**M&M Custard, Major Freddy’s Franchisee, Files for Chapter 11 Bankruptcy**
On Friday, M&M Custard—one of the largest franchisees of Freddy’s Frozen Custard & Steakburgers—filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the District of Kansas.
**Why It Matters**
This year has seen a notable increase in fast-food and fast-casual chains filing for bankruptcy, closing locations, or reporting significant declines in sales and customer traffic. These industry challenges reflect broader economic difficulties for lower- and middle-income consumers across the country, which have hit both the retail and restaurant sectors especially hard.
**Key Facts About the Filing**
According to the court documents submitted Friday, M&M Custard reported $5.2 million in assets and $27.7 million in liabilities, with an estimated 100 to 199 creditors involved. The filing also indicated that there will be funds available for the franchisee to pay its unsecured creditors.
M&M Custard filed for bankruptcy alongside 31 affiliated locations. Despite the filing, all locations are expected to continue normal operations while the company reorganizes and restructures its debts. Importantly, the bankruptcy case only affects franchisee-owned restaurants and does not involve the parent company.
CBS affiliate KCTV 5 reported that M&M Custard holds franchise rights to dozens of Freddy’s Frozen Custard & Steakburgers locations, operating across Missouri, Kansas, Illinois, Indiana, Kentucky, and Tennessee.
**Industry Context and Other Closures**
The challenges facing M&M Custard are not isolated. As The Street notes, other chains have faced similar difficulties, with Freddy’s franchisees and Dairy Queen closing stores this year. Dairy Queen in particular has shuttered dozens of locations in 2025, including several in Texas due to ongoing legal disputes over royalty payments and required remodels.
**Industry Voices on Consumer Trends**
Restaurant executives have also highlighted the pressures facing the industry:
– **McDonald’s CEO Chris Kempczinski** recently stated:
“In the U.S., we continue to see a bifurcated consumer base, with [quick-service restaurant] traffic from lower-income consumers declining nearly double digits in the third quarter—a trend that’s persisted for nearly two years. In contrast, traffic growth among higher-income consumers remained strong, increasing nearly double digits in the quarter. We continue to remain cautious about the health of the consumer in the U.S. and our top international markets and believe the pressures will continue well into 2026.”
– **Chipotle CEO Scott Boatwright** commented during an October earnings call:
“Earlier this year, as consumer sentiment declined sharply, we saw a broad-based pullback in frequency across all income cohorts. Since then, the gap has widened, with low- to middle-income guests further reducing frequency. This trend is not unique to Chipotle and is occurring across all restaurants, as well as many discretionary categories. This group is facing several headwinds, including unemployment, increased student loan repayment, and slower real wage growth.”
– **Hooters CEO Neil Kiefer** told Newsweek:
“It’s a tough time for just about everybody in the restaurant industry and the hospitality business.”
**What Happens Next**
According to KCTV 5, M&M Custard plans to close several stores as it works to emerge from bankruptcy. The company aims to stabilize its operations and restructure its debts, with the hope of resuming regular business activities at most locations.
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*Stay tuned for further updates on the fast-food industry’s ongoing challenges and the future of M&M Custard’s Freddy’s franchise locations.*
https://www.newsweek.com/dairy-queen-rival-files-bankruptcy-mm-custard-11055142
