Restaurant chain files for bankruptcy and blames the rising cost of food and workers for its financial woes
A major restaurant chain with more than 30 locations in the United States has filed for bankruptcy. rapidly growing food and labor costs due to their financial difficulties.
M&M Custard LLC, one of the largest franchise operators of Freddy’s Frozen Custard and Steakburger, has locations in six states and just three years ago announced ambitious plans to expand throughout Chicago.
But the company has since been forced to file a lawsuit. Chapter 11 Bankruptcy case, Its assets of $5.52 million are dwarfed by its liabilities of $27.7 million.
Fears that the chain could close its stores in Missouri, Illinois, Kentucky, Tennessee, Indiana and Kansas intensified following the filing. However, the company is reportedly working to keep all its stores open.
“We have no comment other than we have no plans to close any additional stores,” said Eric Cole, founder and Co-CEO of M&M Custard LLC. Independent. “The stores we closed that led to our application were in the Chicago market. This is typical for our 31 franchise locations across the U.S. and the rest of Freddy’s.”
Freddy’s Frozen Custard & Steakburgers stores in six states may close after a franchise operator files for bankruptcy (Google Streetview)
Court documents show the company is seeking permission to maintain existing banking regulations and take measures to manage stagnant cash flow.
Because M&M is a franchise operator, finances relate only to its stores, not its larger Freddy’s Frozen Custard and Steakburger brand.
Court documents submitted and seen by the company Dealership Periodsalleges that the chain’s Chicago stores were a “toxic asset” purchased in 2021. M&M Custard invested $1 million to acquire and develop six stores in Chicago.
Just three years later, court documents show the company was forced to begin a closure program in Chicago.
In its bankruptcy filing, the brand blamed “a combination of persistent negative EBITDA, limited buyer appetite for underperforming assets, and an increasingly onerous regulatory and tax environment in Illinois eroding the long-term viability of the market.” Dealership Times.
“Despite targeted expansion, operational improvements and increased market awareness, after three years (six years in total under the brand), the Chicago market has struggled to gain sustainable traction, raising significant concerns about its long-term viability,” the filing continued.
M&M Custard LLC says it has over $27 million in debt and just $5.52 million in assets (Google Streetview)
We are in a tense competition with Freddy’s Frozen Custard and Steakburger. Dairy QueenBecause both companies are known for selling scrambled desserts alongside burgers.
However, some Reddit fans revealed that they prefer Freddy’s food. Dairy Queen’s iconic dish.
“Similar to Dairy Queen but maybe better presentation and aesthetics,” said one enthusiastic diner wrote. “The taste is different, too. It’s fair to say it’s probably richer and creamier. I’m happy it’s around as an option for these types of desserts.”
Another fan was less thrilled, saying the burger chain beat out McDonald’s but not Five Guys.
“It was pretty good,” the burger lover wrote. “Quick service and ice creams are great. Above McDonald’s but less than 5 people.”
Independent Contacted Freddy’s Frozen Custard and Steakburger.
