Chip City Cookies, the nearly six-ounce cookie chain that got its start in a 250-square-foot Astoria storefront, permanently closed all 22 of its remaining locations at the close of business Thursday, cutting off hundreds of store-level employees with no public warning. The shutdown came just days after co-founder and former CEO Peter Phillips filed a lawsuit against the company, its controlling investor and two executives.
Nicolas Baizan was promoted to president of Chip City. As reported by the New York Post, Chip City had not publicly announced a systemwide shutdown before stores across New York City and other major markets simply went dark, with the chain's website still listing 24 locations in New York, New Jersey and Texas even as the closures spread. One customer told the Post that locations shut down with no notice at all, and Astoria Crave reported that the Upper West Side shop was closed with police standing outside.
A Sudden End After Years of Explosive Growth
Chip City began in 2017 as an informal baking challenge between childhood friends Peter Phillips and Theodore “Teddy” Gailas in Astoria, Queens — a modest plan to sell just 100 cookies a day that instead caught fire on social media, the station's report notes. The brand grew into a chain operating or developing nearly 50 stores across ten states, including New York, New Jersey, Connecticut, Massachusetts, Texas, Virginia, Florida and Illinois, per the same account from TheStreet. Along the way, Chip City built a following of more than 300,000 Instagram followers who tracked its rotating weekly cookie lineup, according to the Post.
That expansion was fueled by institutional money. Danny Meyer's Enlightened Hospitality Investments first took a minority stake in October 2022 with a $10 million investment meant to push the then 14-unit regional concept into major national markets. The fund added another $7.5 million in 2024, bringing its total backing to $17.5 million, per the Post. The chain also described a franchise opportunity.
Ownership Fight Preceded the Collapse
The cracks widened in March, when a restructuring left EHI as Chip City's controlling investor. Phillips stepped down as CEO that same month, according to the Post, as Enlightened Hospitality Investments became the company's controlling investor.
Phillips filed suit on September 28 in New York Supreme Court against Chip City, Enlightened Hospitality Investments, Nicolas Baizan and Fred LeFranc, according to the Post. He alleged the company froze his pay after promising him $157,500 in salary and family health benefits through December, pressured him to transfer company-related web domains, and pushed him to sign paperwork tied to more than $640,000 in SBA loans he had personally guaranteed. Phillips also said the company terminated him and moved to cut off his health coverage. His lawsuit accuses Chip City and the other defendants of breach of contract, unlawful wage withholding and retaliation, seeking unpaid compensation, damages and other relief. The defendants had not responded to the lawsuit in court as of the Post's reporting, and the suit itself does not establish that the dispute caused the store closures. A representative for Phillips' law firm said he was shocked by what happened to Chip City.
Quiet Regional Exits Came First
The nationwide shutdown wasn't entirely without warning signs. In the weeks before the full collapse, Chip City had already quietly pulled out of several regional markets, abruptly closing all three of its Connecticut storefronts, according to TheStreet. The Post also reported that stores in Virginia had shuttered. Those exits mirrored what played out nationally: stores vanishing with little or no public notice, leaving hundreds of employees out of work.
The collapse also lands within a broader slowdown for gourmet desserts. Total sales across the specialty cookie and baked goods category stagnated at $11.85 billion in the 52 weeks leading up to July, reflecting a consumer pullback on premium dessert spending after years of rapid growth, per TheStreet's reporting.
Legal Notice Questions Remain Open
The abrupt, companywide closure raises questions about whether affected workers received advance notice, which the company has not addressed.
Phillips also founded Somedays Bakery, which the team behind Kostantina, a Greek frozen yogurt shop in Forest Hills, also runs. Hoodline covered Kostantina this summer, noting Phillips' Chip City roots even as his former cookie empire headed toward collapse.
