Another Subway franchisee has filed for Chapter 11 bankruptcy, highlighting the growing financial challenges facing restaurant operators even as the iconic sandwich chain continues to serve customers nationwide.
Cherry Butte Company, a North Dakota-based Subway franchisee operating three restaurants, recently sought Chapter 11 bankruptcy protection, becoming the second Subway franchisee to file for bankruptcy in 2026. The filing follows a similar bankruptcy earlier this year by MTF Enterprises, a much larger operator with 43 Subway locations across Pennsylvania, Maine, New Hampshire, and Virginia.
Two franchisees, similar financial struggles
According to bankruptcy filings, Cherry Butte Company reported approximately $19,000 in assets and more than $1.8 million in debt. Court documents show the franchisee’s revenue declined sharply over the past two years, while liens placed on its credit card and DoorDash receipts by creditors strained its cash flow. The company said it intends to continue operating while reorganizing under Chapter 11.
MTF Enterprises filed for Chapter 11 in January after defaulting on merchant cash advance loans. The company said daily and weekly loan repayments became a major financial burden, ultimately leading to the bankruptcy filing. At least six Subway locations were later closed as part of the restructuring process, though many restaurants have remained open while the case proceeds.
Franchisees face mounting pressure
The back-to-back filings underscore the difficult environment facing many restaurant franchise operators. Rising food and labor costs, higher interest rates, and expensive financing arrangements have squeezed margins, particularly for multi-unit operators.
While these bankruptcies involve independent franchisees—not Subway itself—they illustrate the financial pressures affecting restaurant operators across the industry. For now, both companies are using Chapter 11 to reorganize their finances while seeking to keep as many restaurants operating as possible.
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