Frozen dessert fast-food chains are among the favorite shops that consumers enjoy visiting, but financial distress in some cases leads to bankruptcies and closings that disappoint customers.

The ice cream shop industry reported 0.9% growth in 2025, according to data from IBISWorld, but still faces economic issues.

“Despite the general increase in appetite for ice cream, significant challenges must be navigated,” IBISWorld said in the report.

Rising milk costs cut into ice cream profits

Among the economic challenges the report cited is the rising cost of milk, which cuts into profits.

Tariffs on Canadian dairy products have also increased the cost of milk and butter that are essential for ice cream production, which drives up retail prices and reduces profit margins, the report said.

Customers’ most preferred shops include Baskin-Robbins, Ben & Jerry’s, Cold Stone Creamery, Dairy Queen, and Freddy’s Frozen Custard & Steakburgers.

Certain chains ran into some economic problems in 2025 that forced them to file for bankruptcy or close locations.

Ice cream shop operators have stated a variety of reasons for closing down, including rising costs of labor and products driven by inflation or, more recently, tariffs; high lease payments; increased costs of debt from higher interest rates; and changing attitudes toward shopping by consumers.

Dairy Queen franchises forced to close locations

About 30 Dairy Queens in Texas lost their franchises in the first half of 2025 when the parent company, American Dairy Queen, pulled the franchises from franchisee Project Lonestar after it failed to remodel its locations. That meant that those locations could not order supplies from the parent corporation and would have to shut down.

Cream ice cream chain files for Chapter 11 bankruptcy to reorganize its business and restructure its debt.

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Cream files for bankruptcy protection

And now the parent company of the Cream ice cream shop chain has filed for Chapter 11 bankruptcy to reorganize and restructure its debts, which includes an employment law lawsuit judgment.

Creamy Treats Inc. filed its petition in the U.S. Bankruptcy Court for the Northern District of California on Feb. 2, listing $500,000 to $1 million in assets and $100,000 to $500,000 in liabilities.

The San Francisco-based ice cream shop chain, which specializes in fresh ice cream sandwiches, did not list a specific reason for filing for bankruptcy protection, but among its largest unsecured creditors was Halil Budan, who is owed $98,000 for an employment law lawsuit. The debtor also listed Square Financial Services, owed $27,000.

More bankruptcies:

  • 73-year-old family diner franchisee files Chapter 11 bankruptcy
  • More troubled regional airlines file for Chapter 11 bankruptcy
  • Major department store brand liquidates in Chapter 11 bankruptcy

Cream founders Jimmy and Gus Shamieh opened their first ice cream shop in Berkeley, Calif., in 2010 and have since expanded to 7 locations in Northern California, according to the company website.

The debtor’s menu includes 15 flavors of ice cream, 13 types of cookies, ice cream sandwiches, ice cream tacos, ice cream sundaes, milkshakes, ice cream cakes, and ice cream pints to go.

Cream, which the company claims is an acronym for “Cookies Rule Everything Around Me,” also offers catering services, online orders, and gift cards.

Freddy’s Frozen Custard & Steakburgers franchisee M&M Custard LLC last year filed for bankruptcy protection.

The debtor and 31 affiliates on Nov. 14 filed for Chapter 11 bankruptcy protection to reorganize their businesses and restructure debts, according to KCTV-5.

Freddy’s Frozen Custard planned closings

M&M Custard indicated in the filing that it planned to close several of its franchise locations in Illinois, Indiana, Kansas, Kentucky, Missouri, and Tennessee, KCTV-5 reported.

The Overland Park, Kan.-based debtor filed its petition in the U.S. Bankruptcy Court for the District of Kansas listing $5.2 million in assets and $27.7 million in liabilities, according to Bondoro.

Freddy’s Wichita, Kan.-based parent company and franchisor did not file for bankruptcy.

Cream ice cream shop locations:

  • Berkeley, Calif., 2399 Telegraph Ave.
  • Cupertino, Calif., 19501 Stevens Creek Blvd.#102.
  • Fresno, Calif., 1760 E. Barstow Ave.
  • Martinez, 3940 Alhambra Ave.
  • San Francisco, 3106 16th Street.
  • San Francisco, 24 Willie Mays Plaza.
  • San Jose, 49 South 1st Street

Related: Another fried chicken dining chain files Chapter 11 bankruptcy