Denny’s franchisee EYM Diner filed for Chapter 11 bankruptcy on Wednesday, court records show. The operator’s Florida subsidiary and its Dallas-Forth Worth branch also filed.
EYM’s holdings across multiple chains have struggled in recent years, with bankruptcies and unit closures at its KFC and Pizza Hut divisions. EYM’s Panera operation also previously filed for Chapter 11, Denny’s said in a statement. Those bankruptcies led to over 100 restaurant closures across those brands.
Denny’s 2026 franchise disclosure document listed 39 restaurants operated by EYM as of April. Denny’s said that Eduardo Diaz, the operator behind EYM, has been a franchisee at the chain since about 2012, and had roughly 30 restaurants operating at the time of his bankruptcy.
The chain has “spent the past two years working side by side with Mr. Diaz to support the sale of his Denny’s restaurants; that commitment continues,” said Mark Burgess, Denny’s senior vice president and chief development officer.
Burgess said there were viable restaurants in EYM Diner’s portfolio, and that other Denny’s operators were willing to step in and run those locations.
“We are working with those partners and other creditors through the necessary processes to transition operations of as many impacted restaurants as possible to experienced operators in our system,” Burgess noted. “For the team members whose livelihoods depend on these restaurants and the guests who count on them, continuity matters. That is where our attention and effort remain.”
Denny’s has seen substantial closures in recent years, with 37, 74 and 60 net closures in each of the last three full calendar years, according to its FDD. Those closures combined add up to about 12% of its 2023 U.S. store system. Many of those closures were part of a deliberate effort to eliminate underperforming units, thereby strengthening the health of the brand’s overall system.
The chain is pursuing a turnaround strategy under Chris Bode, who was promoted from COO to CEO earlier this year. That strategy, dubbed Project Grand Slam, is meant to rebuild the chain in part by improving franchisee margins enough to sustain further growth.
The EYM bankruptcy comes at an ominous moment for American franchisees. Last week, Outback Steakhouse’s largest U.S. operator went bankrupt, and cost pressures and sales declines have led to major failures outside of casual dining, with a spectacular bankruptcy by a 314-unit Wendy’s operator in September.
