M&M Custard LLC, one of the largest franchise operators for Freddy’s Frozen Custard and Steakburgers, has filed for Chapter 11 bankruptcy. The company, which runs more than 30 locations across six US states, blamed skyrocketing food and labour costs for its financial difficulties.
Court documents show the firm has assets of $5.52 million against liabilities of $27.7 million. The filing follows the closure of its six Chicago stores, which the company described as a “toxic asset” acquired in 2021 for $1 million. M&M cited “sustained negative EBITDA, limited buyer appetite for underperforming assets, and the increasingly burdensome regulatory and tax environment in Illinois” as factors eroding the market's viability.
Despite the bankruptcy, co-chief executive Eric Cole insisted that the remaining 31 franchise locations are operating as usual. “The stores we closed that led to our filing were in the Chicago market. It's business as usual for our 31 franchise locations as well as the rest of Freddy's across the US,” he said.
Freddy’s Frozen Custard and Steakburger, the parent brand, said the filing applies only to the franchisee group and is not a reflection of corporate stability. A spokesperson said the firm was “fully engaged” and would work to minimise disruption while M&M completes its restructuring.
The chain, known for its frozen custard and burgers, has long competed with Dairy Queen. Some fans on social media have praised Freddy's offerings, with one describing the desserts as “richer and creamier” than Dairy Queen's, while another ranked the burgers above McDonald's but below Five Guys.
