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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, 2024. Joining us today are Carl Bachmann, CEO; and Chris Jones, CFO. Following their remarks, we'll open the lines for your questions.
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 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.
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 and similar expressions. 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. Factors that could 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 with other documents that the company files with the Securities and Exchange Commission. 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 publically release the results of any revision to these forward-looking statements, except as required by law. Given these statements and uncertainties, listeners are cautioned not to place undue reliance on such forward-looking statements.
Also, the following discussion will contain non-GAAP financial measures. 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 telephone replay for 2 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 to BurgerFi's CEO, Carl Bachmann. Carl, go ahead.
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've 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' 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 also contended with unfavorable weather in key markets.
Notably, however, we saw a 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 have shown stability during the second quarter to date as we expect to see our initiatives begin to take hold. 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 5 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, building the right team and fostering a strong culture of comradery across both brands has been paramount. We have made progress on stabilizing restaurant teams as overall, the company is 95% staffed to bar, while benefiting from considerably reduced turnover. With improved retention and turnover numbers of 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 lead indicators that our recovery has begun. Technology is another area where we are enhancing our infrastructure.
Earlier this year, we implemented an inventory management platform at Burgerfi with the 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. Here, we believe that we'll see at least 200 bps improvement in COGS at both founder 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. 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 an initial insight into the impact to the business.
This POS 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. 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 BurgerFi. 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. 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 tastes.
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. 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 have now -- 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. 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 hotdogs that are only available at this New York City test location. Our BurgerFi loyalty members will also be invited exclusive tasting events at the lab to sample new products that 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 cache in 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 thoughtful innovation as we continue exploring creative ways to elevate The Better Burger experience for our guests. On the Anthony side, at the end of April, we launched the inaugural Italian shrimp Festival. We added 6 new shrimps dishes to the menu to serve as our new LTO. Seafood holds a revere place in Italian culinary traditions, and this has been missing from our menu for some time.
Our next initiative revolves around developing gold standards. Drawing from my prior leisure experiences and feedback from employees and guests at both brands I've 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, our third-party audit scores are already improving. We have seen an improvement in feedback from both brands. Anthony is now growing 4.49 on a 5-point scale and BurgerFi at 4.38. New guests look at ratings, and you are not even in the consideration set, it's under a 4. 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. 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. And just last week, we offered 20% off to all teachers and nurses in connection with Teachers and Nurses Appreciation Week.
Finally, I will end with step 5 defining the portfolio, which is about both store development and optimization. As of April 1, 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 continue to rightsize 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 on cash flow and profitability.
Starting with Anthony's during the quarter, we signed our second franchise agreement. This time for 3 Anthony's in the Jacksonville, Florida area. We expect these restaurants to open in 2025. After the successful launch of our inaugural co-branded Anthony's location in late 2023, our partners, NDM Hospitality Services to 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.
Turning to BurgerFi. Last quarter, we opened our first franchise BurgerFi inside Apple Cinema in Rochester, New York. We view nontraditional spaces becoming an important part of our development story as they represent a great opportunity to go to the brand and get people excited about BurgerFi again with a smaller footprint and lower start-up costs. To date, we opened a second franchise BurgerFi inside an Apple Cinema this time within their Warwick, Rhode Island location. As I mentioned earlier, in late March, we reopened our flagship corporate-owned BurgerFi 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 within metropolitan cities along the I-95 corridor, as these are the market areas where both brands have just demonstrated strong performance.
In conclusion, I'm more confident than ever to join the 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.
Thank you, Carl, and good morning to 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 we're cautiously optimistic that we will start to see some of these positive leverage in the back half of 2024.
Now briefly looking at the first quarter. 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 in total revenues in the quarter. The decrease in revenue was 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 2 acquired BurgerFi restaurants from franchisees during 2023. Restaurant level profit margin was 12.2% for the first quarter of 2024 compared to 16.6% in the same quarter last year. 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 3 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. As noted earlier, our performance improved throughout the period with March comps 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 Mid-Atlantic in the North. These trends have continued in the second quarter. Anthony's restaurant-level operating margin was 14.3% for the first quarter of 2024 compared to 17.9% in the period prior year 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 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 their schedules by the smartphones following with more dynamic scheduling. 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 efficiency within their store schedules. Turning 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. BurgerFi 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 restaurant-level operating margin was 4.1% for the first quarter of 2024 compared to 12.6% in the first quarter of 2023. This is largely the result of lost leverage on fixed costs due to the same-store sales decline. However, despite the overall challenge to top line, the team remains focused on improving profitability with overall gross margins at BurgerFi improving 115 basis points as the restaurants continue to benefit from ongoing implementation of 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. 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 EBITDA was $258,000 in the quarter compared to $2.6 million in the prior year first quarter, reflecting the impact of lower sales of both brands and lost leverage on fixed costs and labor of both brands and loss royalty and franchise fees at BurgerFi. Moving on to the balance sheet. Our cash balance at April 1, 2024, was $4.1 million compared to $7.6 million at January 1, 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 used in operating activities is primarily related to the decline in adjusted EBITDA and timings and payments included. Cash outflows for the investment activities were $800,000, primarily due to capital expenditures. Cash provided by financing activities of $300,000 was due primarily to contributions from noncontrolling interest of $500,000. Looking forward, as we stabilize top line volumes, we can continue to focus on use of cash for EBITDA growth. Now turning to our fiscal 2024 outlook. Today, we are trending to the low end of previously stated revenue and EBITDA guidance, but are maintaining guidance. As a reminder, I will review our 2024 guidance provided at the beginning of the year. Total revenue of $170 million to $180 million, which assumes a low single-digit increase in same-store sales for corporate-owned locations, the addition of 10 to 15 new franchise restaurants, including the new Anthony's in 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 million to $9 million. We are expecting capital expenditures between $2 million to $3 million for the full year. With that, operator, please open up the call for questions.
[Operator Instructions] The first question comes from Peter Saleh with BTIG.
Several questions on my end. I guess, first, could you guys talk about the initiatives you have in place to just reignite traffic, primarily maybe on the chicken sandwich side? I didn't really hear much on that front. Where do we stand on that rollout of that product as I think chicken is a pretty fast-growing category, and I think that chicken sandwich should help some of the sales shortfall right now?
I can take that one. Peter, yes, 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%, 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 we're launching that 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 a great adoption and great feedback from the new chicken. And this summer will be our big rollout and our big marketing push to promote that across the country.
Carl, I guess the initial test, was this incremental? Or did you see any cannibalization? How much of this was truly incremental?
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. And it's really off brand not to have grilled chicken, that we focus on having higher quality, fresh, healthier ingredients for a burger brand. So it has been incremental, especially the grilled chicken. So 2 or 3 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.
Great. And then just on the 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?
I think you're referring to like our social holidays that are kind of what we call social currency holidays. The big thing about those is the treats, trial and excitement. For instance, we did Pi Day on March 14th on the Anthony's brand, and it was -- I think we're up 87% over the year before. So it's 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 the 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 the 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 in new guests and do we reignite our loyalty guests through those social holidays.
Great. And then just last one for me, following up on that, and then I'll pass it along. When you do these kind of social, call it, holidays and these promotions, is the benefit really just confined to that one event? Or are you seeing follow-through? I think you indicated that 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.
Absolutely. Like I said, the most important thing is we do see those guests come back and most importantly, we see them join our loyalty programs. Like I said, we have a -- our huge 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.
And this concludes our question-and-answer session. I would like to turn the floor back to Mr. Bachmann for any closing comments.
Thank you, Keith. I'd just like to thank everyone for listening 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.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.