EYM Diner, 30-Unit Denny's Operator, Files Chapter 11

EYM Diner, which operates 30 Denny's restaurants in Texas and Florida, filed for Chapter 11 bankruptcy in Northern Texas bankruptcy court on Wednesday, reporting less than $50,000 in assets against liabilities of $10 million to $50 million. Its largest unsecured creditor is the IRS, with a claim of nearly $3.5 million in unpaid payroll taxes.

The filing is the latest collapse for EYM Group, the franchise empire founded by former McDonald's Mexico president Eduardo Diaz, whose Pizza Hut, Panera Bread, KFC and Burger King portfolios have all gone through bankruptcies or mass closures since 2023.

Denny's, the franchisor, is already working to transfer the restaurants. Chief Development Officer Mark Burgess said in a statement that the company is cooperating with Diaz to sell the locations to other Denny's franchisees. "There are viable restaurants in this group, and franchise partners within our system are willing to step in to help secure their future," Burgess said.

EYM Diner could not be reached for comment, and an attorney for EYM had not responded to a request for comment by publication time.

What does this change for the 30 restaurants?

For now, the units keep operating. The practical question is who holds the franchises after the sale process. Burgess's statement signals that Denny's expects existing system franchisees to absorb the locations rather than see them close — a pattern consistent with how the brand has managed franchisee distress across its 1,400-unit system, about 96% of which is franchised.

A pattern of collapse since 2023

Diaz founded EYM Foods in 2007, while still president of McDonald's Mexico, to run McDonald's restaurants of his own. The group expanded into Denny's, Panera, KFC, Burger King and Pizza Hut.

The Pizza Hut business, EYM Pizza, grew to more than 140 locations. In 2021, Diaz reached a deal to sell it for $97 million, but the buyer pulled out as the economy deteriorated. Costs then rose, and Pizza Hut sued EYM in 2024 over underperformance and late royalty payments. EYM Pizza filed for bankruptcy and, in early 2025, sold 77 Pizza Huts for less than $12 million while shuttering the other 65.

The other brands followed the same trajectory:

• Burger King sued EYM King in February 2023 over late royalty payments; EYM closed all 26 of its Burger Kings a month later.
• That same year, EYM closed 25 KFC locations across Illinois, Indiana and Wisconsin.
• In 2025, Panera sued EYM Cafe over late royalties. The branch filed for bankruptcy in August, after a federal judge ordered it to stop using Panera's name and trademarks.

Every failure followed the same mechanics: franchisor suits over unpaid royalties, then bankruptcy or closure. The EYM Diner case adds an IRS payroll-tax claim on top of that pattern.

Pressure on Denny's itself

The filing lands during Denny's own turnaround. The 1,400-unit chain was taken private in January after struggling with sales and traffic declines, and it planned to close about 90 underperforming locations.

Burgess framed the franchise base as the core asset: "The 157 million guests who walk through our doors each year reflect the enduring value of America's Diner, and we see significant opportunity to build on that strength through our enterprise roadmap, Project Grand Slam, that is giving guests more reason to choose Denny's, strengthening restaurant performance, and building a more profitable business for our franchise partners."

The pace of the EYM Diner asset sale, and how many of the 30 units survive it, will test whether that franchisee network can absorb distressed territory without further closures.