M&M Custard Files for Chapter 11 Bankruptcy Amid Financial Struggles

M&M Custard, LLC, the parent company of the popular fast-food chain Freddy’s Frozen Custard and Steakburgers, filed for Chapter 11 bankruptcy on November 14, 2023. The filing occurred in the U.S. Bankruptcy Court for the District of Kansas, marking a significant moment for the company as it navigates financial difficulties attributed to rising food and labor costs.

The chain, which operates nearly 40 locations across six states—including Missouri, Illinois, Kentucky, Tennessee, Indiana, and Kansas—once boasted as many as 42 stores, according to Eric Cole, the founder and CEO of M&M Custard, who shared this information via LinkedIn. The company has become one of the largest franchisees in the Freddy’s network, and its financial restructuring aims to keep all restaurants operational while addressing its debts.

According to a review by Bondoro, M&M Custard currently holds assets valued at $5.2 million but faces liabilities nearing $27.7 million. This significant disparity exemplifies the challenging landscape for many businesses in the food sector, where increased operational costs have strained profitability.

The company, now under the ownership of Rhône, a private global equity firm, had previously been owned by Thompson Street Capital Partners, also a private equity firm based in Missouri. The transition in ownership reflects the industry’s shifting dynamics as operators seek to stabilize amidst economic pressures.

As M&M Custard moves forward with its bankruptcy proceedings, the company’s priority remains to maintain its locations and avoid full closures. While the restructuring process may bring about changes in operations, the leadership is focused on ensuring that the restaurants continue to serve their communities.

In light of these developments, the future of M&M Custard and its franchisees remains uncertain. Stakeholders will be monitoring closely how the restructuring unfolds and whether the company can rebound from its current financial challenges.