Chapter 11 bankruptcy, season sales, franchisee trouble — Here's why multiple ice cream brands in US are shutting shops

A number of popular ice cream brands in the United States have filed for Chapter 11 bankruptcy and are set to shut shops in multiple locations, according to a report by The Street.

These ice cream chains include households US names including Dairy Queen, Freddy's Frozen Custard & Steakhouse, and Rita's Italian Ice, it added.

Which locations are impacted, and why:

• As many as 30 Dairy Queen franchises in Texas are set to down shutters after parent American Dairy Queen early this year announced that franchisee Project Lonestar has been decommissioned for failing to remodel locations as required.
• Further, in a notice, Rita’s Italian Ice & Frozen Custard in Horseheads, New York said that they are shutting shop for the rest of 2025 from October 13.
• Meanwhile, a Freddy's Frozen Custard & Steakburgers franchisees M&M Custard LLC and 31 affiliates, filed for Chapter 11 bankruptcy protection. They may down some shutters, reorganise the business and restructure debts, as per the TS report.

• Freddy's debtor Overland Park has filed its petition in the US Bankruptcy Court for the District of Kansas on November 14, listing $5.2 million in assets and $27.7 million in liabilities, it added.
• Notably, the parent company and franchisor did not file for bankruptcy. However, the debtor’s largest unsecured creditors include Equity Bank (owed $8.5 million); Budderfly LLC (over $869,000); insider Eric H Cole ($700,000); insider Steven Nordstrom ($550,000); US Food (over $524,000); West Side Investment LLC ($400,000); and Flowers Food (over $91,000).
• As many as 31 stores in Illinois, Indiana, Kansas, Kentucky, Missouri, and Tennessee in the US, will likely down shutters. The chain runs stores in 550 locations across Canada and the US.

• These include locations are Carbondale and Marion in Illinois; Bloomington, Franklin, Columbus, Evansville (two stores), and Seymour in Indiana; Gardner in Kansas; Lexington (two stores), one each in Owensboro, Richmond, Hopkinsville, and Paducah in Kentucky; St. Peters (two stores), Ellisville, Cottleville, Florissant, O’Fallon, Wentzville, Lake St. Louis, Valley Park, Columbia (two stores) Jefferson City, St. Robert, Sedalia, and Martin City in Missouri; and Jackson in Tennessee.
• Earlier in September it was also reported that Freddy's owner, private equity firm Thompson Street Capital Partners, sold the company to investment funds affiliated with global private equity firm Rhône.