In 2017, friends Peter Phillips and Teddy Gailas challenged each other to see who could make the better cookie. That competition inspired the two to embark on their own entrepreneurial adventure in the form of Chip City Cookies.
In New York City, where the first Chip City opened, there weren’t many cookie players. There was Insomnia, and smaller chains like Christina Tossi’s Milk Bar and Dominique Ansel’s eponymous bakery.
“We thought that we could bring a different level of quality to cookie production that we were doing,” said Phillips, CEO of Chip City.
Phillips and Gailas ended up making cookies that are somehow between the larger Insomnia and the smaller independents. The cookies are more artisanal and made for social media in a way that food from independent restaurants normally is, but the brand is scaling like Insomnia.
“We really had very humble expectations,” Phillips said. “The original business plan I showed [Gailas] was 100 cookies a day. I think we made 120,000 cookies last week.”
That’s because Phillips, who had a background in construction before starting Chip City, knew the important kitchen items for scale.
There are no gas lines in Chip City locations; everything is electric. No gas means no venting, which makes it easier to find real estate and expand at the rate the team is planning.
“When we built this model, we really tried to focus on something simple, something that is not a huge training curve,” he said. “There are very few moving pieces in our business.”
Another reason the chain thinks it can grow is that the model itself is “labor light,” as Phillips said. Before the pandemic, the labor market was tough and that only became more true post-pandemic.
After many trials and errors, Phillips and Gailas found that their cookies bake better if they are put into the oven frozen. It makes for a lighter cookie that stays together. This has allowed Chip City to operate out of a central commissary, located in Queens, that’s able to supply all 40 locations.
That includes the new location in Florida. The only time Phillips said he would build a new commissary is if the brand ever moves out to the West Coast.
Phillips believes the chain is successful because of its people. The centralization of their operations and labor-light model allows for the team to roll out new items quicker than the competition can.
“If I ask for a flavor to be created, I’ll have something on my desk within a couple hours,” he said. “It almost becomes a little bit of a competition downstairs, ‘who’s coming up with something new and fun?’”
That allows Chip City to bounce on trend like the crookie — a croissant baked into a cookie — that went viral on social media.
In 2022, Danny Meyer’s growth fund Enlightened Hospitality invested $10 million in Chip City. In 2024, that amount was almost doubled when Chip City closed its Series B funding with Enlightened Hospitality for $7.5 million.
“[Meyer] says that all the time, ‘I’m not the first guy or the last guy who’s going to sell a burger and fries and a shake,’ and we’re not going to be the first or last cookie operator out there, that’s for sure,” Phillips said. “But when you’re in a business that’s not proprietary, it really comes down to how do you operate versus the next guy.”
Phillips believes that Chip City stands out because of how it operated with its commissary and recipe development, as well as its people. And ultimately, it made an impression on Danny Meyer.
Vote for Chip City Cookies in the NRN Dessert Showdown on Instagram or LinkedIn.
