In a significant blow to the US casual dining sector, a major franchise operator for the popular Freddy's Frozen Custard and Steakburger chain has sought bankruptcy protection, pointing the finger at unsustainable operating expenses.
The Financial Breakdown
M&M Custard LLC, a substantial franchisee, officially filed for Chapter 11 bankruptcy on Wednesday 19 November 2025. The court documents reveal a stark financial picture, with the company listing $5.52 million in assets against a staggering $27.7 million in liabilities.
The firm operates more than 30 Freddy's locations across six different states, making this one of the more notable restaurant bankruptcies of the year.
Root Causes of the Collapse
According to the filing, the primary drivers behind the bankruptcy are the dual pressures of escalating food costs and rising wages for workers. These industry-wide challenges have squeezed profit margins to a breaking point.
Compounding these issues was the poor performance of a group of stores in the Chicago market, which were acquired in 2021. The company has since labelled these outlets as "toxic assets," and they have been a persistent drain on finances. Eric Cole, the Co-CEO of M&M Custard LLC, confirmed that several of these underperforming Chicago locations have already been closed.
What Happens Next for Freddy's Fans?
In a statement aimed at reassuring customers, Eric Cole stated there are no current plans to close any additional stores beyond those already shuttered in Chicago. The bankruptcy process is intended to allow the company to restructure its debts and continue operations.
It is crucial to note that this bankruptcy filing only impacts the locations owned by M&M Custard LLC. The wider Freddy's Frozen Custard and Steakburger brand, a separate corporate entity, is not affected by this action and continues to operate as normal across its other franchised and company-owned restaurants.
