Dairy Queen Chapter 11 Shockwave After Major Rival Bankruptcy

Dairy Queen Chapter 11 concerns are mounting right now after M&M Custard, one of the largest franchisees of Freddy’s Frozen Custard & Steakburgers, filed for bankruptcy protection this past Friday. The filing was submitted to the Bankruptcy Court for the District of Kansas, and it revealed some pretty stark numbers – $5.2 million in assets against $27.7 million in liabilities. The fast-food bankruptcy also listed somewhere between 100 and 199 creditors. This Dairy Queen rival development is intensifying worries about restaurant closures in 2025 as chains across the country continue to struggle with mounting economic pressures and consumer spending challenges.

Also Read: China Begins Production of Flying Cars, Will Export to BRICS Countries

Also Read: China Begins Production of Flying Cars, Will Export to BRICS Countries## Fast-Food Bankruptcy Intensifies As Dairy Queen Rival Faces Closures

Source: TripAdvisorSource: TripAdvisor### M&M Custard Files For Dairy Queen Chapter 11 Protection With Major Debt

M&M Custard’s fast-food bankruptcy included 31 affiliate locations that are operated across Missouri, Kansas, Illinois, Indiana, Kentucky, and also Tennessee. At the time of writing, the company’s largest creditors include Equity Bank, which is owed $8.5 million, along with Budderfly LLC, owed over $869,000. There’s also insider Eric H. Cole, who is owed $700,000, and insider Steven Nordstrom, owed $550,000. Both Cole and Nordstrom actually hold 17% equity interest in the franchisee.

All of the Freddy’s Frozen Custard restaurants are expected to continue normal operations during the restructuring process. Funds will be made available to pay unsecured creditors, according to the filing. However, CBS affiliate KCTV 5 reported that several store closures are being planned. M&M Custard attempts to emerge from the bankruptcy process. The case affects franchisees exclusively and not the parent company Freddy’s Frozen Custard & Steakburgers, which is based in Wichita, Kansas.

Parallel Dairy Queen Chapter 11 Pressures Hit Texas Locations

Dairy Queen has been forced to shutter dozens of locations throughout 2025, with particularly heavy losses seen in Texas. In the first half of this year, American Dairy Queen actually pulled the franchises from operator Project Lonestar. This happened after it failed to complete mandatory remodels. That meant those locations could not order supplies from the parent corporation and would have to shut down. By early April, the chain had closed 40 locations in Texas alone.

Lou Romanus, CEO of the Texas Dairy Queen Operators Council, had this to say:

“Although the franchisee determined that bankruptcy protection was necessary to strengthen its company, Dairy Queen remains a strong brand in our state. Texas is home to 130 Dairy Queen franchisees and more than 575 locations – more than any other state in the U.S. – the majority of which will continue to serve your communities.”

**“Although the franchisee determined that bankruptcy protection was necessary to strengthen its company, Dairy Queen remains a strong brand in our state. Texas is home to 130 Dairy Queen franchisees and more than 575 locations – more than any other state in the U.S. – the majority of which will continue to serve your communities.”**These struggles with the Dairy Queen rival chains and the ongoing restaurant closures in 2025 reflect much broader fast-food bankruptcy trends. They are all affecting chains from coast to coast.

Industry Experts Warn Dairy Queen Chapter 11 Trend Will Continue Into 2026

The economic pressures driving these closures are expected to persist well into next year. McDonald’s CEO Chris Kempczinski stated during an analyst call:

“In the U.S., we continue to see a bifurcated consumer base, with [quick-service restaurant] traffic from lower-income consumers declining nearly double digits in the third quarter, a trend that’s persisted for nearly two years. In contrast, traffic growth among higher-income consumers remained strong, increasing nearly double digits in the quarter. We continue to remain cautious about the health of the consumer in the U.S. and our top international markets and believe the pressures will continue well into 2026.”

**“In the U.S., we continue to see a bifurcated consumer base, with [quick-service restaurant] traffic from lower-income consumers declining nearly double digits in the third quarter, a trend that’s persisted for nearly two years. In contrast, traffic growth among higher-income consumers remained strong, increasing nearly double digits in the quarter. We continue to remain cautious about the health of the consumer in the U.S. and our top international markets and believe the pressures will continue well into 2026.”**Chipotle CEO Scott Boatwright stated:

“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. 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.”

**“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. 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.”**Even Hooters CEO Neil Kiefer acknowledged the widespread difficulties. He stated:

“It’s a tough time for just about everybody in the restaurant industry and the hospitality business.”

**“It’s a tough time for just about everybody in the restaurant industry and the hospitality business.”**Also Read: Nvidia Stock Price Surges Into Nov. 19 AI Reveal: “Strong Buy” Now

Also Read: Nvidia Stock Price Surges Into Nov. 19 AI Reveal: “Strong Buy” NowThe Freddy’s Frozen Custard franchisee bankruptcy filing and the continued restaurant closures in 2025 signal that the fast-food bankruptcy challenges aren’t going away anytime soon. Consumer pressures, especially on lower-income households, are creating a difficult environment that’s expected to persist into 2026 and possibly beyond. The Dairy Queen Chapter 11 concerns, along with M&M Custard’s filing, represent just the latest developments in what’s becoming an increasingly challenging period for the restaurant industry as a whole.