Cookie lovers searching the streets of New York City for a certain particularly gooey, thick and chewy dessert were left with crumbs this weekend after a local cookie chain abruptly shut its doors.
Chip City, a chain of stores known for large cookies in a variety of rotating flavors, closed its remaining 20-some locations on Friday, according to a statement posted on the company website.
The chain originated as a stand-alone shop in Astoria, Queens, run by two childhood friends, Peter Phillips and Theodore Gailas, who grew up in New York City and attended the Bronx High School of Science.
Chip City grew to multiple locations citywide before Danny Meyer, the New York City restaurateur responsible for Shake Shack, Gramercy Tavern and Daily Provisions, invested $10 million in 2022, contributing to the chain’s national expansion with outposts in New Jersey, Texas and Virginia.
The move to quickly shut down all locations on Friday saddened some New Yorkers with a sweet tooth and marked the culmination of a feverish growth spurt that included a messy final year for the company and changing consumer habits.
“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,” the statement on the website read. “We are grateful to our dedicated employees and loyal customers who have supported us for the past 10 years.”
On Sept. 28, Mr. Phillips sued Chip City and Enlightened Hospitality Investments, Mr. Meyer’s company, alongside Nicholas Baizan, Chip City’s president, and Fred LeFranc, whose LinkedIn page said that he fixes “broken companies and culture.” Mr. LeFranc served as interim chief executive at the time of the chain’s closure.
According to the suit, the defendants and Mr. Phillips had agreed to a company restructuring in March that called for Mr. Phillips to step down as chief executive. He was guaranteed a nine-month contract as a consultant from March 2 to Dec. 2, the suit said, and was assured he would receive his $157,500 salary, severance and fully paid health insurance, even if he was terminated during this transition period, the suit said. Mr. Phillips is suing the defendants for breach of contract and wage theft, among other claims.
Beginning in May, Mr. Phillips’s suit claims, the defendants began auditing approximately $900,000 in company expenses.
In a May 26 letter from Mr. LeFranc that Mr. Phillips included in his suit, Mr. LeFranc sought information from Mr. Phillips regarding use of Chip City money to pay for expenses associated with Mr. Phillips’s other restaurant ventures. Mr. LeFranc also asked Mr. Phillips in the letter about roughly $443,000 that had been sent to a construction company affiliated with Mr. Phillips and inquired about overpaid rent for its Astoria location.
In the letter, Mr. LeFranc asked Mr. Phillips to provide proof that Chip City had been reimbursed.
According to Mr. Phillips’s lawsuit, he replied to Mr. LeFranc via email rebutting his claims. On Sept. 11, the suit claimed, Mr. Phillips was told his pay would be frozen if he did not transfer ownership of four Chip City web domains and share loan information related to certain stores. The suit alleges that on Sept. 18, his pay was frozen and three days later the company moved to terminate Mr. Phillips, which revoked his access to his company email account and scheduled an end to his family’s health insurance for Sept. 30.
Mr. Phillips, Mr. Gailas and Mr. LeFranc did not respond to requests for comment. Representatives for Mr. Baizan and Chip City, as well as a representative for Mr. Meyer’s company, did not respond to a request for comment.
The lawsuit is ongoing and it is unclear whether it factored into the sudden closure of the chain’s stores. Mr. Gailas was not mentioned in the lawsuit. According to his LinkedIn, he was the chief brand officer at Chip City until the sudden closure.
In a mysterious twist, just before 2 a.m. on Friday, two unidentified individuals entered the Chip City Upper West Side location on Columbus Avenue and removed an unknown amount of money, according a spokesman for the Police Department. Hours later, the chain announced its stores’ closure and the Columbus Avenue Chip City closed up shop.
The investigation into the incident continues, and there have been no arrests, the police said.
The post Popular Cookie Chain Abruptly Shuts Down in New York City appeared first on New York Times.
