20-year-old breakfast chain, Pancakes R Us, files Chapter 11 bankruptcy

Americans have cut back on eating breakfast in restaurants.

"Once the hottest growth area for restaurant operators [in] both full-serve restaurants and limited-serve restaurants, breakfast-spending growth now lags behind all other dayparts," according to McKinsey's What U.S. consumers want from restaurants in 2026.

It's a case of consumers making cuts where they can and saving money on a meal that's easy enough to eat at home.

"When consumers feel their budgets are pinched, they tend to cut back on breakfast spending, since it is often seen as a more discretionary dining category," McKinsey reported.

This is one factor that has contributed to Denny's decision to close hundreds of locations, and it has now claimed regional breakfast chain Pancakes R Us, which has filed for Chapter 11 bankruptcy.

Pancakes R Us files Chapter 11 bankruptcy

Pancakes R Us filed for Chapter 11 bankruptcy on June 29, according to legal documents filed on PacerMonitor. The California-based chain operates four restaurants that remain open, according to the company's website.

"Our specialty is pancakes. We prepare different types of pancakes like multi-grain pancakes, gluten-free pancakes and vegan pancakes. Here at Pancakes R US, we look forward to continuing our outstanding service for our customers for many years to come," the chain shared.

In its Chapter 11 bankruptcy filing, the chain reported assets of $50-$100,000, and liabilities of $100-$500,000. Pancakes R Us has 1-49 creditors and filed in the Central District of California.

The chain, which started in 1995 as an IHOP franchisee, was founded by Abdullah Akbar, a former CIA operative.

"Akbar worked with the CIA from 1979 to 1982, at which point he said he was captured and tortured. His experiences with the CIA are the subject of the 1999 book 'The Jewel Carriers,' which is the basis for a screenplay that is in development for a movie," the Orange County Register reported.

A friend he had met during his CIA days connected him with the opportunity to purchase a California IHOP franchise, which he took over, then converted to his own brand, Pancakes R Us, in 2006.

He has built the chain based on creating customer loyalty.

"About 75% of my customers are repeat customers," he told the OC Register. "I remember kids who were in high school, and now they're in college and they've moved out of town. But whenever they come to visit their family, they come to visit me, too."

Breakfast chains have struggled

Americans have cut back on breakfast spending and that has forced chains to either close or try to adapt.

"Breakfast LSRs are increasingly experimenting with smaller portions at lower price points and introducing drinkable breakfast options, such as protein-enhanced caffeine drinks," according to McKinsey.

That hit Denny's, arguably America's most-famous diner chain, which has been shrinking.

In October 2024, Denny's revealed plans to permanently shut down around 150 locations, following more than 80 closures earlier in the year. By the end of 2025, the breakfast chain closed another 90 restaurants, approximately 10% of its total footprint.

Even fast-food giant McDonald's (MCD) has struggled with a decline in its U.S. market over the last few years.

"Morning now is a place that you're seeing people are choosing either to skip breakfast or they're choosing to eat at home for breakfast," said McDonald's CEO Chris Kempczinski during the chain's second-quarter earnings call.

In addition to the big chain's struggles, some smaller players have filed Chapter 11 or closed locations as well:

• A franchisee of iconic breakfast restaurant chainVillage Inn has filed for Chapter 11 bankruptcy protection on behalf of three Florida locations, as the restaurant operator's revenue has fallen significantly over the last two years, TheStreet's Kirk O'Neil reported.
• Taste of Belgium, which began as a waffle stand, filed for Chapter 11 bankruptcy in January, Nation's Restaurant News reported.
• Huddle House has closed over 60 locations since 2021, according to MassLive.

Breakfast sales have struggled

Kempczinski explained why rebuilding breakfast sales can be more challenging than fixing other dayparts.

"The breakfast daypart is the most economically sensitive daypart because it's the easiest daypart for a stressed consumer to either skip breakfast or choose to eat breakfast at home. And we as well as the rest of the industry are seeing that the breakfast daypart is absolutely the weakest daypart in the day," he said.

As a consumer and fan of eating breakfast out, and as someone who has covered the restaurant industry for over 30 years, it's easy to understand why people opt to eat the morning meal at home. My wife and I recently had breakfast at a family-owned local restaurant near our home, and the check came to more than $30.

You can make coffee, eggs, pancakes, and bacon for a few dollars at home, which makes breakfast a logical cut if you're looking to save money.

Breakfast sales depend on a return to office

Breakfast sales have ticked up as more Americans have been working from offices.

"Office occupancy now averages 52% across the U.S., up 3% since last year, and the return to office movement is disrupting the post-pandemic breakfast routine. Morning foodservice traffic is up for the first time in two years," according to Circana's Eating Patterns in America.

That hasn't delivered a return to people eating a traditional breakfast.

"They might pick up a protein shake or breakfast sandwich at a restaurant to consume in their car, or purchase something to eat at the office mid-morning - more brunch than breakfast," said David Portalatin, SVP and industry advisor for food and foodservice at Circana.

Breakfast-focused chains like Pancakes R Us remain especially vulnerable as traffic continues to decline.

"QSR breakfast traffic trends have been negative throughout 2025, down an average of -8%," according to data from Modern Restaurant Management.

The drop in breakfast comes as part of a larger trend, according to YouGov's Check, please: U.S. dining out report 2025.

"Seven in ten Americans still eat out at least once a month, but more than a third (37%) say they're doing so less often than a year ago... Only 8% report eating out more frequently. Of those cutting back, nearly seven in ten (69%) cite the rising cost of restaurant meals, while 58% say they're simply trying to save money," the study showed.

Restaurants, however, still have an opportunity to win customers by offering the right products at the right price.

"Americans still enjoy dining out, but value has become the deciding factor shaping where and how they choose to eat," said Nora Hao, senior sales director for YouGov America.

"As costs continue to rise, consumers are becoming more selective - and restaurants that pair affordability with loyalty rewards, and smart digital engagement will come out ahead," she added.

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This story was originally published June 30, 2026 at 10:07 AM.