M&M Custard Files for Chapter 11 Bankruptcy Amid Financial Struggles

M&M Custard, LLC, the parent company of the popular Freddy’s Frozen Custard and Steakburgers chain, has filed for Chapter 11 bankruptcy. The filing took place on November 14, 2023, in the U.S. Bankruptcy Court for the District of Kansas. This decision reflects the challenging landscape for the food industry, with rising food and labor costs impacting many fast casual and quick service restaurants, as noted by Franchise Times.

As one of the largest franchisees of Freddy’s, M&M Custard operates nearly 40 locations across several states, including Missouri, Illinois, Kentucky, Tennessee, Indiana, and Kansas. According to the company’s founder and CEO, Eric Cole, they previously operated a total of 42 stores. While navigating the bankruptcy process, M&M Custard plans to keep all restaurants open, as reported by ET Now News. However, these plans may evolve as the company restructures its operations.

The bankruptcy filing indicates that M&M Custard has assets totaling approximately $5.2 million, while its liabilities stand at nearly $27.7 million. This move aims to allow the company to reorganize its debts without completely closing its locations. The financial pressures contributing to this filing are echoed in the broader industry, where many dining establishments are grappling with similar economic challenges.

Freddy’s Frozen Custard & Steakburgers, currently owned by the private equity firm Rhône, has previously been under the ownership of Thompson Street Capital Partners, a firm based in Missouri. The transition in ownership reflects ongoing changes within the restaurant sector as companies strive to adapt to shifting market conditions.

As M&M Custard embarks on this restructuring journey, the future of its numerous locations will depend on effective management of its financial obligations and the ability to navigate the current economic climate. The outcome of this bankruptcy filing will be closely watched by industry observers and stakeholders alike.