Popular restaurant chain M&M Custard LLC has filed for Chapter 11 bankruptcy, reporting $5 million in assets and $28 million in liabilities.
M&M Custard LLC, located in Overland Park, Kansas, owns franchise rights to dozens of Freddy’s Frozen Custard & Steakburger locations in various states, KCTV 5 reported. The locations include Missouri, Kansas, Illinois, Indiana, Kentucky and Tennessee. Although 32 of those locations are now named in the filing, all the restaurants will continue to operate as normal for now.
Because M&M Custard is a franchisee, not a parent company, only the specific locations are affected by the bankruptcy. Freddy’s brand as a whole is not affected, ET Now reported.
How will M&M Custard continue operations despite filing for bankruptcy?
After filing for bankruptcy, M&M Custard has asked for permission to keep its banking arrangements as is. The company is also requesting for permission to manage daily operations while reorganizing its debts. Still, the filing notes that some locations may close eventually to eliminate costs and strengthen efficiency.
M&M Custard has listed Equity Bank, U.S. Food and Budderfly LLC as some of the major unsecured creditors. Per ET Now, unsecured creditors are entities who are owed money without collateral.
What are some other popular restaurant chains that have recently filed for bankruptcy?
Earlier this year, Dairy Queen closed almost 30 locations in Texas. The closures came as the company was caught up in a legal battle between franchisees and corporate headquarters, disputing about royalty payments and remodels, Newsweek reported.
Chipotle CEO Scott Boatwright recently explained how consumer trends are affecting restaurants across the country.
“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,” Boatwright said, per Newsweek. “This trend is not unique to Chipotle and is occurring across all restaurants, as well as many discretionary categories. This group is facing several headwinds, including unemployment, increased student loan repayment, and slower real wage growth.”