Chip City Cookies closes all 22 stores after founder sues
The Queens-born cookie chain cited falling consumer spending, days after co-founder Peter Phillips sued the company over unpaid compensation.
Chip City Cookies closed all 22 of its remaining stores on October 1, nearly a decade after two childhood friends from Queens turned a baking challenge into a chain that reached $35m in system sales last year.
The company told staff by email that the cookie chain no longer had the funding to keep operating, citing a shift in consumer spending it had tracked for months. President Nicolas Baizan, who took the role ten weeks before the closure, said consumers were "spending less" and that their preferences were "evolving."
A lawsuit preceded the shutdown
Consumers are spending less and their preferences are evolving.
The closure followed a legal filing by co-founder and former chief executive Peter Phillips, who sued the company, its controlling investor and two executives days earlier. Phillips alleges he is owed $157,500 in unpaid compensation through early December, and disputes claims over the company's web domain and an SBA loan.
Chip City has not publicly responded in detail to Phillips' allegations, and the company's statement to staff did not address the lawsuit directly. The claims remain allegations that have not been tested in court.
Danny Meyer's investment firm, Enlightened Hospitality Investments, put $7.5m into Chip City in 2024 and added a further $4m for majority control in March 2026, bringing its total investment to $17.5m and reducing Phillips' stake to 5%, according to the company's own disclosures.
From 45 stores to zero in two years
Chip City had grown to 45 locations by 2024, spanning New York, New Jersey, Connecticut, Illinois and Florida, before a wave of closures through 2026 left 22 stores standing ahead of Thursday's shutdown. No severance or transition details for staff were included in the public reporting.
The chain's collapse lands alongside a run of closures across the sector this year, including Red Lobster's reduction to 484 sites and the Chapter 11 filing at Yardbird, as US chains built on pandemic-era growth confront tighter consumer budgets.
Gift cards bought before the closure are unlikely to be honoured, and it remains unclear whether the Chip City name or recipes will resurface under new ownership once the legal dispute over its assets is resolved.
