On Friday, M&M Custard, one of the largest franchisees of Freddy’s Frozen Custard & Steakburgers, filed for Chapter 11 protection with the Bankruptcy Court for the District of Kansas.
Newsweek has contacted the company’s legal representatives via email for comment.
Why It Matters
This year has already seen a number of chains in the fast-food and fast-casual restaurant space file for bankruptcy protection, close locations or report notable slides in sales and traffic. This comes amid a period of economic difficulty for lower- and middle-income consumers across the country that has hit the retail and restaurant sectors especially hard.
What To Know
According to Friday’s court filing, M&M Custard reported $5.2 million in assets and $27.7 million in liabilities, with a total of between 100 and 199 creditors. The filing stated that there will be funds available for the franchisee to pay out to its unsecured creditors.
M&M Custard filed for bankruptcy alongside 31 other affiliate locations, though all are expected to resume normal operations as the company reorganizes and restructures its debts. The bankruptcy case exclusively involves franchisees and not the parent firm.
CBS affiliate KCTV 5 reported that M&M Custard holds the franchise rights to dozens of Freddy’s Frozen Custard & Steakburger locations which it operates across Missouri, Kansas, Illinois, Indiana, Kentucky, and Tennessee.
As The Street notes, other popular chains similar to M&M Custard have closed stores this year, including other Freddy’s franchisee locations and Dairy Queens. The latter has shuttered dozens of locations in 2025, including several in Texas amid a legal dispute between franchisees and the corporate headquarters over royalty payments and remodels.
What People Are Saying
McDonald’s CEO Chris Kempczinski, in a call with analysts last week, said: “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, during an earnings call in October, said: “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,” he added. “This group is facing several headwinds, including unemployment, increased student loan repayment, and slower real wage growth.”
Hooters CEO Neil Kiefer, in a recent interview with Newsweek, said: “It’s a tough time for just about everybody in the restaurant industry and the hospitality business.”
What Happens Next
According to KVTV 5, M&M Custard plans to close several stores as it attempts to emerge from the bankruptcy process.
