Restaurant Finance Monitor
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OPES ACQUISITION CORP, a “blank check” company, also called a “SPAC”, or Special Purpose Acquisition Company, raised $115M on 3/13/2018, and embarked on a search to find an attractive acquisition candidate.


This has become a commonplace approach in the current environment when so many investors are searching for return in a zero interest rate environment. Skeptics might suggest that this process is capable of producing massive “misallocation of capital” but that’s another subject for another day.

investors in these underwritings have the opportunity to vote on the proposed transaction, and can redeem their shares prior to the closing if they so choose. The warrants that are typically attached to the underwritten “units”, are retained by the investors even after redemption of the shares, as a sweetener for their trouble. There have been a number of highly publicized successful transactions whereby early stage companies developing Space Vehicles, Electric Cars, purchase of sports teams and other typically glamorous opportunities have created multi-billion dollar enterprise values. $12B has been raised so far in ’20 in this manner and hedge fund manager, Bill Ackman, is just now raising $4B. Our suggestion is that, in general, most companies that have come public in this manner are either very speculative or have some sort of a checkered history. An established, unblemished and well managed company can go directly to Goldman, Sachs or some other reputable underwriter, and become publicly held with less dilution of their pre-public equity.


There have been two recent attempts by well known restaurant chains to go public in this manner. Chucky Cheese (CEC Entertainment) tried to come public again about two years ago in this manner, but the transaction aborted (market conditions, you know?) before completion. TGI Friday’s tried to do the same earlier this year but the coronavirus pandemic interfered just days before the shareholder vote and the transaction was cancelled. We provided writeups on both of these situations (see the “Search” function on our Home Page) and were prepared to provide ongoing coverage, which proved unnecessary in both cases.


BurgerFi operates and franchises “better burger” fast casual restaurants. The “chef crafted” and “diverse menu with premium all-natural ingredients, combined with a next-gen sustainable restaurant design, appeals to consumers of all ages”.

Formal proxy material, which will include audited financial results, has not yet been filed. The following information has been excerpted from the Company website Investor Presentation. The Company has not yet responded to our request for an interview, and we will update and expand upon the following information when the proxy filing and/or interview take place.

Founded in 2011, BurgerFi opened the system’s 50th location in 2014, the 100th unit by 2017 and will have a total of 130 (105 franchised and 25 company operated) by the end of 2020. 54 (30C and 24F) locations are scheduled to open in 2021, according to the “internal Company forecast” and “executed franchise agreements and forecasts”.

The systemwide AUV (“12 mo. Average sales”) was $1.41M. Systemwide sales in 2019 was $146M. The average size of a location is not provided but the average Gross Buildout Cost is $650-750k. The Sales/Investment (excluding lease obligations) ratio is therefore about 2.0x. The average check per person (burger, fries, 16 oz.drink) is $13.01 and the average transaction is $18.40. The Prime Costs are 55.25%, leaving a Prime Margin of 44.75%. The average same store sales (over three years) has been 2.43%. Both lunch and dinner are important dayparts, at 45% and 54%, respectively. Burgers and More Sandwiches represent 58% of sales, Fries and Onion Rings 19%, Other Food 11%, Non-Alcoholic Beverages 9%, Alcoholic 3%. Store level EBITDA is not provided, nor is corporate G&A, pretax or aftertax profit.

Stores are established in both traditional and non-traditional locations. Highlighted are agreements with Aramark, who opened their first successful unit at Temple University in 2017, and HMS Host, who opened a $3M location at the Ft. Lauderdale airport in 2017. Aramark has plans for locations at University of South Florida, Philadelphia Fashion Center, Pioneer Place in Portland, OR, and Entertainment Center in Charlottesville, VA. Timing has not been provided. Information has not been provided yet as to HMS Host expansion plans, or how many existing locations are in airports, universities or other non-traditional locations that may be currently compromised due to the coronavirus. Agreements are also in place with non-traditional partners, Delaware North, SSP America and the US Air Force Services Activity (USAF). USAF has plans, in 2020-2021, to open six locations.

Another important non-traditional relationship has been established, with REEF Kitchens, an operator of “ghost kitchens”, backed by SoftBank and valued at over $1B. REEF has a “distributed real estate network of more than 5,000 locations…..across 50 cities, as the largest operator of logistic hubs and neighborhood kitchens in the US.” BurgerFi launched its first kitchen with REEF on June 15th in Miami, and is planning 25 such kitchens by 12/31/21. The BurgerFi/REEF effort sounds important and we await more information in this regard.

There is heavy geographical concentration in the southeastern US, with 50 locations now located in Florida. Florida will continue to be the focus for Company operated stores, and new franchised locations are spread more widely in the southeast. Furthest away are Air Force Base locations in Omaha, NE, Anchorage, AK, and Aurora, CO. More exact location numbers will no doubt be provided in the proxy material.


The current CEO, and largest shareholder, of OPES Acquisition Corp. is Miami based, Ophir Sternberg, with a heavy investment banking/real estate background. Other current directors have impressive financial credentials but no obvious restaurant experience. This will no doubt change once the contemplated transaction is completed. BurgerFi was founded by John Rosatti, but he is apparently no longer involved in operations. The Company is presently run by President, Charlie Guzzetta, who has worked his way up through the corporate ranks over the last seven years, and was named, several years ago, by Nation’s Restaurant News, as one of the restaurant industry’s most influential executives. At the same time, there is a current search for an experienced CEO, which is understandable, considering the very rapid expansion plan and long runway for growth.


While no actual financial results have been yet provided, from 2019 through estimated 2020 and 2021, the following summaries have been provided.

System revenues will have gone from $145.8M in ’19 to $112.5M in ’20 and $161.0M in ’21.

System stores will have gone from 113 in 2019 to 130 in 2020 to 189 in 2021.

Net Company Revenues will have gone from $31.9M in ’19 to $30.9M in ’20 to $59.3M in ’21.

Adjusted EBITDA will have gone from $3.3M in ’19 to $4.3M in ’20 to $10.5M in’21.

The current BurgerFi shareholders will receive $30M in cash and 6.6M shares, which will represent 38% of the 17.6M shares outstanding after the transaction. Assuming that OPES (renamed BurgerFi, BFI) sells at $10.60 per share, the Implied Equity Value would be $186M, including about $45M in cash raised from the IPO and a private placement, and the Implied Enterprise Value would be $143M.

Setting aside additional contingent shares to be issued when BFI price hits $19, $22, and $25, the Enterprise Value is 2.4x Estimated 2021 Corporate Revenues and 13.6x Estimated 2021 EBITDA.


We expect to know a lot more before this transaction, expected to be completed in October, takes place. The positive aspects include strong geographical concentration (easier to manage during rapid expansion), an established franchise system including important non-traditional partners, the new REEF ghost kitchen approach, and unit level economics that include well controlled prime costs at about 55% of sales.

At the same time, actual financials are not yet available and investors will no doubt want to fill in the blanks regarding BurgerFi’s history, unit level economics, strategic positioning and expansion plans. This is especially so in the middle of a pandemic which makes 2020 basically a ‘throw away” year. It has to be considered a “reach” to project $10.5M of Adjusted EBITDA in 2021, almost a triple of the average EBITDA in ’19 and ’20. Justifying 13.6x that  number may be difficult, considering the G&A burden to support very rapid expansion, especially for Company operated locations.

We will provide more information to our readers after formal proxy material is filed.

Roger Lipton