Chip City: The Rise and Sudden Closure of a Rapidly Expanded Cookie Chain

Union Square Hospitality Group founder Danny Meyer and Chip City co-founder Peter Phillips previously discussed the origins of their partnership on ‘The Claman Countdown’.

Chip City, the New York-born cookie chain that experienced rapid expansion in recent years with backing from a prominent hospitality investment firm, has permanently closed all of its locations nationwide.

“Despite extensive efforts to stabilize our business in the face of significant macroeconomic headwinds, we have made the very difficult decision to close all of our Chip City locations. We are grateful to our dedicated employees and loyal customers who have supported us for the past 10 years,” the company announced on Friday.

The shutdown marks a dramatic reversal for Chip City, which grew from a single store in Astoria, Queens, into a multistate cookie chain while attracting millions of dollars in outside investment.

The closure marks a significant turning point for the brand, which became famous for its oversized cookies and a rotating menu featuring more than 180 flavors.

Childhood friends Peter Phillips and Teddy Gailas founded Chip City in 2017. The brand’s rapid growth attracted Enlightened Hospitality Investments, a growth equity fund affiliated with restaurateur Danny Meyer’s Union Square Hospitality Group. In 2022, EHI announced a $10 million investment in Chip City to help accelerate the chain’s expansion.

At the time of the investment, Chip City operated 14 locations and was preparing to expand beyond its New York base into additional markets.

The company ultimately expanded into several states, including New Jersey, Connecticut, Maryland, and Virginia, operating dozens of locations at its peak.

Despite its earlier momentum, Chip City was still publicly focused on growth earlier this year. In announcing Nicolas Baizan’s promotion to president, the company said he would help lead its “next phase of growth, with a focus on strengthening revenue performance and profitability across its 39 locations.”

The sudden closure also coincides with an ongoing legal dispute with co-founder and former CEO Peter Phillips.

Phillips alleges in a lawsuit filed on September 28 that Chip City failed to pay compensation and benefits he says he was owed after stepping down as CEO in March. The lawsuit also names Enlightened Hospitality Investments and company executives Nicolas Baizan and Fred LeFranc as defendants, seeking unpaid compensation and benefits. The allegations have not yet been proven in court.

The company’s social media accounts had continued advertising its cookies shortly before the closure announcement, including promoting a seasonal Crisp Apple Fritter Cookie on Thursday. Representatives for Chip City did not immediately respond to requests for comment.

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