A chilling wave of store closures is sweeping across several popular American ice cream brands, with household names like Dairy Queen, Freddy's Frozen Custard, and Rita's Italian Ice being forced to down shutters at numerous locations. The reasons behind this frozen treat downturn range from Chapter 11 bankruptcy filings to franchisee disputes and seasonal sales patterns, creating a perfect storm for these beloved chains.
Bankruptcy Bites: Freddy's Frozen Custard Leads the Closures
The most significant financial freeze has hit a major franchisee of Freddy's Frozen Custard & Steakburgers. According to a report by The Street, the franchisee group, M&M Custard LLC and its 31 affiliates, filed for Chapter 11 bankruptcy protection on November 14. The petition was lodged in the US Bankruptcy Court for the District of Kansas.
The filing reveals a stark financial picture, with the debtor listing $5.2 million in assets against a massive $27.7 million in liabilities. It is crucial to note that the parent company and franchisor of Freddy's did not file for bankruptcy. However, the franchisee's largest unsecured creditors are facing significant losses, including:
- Equity Bank: Owed $8.5 million
- Budderfly LLC: Owed over $869,000
- Insiders Eric H Cole and Steven Nordstrom: Owed $700,000 and $550,000, respectively
As part of the bankruptcy process, the franchisee plans to reorganise its business, restructure debts, and unfortunately, permanently close a substantial number of its outlets.
Location Shutdowns: Which Stores Are Affected?
The fallout from the Freddy's bankruptcy will be felt across six states in the US. A total of 31 stores are slated for closure, impacting communities in Illinois, Indiana, Kansas, Kentucky, Missouri, and Tennessee.
The specific locations set to close include multiple stores in cities like Evansville (Indiana), Lexington (Kentucky), and Columbia (Missouri). This widespread shutdown will leave a noticeable gap in the frozen custard landscape for many local residents.
Franchisee Fallout: Dairy Queen and Rita's Join the Exodus
The troubles are not confined to Freddy's. In a separate development, the parent company, American Dairy Queen, decommissioned a franchisee in Texas earlier this year. The franchisee, Project Lonestar, was found to have failed in its obligation to remodel locations as required by the brand. This action has led to the impending closure of around 30 Dairy Queen franchises across the state of Texas.
Adding to the list, a Rita's Italian Ice & Frozen Custard outlet in Horseheads, New York, has announced it will shut its doors for the remainder of 2025, starting from October 13. While this appears to be a seasonal closure, it contributes to the overall trend of reduced accessibility for these ice cream brands.
This series of events highlights the complex challenges facing the food and beverage franchise industry in the United States, where financial pressures, contractual obligations, and market dynamics can combine to force even well-known brands into retreat.
