The U.S. frozen dessert and fast-casual sector is hitting another rough patch. M&M Custard LLC, one of the largest franchise operators of Freddy’s Frozen Custard & Steakburgers, has entered Chapter 11 bankruptcy, adding new uncertainty to an industry already shaken by franchise closures, remodel mandates, and seasonal volatility.
The Bankruptcy Filing — What’s Inside
Filed: November 14
Assets: ~$5 million
Liabilities: ~$28 million
Locations included: 32 Freddy’s units across
- Kansas
- Missouri
- Illinois
- Indiana
- Kentucky
- Tennessee
Despite the filing, the company has assured the court that all locations will remain open during restructuring.
Key creditors include:
- Equity Bank
- Budderfly LLC
- U.S. Food
- Several internal stakeholders
The operator has signaled the possibility of select closures later, depending on restructuring outcomes.
Major Freddy’s Locations Potentially at Risk
While no closures are confirmed yet, stores named in filings include:
- Gardner, Kansas
- Martin City, Missouri
- Sedalia, Missouri
- Multiple units across Illinois, Indiana, and Kentucky
Franchisees in secondary markets—where operating margins are tighter—are typically most vulnerable.
Industry Context: This Isn’t Happening in Isolation
a) Dairy Queen: 30 Stores Closed in Texas
Earlier in 2025, nearly 30 Dairy Queen outlets shut down after the parent company revoked franchise rights from Project Lonestar for not completing mandatory remodels.
Result:
- Stores lost supply-chain access
- Many small-town locations went dark
- Customer loyalty took a hit
This event exposed how capital-intensive remodel requirements are squeezing mid-sized franchise groups.
b) Rita’s Italian Ice Seasonal Closures
Each winter, Rita’s shutters multiple outlets—traditionally “normal” but now adding to the perception of instability in the frozen dessert category.
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c) Rising Costs + Tight Labor
Even though consumer traffic remains steady, franchisees are burning cash on:
- Mandatory store upgrades
- Increased labor costs
- Higher financing rates
- Declining margins on legacy menu items
M&M Custard’s bankruptcy is essentially a margin squeeze case-study.
What This Means for Consumers
In the short term:
- All Freddy’s locations under M&M Custard remain open
- No immediate changes to menu or operating hours
In the medium term (next 6–12 months):
- Store closures possible in underperforming regions
- Menu simplification to reduce operating costs
- Delays in remodels and store upgrades
- Reduced seasonal promotions or product availability
For Dairy Queen customers in Texas, supply chain disruptions have already meant fewer operating stores—especially in smaller rural towns where DQ was historically dominant.
FAQs
Why did 30 Dairy Queen outlets in Texas close?
The parent company revoked franchise rights from operator Project Lonestar for failing to complete required remodels, cutting off essential supplies. Stores could not operate without corporate procurement access.
Is M&M Custard shutting all Freddy’s locations?
No.
All 32 stores continue to operate during restructuring.
However, targeted closures are likely as the company tries to reduce debt.
Is Freddy’s as a brand in danger?
No — this is a franchise-level issue, not a parent-company collapse.
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Disclaimer
I do my best to share reliable and well-researched market insights but occasional errors or omissions may slip through. Please view all content as informational, not financial advice.
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