Crumbl Chip City Closures: Why the Cookie Chains Are Shutting Stores
The Crumbl Chip City closures are the biggest food story of the week. Crumbl has shut at least 57 stores in 2026 and laid off much of its franchise support staff, while rival Chip City Cookies announced on October 9 that it is closing all of its locations. Cookie sales are down 70% from two years ago, and experts say the cookie bubble is bursting.
Remember when there was a line out the door at every cookie shop in town? Giant cookies in pink boxes, rotating flavors, people posting their hauls on TikTok every Monday. Honestly, that era might be over. In the last few days, two of America’s biggest cookie chains have made headlines for all the wrong reasons, and the numbers behind the story are brutal. Here is what happened and what it means for your cookie runs.
Chip City Is Closing All of Its Locations
Short answer: Chip City Cookies announced on October 9, 2026, that the last of its locations would close, ending a run that once spanned more than 50 storefronts across nine states. The announcement made it official: the chain is done.
This one stings a little because Chip City was supposed to be the cool alternative. Founded by James Philips, the New York-born chain built a loyal following through word of mouth and social media buzz. It raised $17.5 million in funding, including a Series B round from Enlightened Hospitality, and opened 30 locations in the past two years alone, according to Inc. Magazine. At its peak, the growth story was held up as a case study in fast-casual success.
But growth on paper and profit in stores are two very different things. The company had already been quietly shrinking before this week’s announcement, and some franchise-watchers are asking whether the founder’s attention had drifted to a newer bakery concept, Someday’s. Chip City did not respond to requests for comment. Either way, the remaining locations are now closed for good.
Why Is Crumbl Closing Stores?
Short answer: Crumbl’s sales collapsed. August sales were 70% lower than two years earlier, according to an internal document obtained by Restaurant Business, foot traffic at its 1,000-plus locations fell 32% year over year, and at least 57 stores have closed in 2026. The company recently laid off much of its franchise support staff.
The scale of the drop is genuinely hard to wrap your head around. This was the hottest dessert brand in America not long ago. CEO Jason McGowan told franchisees, “It’s my fault where we are today,” which you almost never hear from a CEO. Co-founders McGowan and Sawyer Hemsley stepped down from day-to-day roles in May, and the company is searching for a new CEO, CFO, and head of marketing.
The financial stress is visible everywhere. At least 55 franchises are listed for sale on broker websites. Cash flow fell to $6.4 million from $24.8 million a year earlier. And in one of the stranger chapters, Crumbl’s big bet on “dirty sodas” in 2025 backfired: a 32-ounce soda with 186 grams of sugar sparked online backlash, and franchisees said August’s Soda Week was the worst week in company history.
A Kentucky franchisee just filed for bankruptcy
The pain is hitting franchisees hardest. A Crumbl franchisee in St. Matthews, Kentucky, closed its store and filed for Chapter 7 bankruptcy on October 1, seeking to liquidate assets against more than $352,000 in liabilities, according to Louisville Business First. It is the kind of story that makes other operators quietly check their own books.
Why Are Cookie Chains Closing in 2026?
Short answer: Americans do not buy $5 cookies every day, the market got flooded with copycats, and customers have less money to spend on treats. Food industry experts say the cookie bubble burst the same way frozen yogurt and cupcake chains burst before it.
Here is the thing. Cookies were always an occasional splurge, not a daily habit. As Janet Helm, a food trends expert and former Mintel associate director, told USA Today: people will buy coffee or breakfast every day, but it is hard to build a habit around a $5 specialty cookie. When Crumbl’s success brought dozens of lookalike chains, the market got overbuilt. Too many cookie shops, not enough cookie buyers.
Mike Kostyo, vice president of food and beverage consultancy Menu Matters, put it even more bluntly: “We see this over and over again. When a specific restaurant concept gets hot, a bunch of locations and brands start to flood the market.” The same thing happened with pizza fast casuals, poke chains, cupcake bakeries, and frozen yogurt operators. The pattern never really changes, only the dessert does.
Then add the consumer side. Grocery prices are up, restaurant prices are up, and when money gets tight, the first thing families cut is the fun stuff. A four-pack of giant cookies for $20-plus is an easy no when budgets are squeezed. That is the simple math behind the 32% traffic drop.
Is Crumbl Going Out of Business?
Short answer: No, Crumbl is not shutting down entirely. More than 1,000 locations are still open, and the company is restructuring with new leadership on the way. But more store closures are likely, and the brand is clearly shrinking back to what the market can support.
Crumbl is still the largest cookie chain in America by far, and chains rarely go from 1,000 stores to zero. What usually happens in these corrections is a slow bleed: the weakest locations close, the menu gets simplified, and the company tries to find a version of itself that can make money without the fad frenzy. The new CEO will inherit a brand with serious damage to repair.
The bigger question is what the Crumbl Chip City closures mean for the rest of the dessert world. If two of the biggest cookie names cannot survive the current environment, the smaller copycats are in real trouble. Expect more closures across the category before this shakes out.
❓ Frequently Asked Questions
Why is Crumbl closing stores?
Crumbl is closing stores because sales have collapsed: August sales were 70% lower than two years earlier and foot traffic fell 32% year over year. At least 57 stores closed in 2026, and the company laid off much of its franchise support staff as it restructures under new leadership.
Is Chip City closing all locations?
Yes. Chip City Cookies announced on October 9, 2026, that the last of its locations would close. The chain once operated more than 50 storefronts across nine states after raising $17.5 million in funding.
Is Crumbl going out of business?
No, Crumbl is not going out of business. More than 1,000 locations remain open, and the company is restructuring with a new CEO on the way. However, more closures are likely as the chain shrinks to match demand.
What caused the cookie bubble to burst?
Food industry experts point to three things: cookies are an occasional splurge, not a daily habit; Crumbl’s success triggered overexpansion and copycat chains; and squeezed household budgets cut discretionary spending on treats. The same pattern previously killed the frozen yogurt and cupcake booms.
News checked: October 12, 2026. Sources: USA Today (Oct 9, 2026), TheStreet, Inc. Magazine, Restaurant Business via Entrepreneur.
Prices last verified: October 12, 2026. Menu prices vary by location and are subject to change. See the official Crumbl menu page for current menu information.
