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Grease 8- or 9-inch square pan with 1 tablespoon of the butter. Set aside. Melt remaining 3 tablespoons butter in large saucepan or Dutch oven on low heat. Add marshmallows; stir constantly until marshmallows are melted. Remove from heat. Add peppermint extract; mix well. Add rice cereal, chocolate chips and 2 1/2 tablespoons of the crushed candy canes; stir until well blended.
Press into prepared pan using a buttered spatula. Sprinkle top with remaining 1 1/2 tablespoons crushed candy canes. Cool 15 minutes. Cut into 25 squares.