Good morning. I'm Peter Saleh, restaurant analyst at BTIG. This morning, joining me on the stage here is a team from BurgerFi, Ian Baines, CEO, Michael Rabinovitch, CFO. Good morning and welcome. Morning. Morning. Morning, Pete. we're just gonna do a quick fireside chat here for the next 25 minutes, just questions between myself and the team here. Maybe just a quick, just to get us started, can you just give us a little bit of update on BurgerFi, just so for the audience, a little bit about the background and the history of the company, and how you came to be where you are today with two concepts? Certainly. Certainly. Good morning, everyone. Ian Baines, CEO. Actually, I joined Anthony's at the beginning of 2020, when BurgerFi acquired Anthony's in November of 2021, that's when I became the CEO for the whole organization. And I must say I'm thrilled to be, you know, to have the opportunity to lead, you know, such iconic brands. Breaking out the brands specifically, BurgerFi has been around for just over 11 years now, and it was founded in Southern Florida, and it is a premium burger brand. Really, what was really important when BurgerFi was founded was the quality of the ingredients. you know, premium quality ingredients, fresh Angus beef, no antibiotics, no hormones, and that carries on through, you know, all of the ingredients. you know, cage-free chicken, the french fries are, you know, fresh cut every day. premium products allows us and gives us permission to actually have, you know, premium pricing. you know, consumers and guests are really, you know, responding to that, especially as, you know, the consumers and guests become even more savvy. The transparency of the ingredients is, you know, really important to them, and some of the feedback that we get from our guests, when they come and eat one of our burgers is, you know, they actually feel good after reading it, because, you know, they describe it, you know, it's less greasy than some of the burgers that that they get in other places. You know, we round out the menu with, you know, our shakes and custards, and we also have, you know, craft beer and wine. Shifting over to Anthony's. Anthony's has been around for just over 20 years now, in, you know, our 20th year. It too was founded in Southern Florida, you know, by Anthony. He too was maniacal when it came to ingredients. The all of the tomatoes that we use for our pizza sauce are imported from Italy. We have a proprietary mozzarella that is made for us, and, you know, it carries on all the way through. The menu is, you know, very tight menu. We sell really four main products, you know, pizza, wings, meatballs, and salads. Everything except for our salads and desserts are cooked in the 900-degree coal-fired oven. That coal-fired oven really imparts a, you know, a unique flavor to everything that goes in there. You know, it's a, you know, slight charring, whether it's a pizza or our fresh, never frozen, jumbo chicken wings. The menu, you know, how the menu breaks out, you know, 50% of our sales at Anthony's are pizza. 15% of our sales are actually chicken wings. It's a big part of the brand and helps to really, you know, differentiate it. Once again, because of, you know, these premium products, it allows us to, you know, charge, you know, premium pricing. From a geography standpoint, for BurgerFi, we have a big presence here in Florida, and the rest of the locations kinda move up the Eastern Seaboard. Similarly with Anthony's, of the 60 locations, 28 of them are in Florida, and the other 32 are up in, you know, the northern states, you know, New Jersey, Long Island, et cetera. The two brands, BurgerFi, is a more heavily franchised brand. We have 92 franchise locations, and 25 corporate locations, whereas, currently Anthony's is, you know, 100%, corporately owned. We see huge opportunities for franchising Anthony's in the future. Mike, can you just give us a little bit of detail around, the overall business in terms of the sales, how the sales mix, Anthony's versus BurgerFi and how that breaks out? Sure. Given that Anthony's has 60 corporate locations and BurgerFi we have 25, about three-quarters of our P&L is Anthony's. As Anthony's sales have continued to recover sequentially throughout 2022, we've been seeing sales gains. As the food costs and labor productivity goes in Anthony's, we've been able to drive some four-wall contribution gains. On BurgerFi, 25 corporate locations, about a quarter of the P&L. About 2/3 of that is our corporate-owned restaurant results, about a quarter to a 1/3 is our royalty stream from the franchises. Great. you know, strategically, you started off as BurgerFi, then you acquired Anthony's. What is the strategy going forward? Is it just two concepts? Do you look to add another concept? how are you thinking about this as you go forward? Yeah. The going-in strategy after the de-SPAC that occurred in December 2020 was to take BurgerFi, which had, from a consumer acceptance perspective, you know, a very strong product offering and a very, very distinct brand, was to drive growth in that brand. The acquisition of Anthony's at the time was both opportunistic, given that they were recovering, and it was an acquisition that we bought from private equity. The synergies that acquiring the two brands provided us creates a platform for back office, HR, IT, finance, supply chain, and we've been able to realize over $2 million of synergies through the acquisition. The $2 million may not sound like a large number for some companies, but given that, just to put it in perspective, BurgerFi only had about $35 million of revenue, total revenue, prior to the acquisition. That $2 million is significant. We look at inorganic growth as an opportunity now. The current share price creates challenges in executing on some of those. Nevertheless, the way that we acquired Anthony's, was essentially a no-cash acquisition. We issued stock, common stock, and preferred. We see the opportunity to continue to look at brands for acquisitions. There are some strategically when BurgerFi acquired Anthony's, there are opportunities when it comes to, you know, marketing, also presented opportunities, you know, for more franchise growth. There is, you know, quite a lot of geographical overlap, you know, between the two brands. We're able to, you know, cross-promote between BurgerFi and Anthony's. You know, for Anthony's, during, you know, during COVID or during the last couple of years, we had spent time preparing Anthony's to become a franchise business. There's always been a lot of pent-up demand over the life of Anthony's, over the 20 years for franchising. We really worked on, you know, shrinking the footprint, because Anthony's now has about 50% of our business is off-premise, which is actually similar to BurgerFi. BurgerFi also has about 50% of its business off-premise. We had shrunk the footprint. We had done some work on, as I said, streamlining the menu. Also, we had introduced a gas-enhanced coal-fired oven, which is much easier for operations. The combination of those things kind of set us up ready to begin franchising. Being acquired, you know, by BurgerFi, we instantly had access to this, you know, very large and robust and successful franchise community. In fact, we've already, one of our early franchisees, has signed up for a multi-unit Anthony's franchising opportunity. That was another one of the synergies that we thought were, was really advantageous. Ian, that piggybacks to one of our other strategies, which is the capital required to grow through franchising is significantly lower than the capital required to open company restaurants. Once we finished the acquisition of Anthony's, we didn't see the need to build our corporate restaurant base to build the scale to cover G&A. We saw the opportunity to pivot directly to franchising growth. In that vein, we've opened a number of franchises for BurgerFi in 2022. We plan more than 2022's number in 2023. As Ian mentioned, we now see growing through franchising at Anthony's. We have a captive base of 50 franchisees at BurgerFi, many of which have expressed a very strong interest. That's our growth strategy. Excellent. Can we talk for a minute about technology? I think you got some kiosks going in at BurgerFi. You've also got some AI phone ordering over at Anthony's. I think those are pretty interesting techs that can actually help drive the average check and the profitability of both the brands. Maybe you can give us a little bit of update on where you stand there. Right. BurgerFi, from the very beginning, were, you know, very, forward-thinking when it came to, when it came to technology. Yes, you're right. You know, the introduction of kiosks into BurgerFi has been advantageous from, you know, both standpoints. From, first of all, from a customer standpoint, it's a much more seamless experience. You know, the customer gets to take their time in choosing, you know, what it is that they're wanting to eat. As you can imagine, the kiosk, you know, intuitively guides them through the process and, you know, for want of a better word, there's an upselling, you know, that takes place automatically, which we would love that it took place every time the cashier was taking the order, but we know that's not always the case. The result of that is we see, you know, a 10%-12% increase in the check for those customers utilizing the kiosk. It, you know, affords opportunities, the ease of signing up for our loyalty program, et cetera, et cetera. Then over on the Anthony's side, you know, the demographic of Anthony's, obviously, you know, we have, you know, we can order through our website, et cetera. You know, a good number of our guests still like to, you know, utilize the telephone to order. On a Friday night, which is prime time for pizza, unfortunately, one of the things that you would hear too often would be, "Hello, this is Anthony's. Can I put you on hold?" You know, we would lose people, and when the person taking the call would get on there, they would be rushing through the order versus the upselling. Now, with the introduction of AI technology, which we have throughout all, you know, 60 locations now, we guarantee that phone is gonna get answered on the first call. You know, the AI technology automatically upsells throughout the process. Same thing, you know, it's certainly helped us when it came to the average check. There's about, you know, a 10% increase on the check, those customers ordering through the AI technology. From a business model standpoint, in both brands, it also allows us an opportunity to do some, you know, better management of labor. We don't need as many people answering the phone. We don't need as many cashiers, actually taking the orders. We can either re-utilize that labor somewhere else in the business or, you know, take advantage of it. How accurate is this phone ordering technology? It's surprisingly accurate. We had started actually, well, two years ago, starting to look at this, and it wasn't great, to be honest with you. We stopped the test after three or four restaurants. Now it is, you know, really advanced and it continues to learn. You know, the algorithms continue to learn throughout. Yeah, it's worked out well. There's still an opt-out for the customer if they wanna be able to speak with somebody. Right. Yeah. Oh, okay. Okay, great. Can we just talk about, you know, the past couple of years have been pretty tumultuous for the entire industry? Can you talk about, you know, COVID, the learnings that you've had during COVID and coming out of COVID? What have you learned about both the brands in terms of the growth and the margin profile, and how you view them coming out of COVID over the next couple of years? Sure. On the Anthony's side, Anthony's and BurgerFi both suffered obviously the sales and labor and supply chain side. Anthony's top line recovered a little bit slower than BurgerFi's in 2021. The cause of that is about half the revenue and half the stores are in the Northeast, and a lot of those markets continued to be closed, and the customer behavior was different. While in Florida, which remained open, recovered quite well. At BurgerFi, given a majority of the restaurants, vast majority are in Florida. Of our 120 locations, system-wide, 60 are in Florida, and almost all but 1 of the corporate restaurants are in Florida. Excuse me, all but 2. That sales recovery took place very early. In the first quarter, ending the first quarter 2021, BurgerFi returned to positive comps versus 2019. Some of the learnings, we launched a very successful LTO in BurgerFi. That LTO drove almost 10% of sales. We've had difficulty matching off on that in 2022, hence some of the negative same-store sales that you've seen in 2022. From an Anthony's perspective, the supply chain was severely impacted during COVID, primarily in the area of chicken wings and mozzarella, and to some extent, flour, more recently in 2022 with all the issues in Ukraine. There's been a tremendous recovery on the food cost side. In our third quarter, we were able to drive sequential and comparative increases in our food costs. We expect that to continue into the fourth quarter and into next year. From a people perspective, you know, the industry overall, you know, was very difficult in terms of, you know, finding people. you know, in both brands, we were intensely focused on putting in place retention strategies, retention bonuses, and we've had, you know, some really good success with that. Our, you know, our turnover numbers or our increased retention have certainly improved as we move throughout 2022. Feeling much more confident now as we move into 2023 that we have, you know, a stable environment when it comes to our people, which we know leads to, you know, high levels of execution, so. I think just compounding on that, another learning would be the power of the delivery channel, of the third-party delivery channel. Both brands had partnerships with the deliveries prior to COVID, but the penetration rate went up significantly during COVID. We've been successful at retaining a significant portion of that. I think Anthony's statistic pre-COVID was 35%-37%. Off premises ... off premises before COVID, and now we're at 50%. You can see that that gain is primarily coming from the growth in the third-party channel. We believe in both cases that, you know, that third-party channel quite often are, you know, brand new guests to both brands. In fact, you know, a lot of them actually will probably never come in, you know, and visit the restaurant, but they, you know, choose to get their pizza and their burgers, you know, by, you know, by staying at home. That off-premise growth portion, is that for both brands? I know you talked about for Anthony's. Are you seeing that also at BurgerFi, and is it really? It seems like it's holding quite steady. Yeah. We saw the same trend for both brands, that I'd say that we're probably retaining 70%-80% of that volume from its peak, we're very happy about that. One of the learnings is that the customer continues to choose the BurgerFi product, the BurgerFi brand, the Anthony's product, the Anthony's brand, now they can get it when they want it, where they want it, and they can get it how they want it. remind us again how you're priced for the third-party channel versus in store. Is it margin neutral, margin accretive, margin dilutive for you? I'd say at this point today, or call it the last nine months, it's margin neutral. Margin neutral, okay. On both brands. Got it. Okay. Maybe we could talk a little bit about the release you guys put out this morning and some of the expectations for next year. I think your top line came in fairly in line, but some of the other moving parts within the income statement, Mike, maybe you can give us a quick brief on how the fourth quarter shook out and what you're expecting for 2023. Sure thing. For 2022, we came out with our revenue of $178 million, which was kind of the mid to higher part of our range of $175 million-$180 million. Things came out as we had expected. Store openings came out at 11. That's two or three shy of where we had guided, but those are merely rolling into January as a result of franchisee permits getting approved. From a adjusted EBITDA perspective, we've not changed our guide of $9 million-$10 million. You know, we're in the process of closing the books, so we'll get better visibility into that later in the month. We also issued guidance for 2023, where we see new franchise openings of 15-20 units. Of that would be two to three Anthony's. As Ian mentioned earlier, we signed our first franchise agreement a few months ago. Top line revenue $175 million-$178 million, which is relatively flat to 2022. We are being conservative with everything going on in the economy on the top line. Anthony's continues to perform at a sequential better pace, we don't wanna get ahead of ourselves with what'll happen in 2023. BurgerFi's negative same-store sales that we've experienced the back half of the year, we would expect that would continue somewhat into 2023 and then stabilize as the year progresses, and that's kind of what puts the output to the same revenue range. There's been a lot of talk about, you know, the lower income consumer kind of pulling back and seeing some weakness there. Are you seeing any of that in your brands, or are you seeing that kind of shift to maybe migrate into some higher income consumers? What are you seeing on the, on the top line among your consumer base and how the habits have changed over the past six months? Yeah, we haven't seen a trading down within the ordering, the average order is holding. We have seen some movements in customer traffic. I'm not sure that that's necessarily the economic impact as much as it is for Anthony's, the north stores continuing their recovery because they recovered slower, and the south anniversarying on all the unnatural tourism that took place during 2021, where a lot of people came to Florida because the northeast had and across the country had closed markets. Similarly in BurgerFi, going against the very successful LTO and traffic benefits that we had in 2021, we're not seeing it necessarily as economic. We're aware that it's out there. The people who, you know, are very price sensitive are likely trading down on brands, moving out of an Anthony's to more of a fast service pizza or moving out of BurgerFi into fast food. Coupled offsetting that would be the gains of new customer acquisition. Can you talk a little bit about the menu pricing that you took in 2022 across both brands, and maybe any pushback that you feel like you've seen? What are your expectations for 2023? I think we were talking, you know, commodities seem to be easing somewhat, maybe a little bit, or at least. Flat ... certain commodities. Okay. yeah, and then just in the context of labor and the environment you're seeing there too. Right. Yeah, in 2022, cumulatively, we took about 12% at BurgerFi, and at Anthony's around 6%. As, you know, Mike was talking about those projections going into 2023, we haven't, you know, baked into that yet any further price increases. We would prefer to try and hold where we are, and, you know, take advantage of, you know, some softening in commodities and some stabilization as far as labor is concerned. Yeah, those pricing moves were aimed more to be able to realize a normal food cost margin on our, on our selling. We monitor very closely, especially at BurgerFi, where we have direct market compares. We're not priced above our competition, so we're at one of our competitors, and we're slightly below a few points, one of our others. The industry has moved. The stabilization or flattening, as Ian called it, with the commodity situation, has given us tailwinds in the third quarter. We expect that for fourth quarter and next year, and that's one of the drivers on flat revenue for 2023 that we think we're gonna be able to have a significant increase in adjusted EBITDA, where this year we guided $9 million-$10 million. Next year we're looking at $10 million-$12 million. Got it. Just maybe lastly on labor. Labor has been tight. There's been staffing challenges across the entire sector. Are you seeing that ease up at all? Any sort of green shoots on the labor side? Yeah, it is. It is easing up. You know, as I talk to managers of our restaurants in both brands, you know, one of the first question I ask every time I talk to them is, you know, "How are you doing for people? Are you fully staffed? What is the flow of candidates looking like?" The flow of candidates is getting stronger, and the quality of the candidates seems to be improving also. Whereas people seem to be ready to jump very quickly, you know, we monitor turnover in that first 30 to 60 days, 'cause if we can keep people past that time, then we tend to hang on to them, as the industry average as well. We're seeing that turnover in the first 30 to 60 days improve significantly. That's more notable at BurgerFi being a fast casual versus Anthony's being a sit-down full service restaurant. The labor turnover rates at BurgerFi were exacerbated in 2021 and 2022, more so than Anthony's. That recovery, as we continue to see it through the fourth quarter and hopefully into next year, provides a lot for sales, food, and labor stabilization into 2023. Excellent. Well, we look forward to watching the story in 2023 and seeing you guys grow. Thank you again. I think we're just about out of time. Thank you for everybody for being here. Thank you for your time today. Thank you. Appreciate it. Thank you.