EYM Diner’s Chapter 11 filing puts 39 Denny’s units in play

EYM Diner, a Denny’s franchisee that the chain’s 2026 franchise disclosure document (FDD) listed as operating 39 restaurants as of April, filed for Chapter 11 bankruptcy on Wednesday, according to court records. EYM’s Florida subsidiary and its Dallas-Fort Worth branch also filed.

EYM is a franchisee rather than a company-operated restaurant group, so the case concerns franchise locations rather than a company-operated Denny’s portfolio.

How large is EYM’s footprint?

EYM’s holdings across multiple chains have struggled in recent years, with bankruptcies and unit closures in its KFC and Pizza Hut divisions. Denny’s also said EYM’s Panera operation previously filed for Chapter 11. Those bankruptcies led to more than 100 restaurant closures across the affected brands.

The 2026 FDD listed 39 EYM-operated Denny’s restaurants as of April. Denny’s said Eduardo Diaz, the operator behind EYM, had been a franchisee since about 2012 and that roughly 30 restaurants were operating at the time of the bankruptcy.

Can the restaurants transfer to other operators?

“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 EYM’s portfolio included viable restaurants 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 said.

He said continuity for team members whose livelihoods depend on the restaurants and for guests who count on them remained the company’s focus.

How much has the system contracted?

Denny’s has seen substantial closures in recent years. Its FDD reported:

• 37 net closures in 2023
• 74 net closures in 2024
• 60 net closures in 2025

Denny’s said those closures combined added up to about 12% of its 2023 U.S. store system. Many were deliberate removals of underperforming units, which the company said would strengthen the health of the overall system.

Can better margins support a rebound?

Chris Bode, whom Denny’s promoted from COO to CEO earlier this year, leads Project Grand Slam, a turnaround strategy intended to rebuild the chain. The strategy is meant to improve franchisee margins enough to sustain further growth. That places unit-level profitability at the center of the plan, while the closure program has focused on eliminating underperforming restaurants.

For franchisees, the practical measure is whether margin improvement can offset the pressure visible in recent closures and support continued operation at viable units.

What does this change for U.S. operators?

The EYM bankruptcy comes at an ominous moment for American franchisees. Last week, Outback Steakhouse’s largest U.S. operator went bankrupt. Cost pressures and sales declines have also led to major failures outside casual dining, including the September bankruptcy of a 314-unit Wendy’s operator.

What does this change for U.S. operators? Denny’s is working with creditors and prospective operators to move as many viable EYM restaurants as possible to experienced operators in its system. The chain has not stated how many locations will transfer, leaving unit-level outcomes tied to creditor and court processes.

The next test is whether the transfer process can preserve restaurant continuity and worker livelihoods while Project Grand Slam improves franchisee margins enough to support further growth.