The cookie space is proving attractive to investors and customers alike as brands like Crumbl make headlines and gain cult followings.
Shake Shack founder Danny Meyer’s Enlightened Hospitality Investments closed a $7.5 million Series B funding with Chip City Cookies. The private equity firm previously invested $10 million in the concept.
“We’re very fortunate that we got such a great partner that really embraces the division and excitement,” Chip City CEO Peter Phillips said. Meyers’ investment proved so successful the first time around that Chip City didn’t consider other investors for more funding, Philips said.
Related: Why Shake Shack’s Founder Bet On Chip City
The New York City-based cookie franchise has nearly 40 locations open, all of which are corporate owned.
“We haven’t found the right partner,” Philips said. The company is taking applications and pursuing franchising, though.
With Enlightened’s latest funding, Chip City plans to open more stores in its existing markets.
“We’re going to be focusing in on filling in with the existing markets that we’re already placed in,” he said.
Chip City’s menu is similar to other cookie concepts, in which it has weekly rotating flavors. This week’s line-up includes banana cream pie, triple chocolate and lemon berry cookies. There are also “lil chips” for those looking for miniature options.
The cookie franchise category has its share of competitors, like 970-unit Crumbl, which saw its average unit volume decline in 2023—the first time in its history. The brand reported AUVs at $1.16 million, down from 2022’s $1.8 million, a 37 percent decrease.
There’s similarly named Chip Cookies, which was founded just 40 minutes away from Crumbl’s flagship store in Utah. The brand boasts about being the original cookie delivery company, as it launched a year before Crumbl. Chip has 30 stores nationwide.
Cookie Plug and Dirty Dough are two other cookie brands in the franchising space. Cookie Plug has 33 units in the United States and Puerto Rico. It had 25 stores open in 2022.
Dirty Dough garnered plenty of headlines last year when Crumbl sued the brand for the misuse of trade secrets. Crumbl accused Dirty Dough of stealing and misusing 66 recipes and information about sales statistics, process improvement and recipe experiments, according to court documents. The companies reached a settlement late last year.