Chip City, a New York-based cookie chain, has closed all of its locations across the United States, including New York City, following a lawsuit filed by its co-founder. The company announced the decision in a statement, citing significant macro-economic challenges and a lack of funding necessary to continue operations. A former employee reported that an email was sent to staff indicating that all store operations would cease, with employees to be paid through October 18 under Fair Workweek policies.
The closures come shortly after co-founder Peter Phillips filed a lawsuit against Chip City, its controlling investor Enlightened Hospitality Investments, and several executives, alleging breach of contract and other violations related to his compensation and benefits. Phillips claims he was terminated after demanding payment and that his health coverage was cut off.
The company had previously received $17.5 million in investments from Enlightened Hospitality Investments, but has recently faced a series of closures, including locations in Connecticut and Virginia. The lawsuit does not directly link the store closures to the legal dispute, but the timing raises questions about the company's stability.
Despite the closures, Chip City had been actively promoting its cookie offerings on social media, maintaining a following of over 300,000 on Instagram. The sudden shutdown has left hundreds of employees without jobs and has generated significant discussion on social media, with customers sharing experiences and videos of closed storefronts. The presence of NYPD Evidence Collection Team officers at one location has added to the uncertainty surrounding the company's abrupt closure.