Danny Meyer funds $10M Chip City deal
Shake Shack founder Danny Meyer's growth equity fund has invested $10 million in cookie company Chip City to fuel its store expansion.
Why it matters: The New York cookie company is hoping to ride the wave of dessert trends and appeal to loyal sweet tooths to keep them coming back to their stores.
Driving the news: Meyer’s growth equity fund, Enlightened Hospitality Investments, was behind the Series A round. Chip City leadership intends to leverage the group’s expertise in fast casual retail operations, CEO Peter Phillips tells Axios.
How it works: Founded in 2017 in Astoria, Queens, the company rotates its cookie flavors each week, introducing new flavors on the regular as well as limited releases throughout the year.
- “We wanted to come up with a reason for people to continuously come back,” which became the inspiration behind the rotating menu, Phillips says.
- Chip City has 14 locations throughout Manhattan, Brooklyn, Queens and Long Island.
- The company is also expanding its menu to offer dairy-free and gluten-free options.
What's next: The fresh capital will support the company's expansion into other states as well as its direct to consumer business.
- The company has signed leases throughout New York, New Jersey and in Miami Beach, Florida, and is also negotiating leases in Boston, Virginia (near D.C.), Maryland and Connecticut.
- At least four more stores will open by the end of the year, and the company aims to open two units every month next year
- “We’d like to continue that growth curve for as long as possible," Phillips says.
- The company has also exclusively partnered with Uber Eats to help it bolster its e-commerce line.
The intrigue: Chip controls everything in house, Phillips says, from the marketing and graphic design to the operations and production.
- “We're able to collaborate with each other every day here in the office and just keep innovating,” Phillips says.
- He also plans to keep the store footprint relatively small because of the lower overhead and occupancy. Plus, customers can get cookies minutes out of the oven, he says.
- “You get hit with that smell, you get hit with that experience,” he says, but this also enables the store to keep quality control.
The bottom line: “Our ever-growing flavors and our ever-changing menu will never allow the brand to get stale,” Phillips says.