BurgerFi International Inc

Good morning, everyone, and thank you for participating in today's conference call to discuss BurgerFi's financial results for the second quarter ended June 30th, 2021. Joining us today are BurgerFi's CEO, Julio Ramirez, and CFO, Mike Rabinovich. 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, including statements relating to BurgerFi's estimates of its future business outlook, store opening plans, same-store sales, and restaurant operating margin growth plans, prospects, or financial results. Forward-looking statements generally 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. These forward-looking statements are based on current expectations and assumptions that are subject to risk uncertainties, which could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended December 31, 2020. and those discussed in the other documents we filed with the Securities and Exchange Commission. Of subsequent written and oral forward-looking statements attributable to a BurgerFi or persons acting on BurgerFi's behalf are expressly qualified in their entirety by the cautionary statements included in this conference call. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements except as required by law. Given these risk uncertainties, listeners are cautioned not to place undue reliance on such forward-looking statements. Also, the following discussion may contain non-GAAP financial measures. For discussion and reconciliation of these non-GAAP financial measures, please see our earnings release for the second quarter 2021. I would like to remind everyone that this call 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 on the company's website at https colon forward slash forward slash Now, I would like to turn the call over to the CEO of BurgerFi, Julio Ramirez. Julio?

Thank you, Shannon, and good morning, everyone. We're happy you can join us today. I'll start with a brief history and overview of BurgerFi and then highlight some of our second quarter activities and results. From there, I'll turn it over to Mike to walk through our financials before I close with our outlook and growth opportunities. With that, I'm going to start us off with a quick history of our business, as many of our listeners may be new to our story. The first BurgerFi restaurant opened 10 years ago just outside of Fort Lauderdale in a community called Lauderdale by the Sea, and the success was immediate. People loved our food, decor, ambiance, and the overall energy of our brand. Our mission statement of redefining the way the world eats burgers and enriching lives through the best burger experience is more relevant than ever, building on our great tasting food. We offer the highest quality ingredients and premium burger experience, an exceptionally clean, eco-friendly restaurant, prepared and served by a highly energetic and motivated team. We have grown to 119 franchise and corporate-owned restaurants in 22 states, two countries, and Puerto Rico. I'm proud to say that in our home state of Florida, We believe we are the premier better burger chain with 60 locations. Across all of our locations, we place an emphasis on design that differentiates us versus other restaurant brands. Our dining rooms feature all-natural wood walls made out of number two southern pine lumber, one of the most renewable wood sources on the planet. Similarly, our tables and chairs are made out of recycled materials. For example, our Navy 111 chairs in the restaurants are made from upcycled Coca-Cola bottles, literally 111 of them, and our parallel communal tables are made of compressed, recycled wood from shipping pallets. In addition, all of our lighting and fans are energy efficient with very low electricity usage. All these features contribute to our trendy and modern atmosphere that consumers have come to love. Just like the attention to detail in our design, we place a huge emphasis on the food we serve. We use 100% American Angus beef, naturally raised and harvested, part of the NAE program. That's no antibiotics ever. The beef is never given steroids, hormones, antibiotics, chemicals, or additives by feed or by injection. It's humanely raised, vegetarian, grass-fed, and of course, never frozen. This standard is consistent across all our meat-based burgers, from the signature BurgerFi cheeseburger to our premium Wagyu CEO burger. In addition to our beef, we offer a diversified menu that caters to nearly everyone's unique taste preferences. I firmly believe we have the best onion rings in the industry, which are cut from Spanish colossal onions, literally bracelet in size, and then hand-breaded and beer-battered. We also offer French fries that are fresh and hand-cut from Idaho Burbank potatoes in our restaurants, all natural cage-free chicken, premium frozen cutters and concretes that we believe are far superior than standard ice cream, and local craft beer and wine in select locations. Additionally, we were among the first Better Burger chains to introduce Beyond Burgers plant-based patty to our customers, and we also have a vegetarian patty option, our very own award-winning Veggie-Fi that is made up of 15 all-natural ingredients, including crispy quinoa and fresh-cut vegetables. This is truly a menu that garners awards. Recently, we were named the top Better Burger Fast Casual chain in USA Today's 2021 10 Best Readers Choice Survey, and even more importantly, the number one brand of the year in Fast Casual's top 100 movers and shakers list for 2021. The numerous awards that we have achieved are a testament to our innovation and customer engagement. Our innovation pipeline remains strong and we continue to enjoy the strong preference of our swag or spicy Wagyu Angus burger, first introduced in March of this year. Our swag burger features five spicy ingredients, a double Wagyu and brisket blend burger with charred jalapenos, candied ghost pepper bacon to pack the heat, sweet tomato relish to add a bit of sweetness, habanero pepper jack cheese, and of course, hot steak sauce. Our swag burger has doubled our premium Wagyu sales And due to its continued success, we made a decision to make it a permanent menu item beginning in July. Also, to start our third quarter, we've rolled out our new chef-inspired sauces to accompany our fresh-cut sides and cage-free fried chicken tenders. Our unique sauces include truffle aioli, bacon jalapeno ranch made with fresh jalapenos, garlic aioli, which is infused with roasted garlic, and my personal fan favorite, the ghost pepper honey. I want to thank our team for their commitment and hard work, especially during this challenging time. I'll now turn the call over to our CFO, Mike Rabinovich, who will provide additional commentary on our performance for the second quarter. Mike?

Thank you, Julio, and good morning, everyone. Our second quarter total revenue increased 65% to $11.8 million compared to $7.2 million in the year-ago quarter. New restaurant openings and same-store sales increased Supported by our Swag Burger premium burger introduction in March 21, digital channel sales showing a continued high retention rate, we continue to drive a strong improvement in system-wide sales for the second quarter. In fact, corporate-owned restaurants delivered an impressive 39% increase in same-store sales during the second quarter, with sales surpassing 2019 levels. Our franchise locations also performed very well, with same-store sales increasing 45% in the second quarter. System-wide sales in the second quarter increased 63% to $44.2 million compared to $27.1 million in the year-ago quarter, fueled by the same-store sales increase of 44%, bringing the overall system-wide performance flat with 2019. Digital channel sales were up 12% year-over-year in the second quarter, as our digital platforms drove delivery sales growth, which comprised 39% of our system-wide revenue in the second quarter of 2021, as compared to nearly half that in the comparable period. We are very pleased to retain such a high digital component of our business while the in-restaurant dining continues to recover. As Julio will discuss later, we plan to continue to invest in technology with the goal of delivering a more frictionless omnichannel experience to drive guest satisfaction and sales. Restaurant-level operating expenses for the first quarter were $8 million compared to $5 million in the year-ago quarter. Our restaurant-level operating margin was 11% compared to 10.1% in the second quarter of 2020. The margin improvement reflects tight cost controls on food and beverage costs and the leveraging of occupancy expense which more than offset a wage rate, inflation, and labor headwinds related to the current labor environment. Net income attributable to controlling interests and common shareholders in the second quarter was $9 million, which compares to net income attributable to controlling interests and common shareholders of $100,000 in the year-ago quarter. The increase was primarily attributable to the impact of the gain on change and value of warrant liability recorded during the period. Adjusted EBITDA in the first quarter was $300,000 compared to $500,000 in the year-ago quarter. The decline reflects the additional expenses associated with being a public company, along with the foundational investments to support our growth initiatives as compared to the prior year. Moving on to the balance sheet, our cash balance at June 30, 2021, was $34.8 million compared to $37.2 million on December 31, 2020. The difference reflects the repayment and termination of our revolving line of credit of $3 million during the first quarter of 2021, as well as capital investments in constructing new company-owned restaurant locations. Moving on to our outlook, we remain optimistic about our short-term and long-term prospects. We plan on opening 25 to 30 company and franchise-operated restaurants in new and existing markets for the full year 2021. During the second quarter, we opened three new company-owned locations and one franchise site, representing eight new restaurants year-to-date. Further, we have over 25 signed leases, of which 18 restaurants are currently under various stages of construction and development. Most of the new locations are in markets we currently operate in, and as a result, we're excited about continuing to build on the strength and the brand in those areas. In addition, We are encouraged by the performance of our ghost kitchens, and through our partnership with Reef and Epic Kitchens, we remain on track to hit our target of 15 to 20 new ghost kitchens by the end of 2021, many of which opened in the second and third quarter to date. In terms of restaurant-level margins, we anticipate an improvement due in part to an overall 4% price increase taken late in July. This price increase was designed to help offset ongoing labor and other cost pressures as we expect it to result in a recovery in restaurant-level margins of 300 basis points. In looking at our competitive set, we see similar price increases taken in recent periods, and we are pleased with the results we're seeing in July. In fact, our transaction trends compared to 2019 continue to be at the same level as before the price increase, and we are seeing the flow-through in average transaction value. July preliminary same-store sales are showing continued growth sequentially against 2019 levels at both corporate and franchise locations experienced in June. Given we still have seven franchise locations that are temporarily closed due to being in airports, universities, and the like, we're particularly encouraged for our franchise sales results when these locations are expected to open in the September and October periods. We're expecting company-owned restaurant-level margins to improve to a range of 14 percent to 16 percent of restaurant sales in the back half of the year as a result of the price increase, higher sales, and other store-level operating efficiency initiatives. In terms of capital outlay, we are planning capital expenditures of up to $15 million for 2021 primarily to support new restaurant construction. Now, I'll send it back to Julio to discuss our growth plans and strategic initiatives going forward. Julio?