by cash provided by financing 300000.
Speaker Change: Cash used in operating activities is primarily related to the client.
And adjusted EBITDA and timing of some payments included.
Speaker Change: Gotcha outflows for the investing activities were 800000, primarily due to capital expenditures cash provided by financing activities of 300000 was due primarily to contributions from noncontrolling interest of 500000.
Christopher Emlyn Jones: Looking forward, as we stabilize top-line volumes, we can continue to refocus on the use of cash rebid algorithms. Now, we turn to our fiscal 2024 outlook. Today, we are trending to the low end of previously stated revenue MEBA guidance but are maintaining guidance. As a reminder, I will review our 2024 guidance provided at the beginning of the year. Total revenue of $107 to $180 million, which assumes a low single-digit increase in same-store sales for corporate-owned locations.
Speaker Change: Looking forward as we stabilize top line volumes, we can continue to refocus on use of cash rebid all groups.
Speaker Change: Now turning to our fiscal 2024 outlook today, we are trending to the low end of our previously stated revenue and EBITDA guidance, but are maintaining guidance.
Speaker Change: As a reminder, I will review our 2020 for guidance.
Speaker Change: Right at the beginning of the year.
Speaker Change: Total revenue of 170 $180 million, which assumes a low single digit increase in same store sales for corporate owned locations.
Speaker Change: 10 to 15, new franchise restaurants, including the new Anthonys completely new Anthony and our flagship New York City store continued improvement in cost of goods driven by the adoption of inventory management systems and.
Speaker Change: Adjusted EBITDA, ranging from $7 million to $9 million.
Speaker Change: We are expecting capital expenditures to be the $2 million to $3 million for the full year.
Christopher Emlyn Jones: The addition of 10 to 15 new franchise restaurants, including New Anthony's and our flagship New York City store. Continued improvement in cost of goods driven by the adoption of inventory management systems and adjusted EBITDA ranging from $7 to $9 million. We are expecting capital expenditures to be $2-$3 million for the full year. With that, Operator, please open up the call for questions.
Speaker Change: With that operator, please open up the call for questions.
Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keypad. If at any time your question has been addressed and you would like to withdraw it, please press star then 2. This time we will pause momentarily to assemble the roster. And the first question comes from Peter Saleh with BTIG.
Speaker Change: Yes. Thank you we will now begin the question and answer session.
Peter Mokhlis Saleh: Great. Thanks.
Speaker Change: A question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: Your question is interesting who'd like to withdraw it. Please press Star then two.
Speaker Change: We will pause momentarily to assemble the roster.
Speaker Change: And the first question comes from Peter Sallow, a P T O J.
Peter Mokhlis Saleh: Several questions on my end. First, could you guys talk about the initiatives you have in place to just reignite traffic, primarily maybe on the chicken sandwich side? Didn't really hear much on that front. Where do we stand on that rollout of that product? I think chicken's a pretty fast-growing category, and I think that chicken sandwiches should help some of the sales shortfall right now.
Peter Mokhlis Saleh: Great. Thanks, a several questions on my end I guess first.
Peter Mokhlis Saleh: Could you guys talk about the initiatives you have in place to just reignite traffic.
Peter Mokhlis Saleh: Primarily maybe on the chicken sandwich side didn't really hear much on on that front, where do we stand on that rollout of that product is I think chicken is a pretty fast growing category and I think that chicken sandwich should should help some of the sales shortfall right now.
Carl J. Bachmann: I can take that one. Hi Peter.
Peter Mokhlis Saleh: I can take that one hi, Peter.
Carl J. Bachmann: Yeah, we're excited about chicken. I mean, chicken is a huge part of the industry right now, still one of the hot trends. I believe that chicken, in a burger concept, your chicken mix should be between 10 and 12%.
Speaker Change: Yes, we're excited about chicken I mean chicken is a huge part of the of.
Speaker Change: The industry right now is still one of the hot trends I believe that chicken.
Speaker Change: Burger concept your chicken mix should be between 10, and 12% and that's our goal. We have launched we tested for a long time, and we launched a new sous-vide grilled chicken as well as fried chicken, which is a huge upgrade to what we previously served we've launched that in our corporate stores and work launching that across the country and our franchise stores as we speak.
Carl J. Bachmann: And that's our goal. We have launched, we tested for a long time, and we launched a new sous vide grilled chicken as well as fried chicken, which is a huge upgrade to what we previously served. We've launched it in our corporate stores, and we're launching it across the country in our franchise stores as we speak. And we intend to roll that out this summer with a big promotion. So we are seeing great adoption rates and great feedback from the new chickens. And this summer will be our big rollout and our big marketing push to promote it across the country.
And we intend to roll that out this summer with a big promotion. So we are seeing a great adoption and great feedback from the new chicken and this summer will be a.
Speaker Change: Our big rollout and I'm, a big marketing push to promote that across the country.
Carl J. Bachmann: Hey Carl, in the initial test, was this incremental, or did you see any cannibalization? How much of this was truly incremental?
Carl J. Bachmann: Hey, Carl in the and and I guess the initial test was this incremental or did you see any cannibalization how much of this was truly incremental.
Carl J. Bachmann: So, I believe the majority of chicken, especially the grilled chicken. We did not have a grilled chicken offering. That was pulled off the menu years ago, and it's really off-brand not to have grilled chicken when we focus on having higher quality, fresh, healthier ingredients for a burger brand. So, it has been incremental, especially the grilled chicken. Two or three points of incremental growth just from that alone, I believe, is what we will see, and we have seen that just in our test stores. We originally rolled out just in our corporate stores in Florida, and we saw some incremental push for sure.
Speaker Change: So I believe the majority of chicken, especially on the grilled chicken, we did not have a grilled chicken offering that was pulled off the menu years ago.
Speaker Change: And it is it's really off brand not to have grilled chicken.
Speaker Change: We focus on having higher quality fresh healthier ingredients for a burger brand.
Speaker Change: It has been incremental especially the grilled chicken, so two or three points of incremental growth just from that alone.
Speaker Change: I believe what was what we will see and we have seen that just in our test stores. We recently when we originally rolled out just in our corporate stores in Florida, and we saw some incremental push for sure.
Speaker Change: Yeah.
Carl J. Bachmann: Great, and then just on enhanced marketing, you mentioned several initiatives in your prepared remarks. Can you talk about the success of some of these initiatives, some of these targeted promotions that you guys have had?
Speaker Change: Great and then just on the on the enhanced marketing you mentioned several initiatives in your prepared remarks can you talk about the success of some of these initiatives at some of these targeted promotions that you guys have had.
Carl J. Bachmann: I think you're referring to like our social holidays that are kind of what we call social currency holidays. Yeah, the big thing about those is it creates trial and excitement.
Speaker Change: I think youre right.
Speaker Change: You're referring to like our our social.
Speaker Change: Social holidays that are.
Speaker Change: Kind of what we call social currency holidays.
The Big thing about those is is it treats trial and excitement for.
Carl J. Bachmann: For instance, we did Pi Day on March 14th under the Anthony's brand, and it was, I think we were up 87% over the year before, so it was a huge day for us. But more importantly, what it does is it creates trial, and really, the most important part of that is we also see a spike whenever we do these social holidays or these social currency days. We see a huge spike in loyalty sign-ups, and that's really our goal because we know that as we grow the loyalty programs in both brands, that gives us a lever to really market to those people, and that's a strategy. So we've seen great success on the individual days, but the true measure is, do we create trial and new guests and do we reignite our loyalty guests through those social holidays?
Speaker Change: For instance, we did pay day on March 14th.
Speaker Change: On the Anthonys brand and it was it was a I think we're up 87% over the year before so the huge today for us, but more importantly, what it does is it creates trial and really the most important part of that is we also see a spike whenever we do these social holidays are these social currency days, we see huge spike in loyalty sign ups and that's really our.
Speaker Change: Because we know that as we grow the loyalty programs in both brands that gives us a lever to really market to those people and that's a strategy. So we've seen great success on the individual days, but the true measure is do we create trial and new guests and do we reignite our loyalty guests through those social holidays.
Carl J. Bachmann: Great, and then just last one for me to follow up on that, and then I'll pass it along. When you do these kinds of social holidays and these promotions, is the benefit really just confined to that one event, or are you seeing follow-through? I think you indicated you're seeing increased sign-ups of loyalty, so I assume there's some follow-through in the days and weeks after those promotions end.
Speaker Change: Yeah.
Speaker Change: Great and then just last one for me following up on that and then I'll pass it along.
Speaker Change: When you do these kind of social call holidays, and he's promotions is.
Speaker Change: It is the benefit really just confined to that one.
Speaker Change: Is that or are you seeing a follow through.
Speaker Change: He indicated that youre seeing increased sign ups of loyalty. So I assume there was some fall through in the days and weeks after those promotions and.
Carl J. Bachmann: Absolutely, and like I said, the most important thing is that we do see those guests come back, and, most importantly, we see them join our loyalty programs. Like I said, our biggest spike of loyalty sign-ups is always on these social currency days, and then we can market to those people, and then we have a frequent customer, and that's really our goal. So to really drive them in, create some trial through these social holidays, have some fun with it, get them excited about the brand, and then, yes, we do see them coming back and paying full price for our products, and more importantly, becoming part of the family, so to speak, in our loyalty program.
Speaker Change: Absolutely.
Speaker Change: Like I said the most important thing is we do see those guests come back.
Speaker Change: And most.
Speaker Change: Most importantly, we see them joining our loyalty programs like I said, we have the hugest are hugest spike of loyalty sign ups as always on these social currency days and then we can market to those people and then there then we have a frequent customer and that's really our goal so to really drive them and create some trial through the social holidays have some fun with it and get them excited about.
Speaker Change: The brand and then yes, we do see them coming back and paying full price for our products and more importantly, becoming part of the family so to speak in our loyalty program.
Peter Mokhlis Saleh: Great, thank you very much. I'll pass it along.
Speaker Change: Great. Thank you very much I'll pass it along.
Speaker Change: Yeah.
Operator: Thank you. And this concludes our question and answer session. I would like to turn the floor back to Mr. Bachmann for any closing comments.
Speaker Change: Thank you and this concludes our question and answer session I would like to turn the floor back to Mr. Bachmann for any closing comments.
Carl J. Bachmann: Thank you, Keith. I'd just like to thank everyone for listening to today's call, and we look forward to speaking with you when we report on our second quarter results in August of 2024. Thanks again for joining us.
Keith: Thank you Keith I'd, just like to thank everyone for listening today's call and we look forward to speaking with you when reporting our second quarter results in August of 2024, Thanks again for joining.
Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. I mean, just potential lines at this time. Thank you for your participation.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].