Global cookie chain closes 57 locations in 2026, franchisee owners file Chapter 7 bankruptcy
The cookie retail sector has struggled over the last two years after benefitting from viral success that drove the industry beginning in 2017, when several chains launched.
Queens, N.Y.-based Chip City, which opened in 2017 and grew to about 50 locations in eight states, shut down all three of its Connecticut locations in September 2026, the Hartford Courant reported, but has plans to soon open a New Jersey location in early 2027. The company’s locations have not filed for bankruptcy.
Crumbl, which also launched its cookie operations in 2017, has closed many more locations than Chip City, after facing declining financial results.
Crumbl franchisee closes Kentucky store
A Crumbl cookie retail chain franchisee in St. Matthews, Ky., closed its business and its owners filed for Chapter 7 bankruptcy, seeking to liquidate their assets, facing more than $352,000 in liabilities, according to Louisville Business First.
Franchisee Red Sheep St. Matthews LLC, which was owned by Richard and Emily Diamond, filed its petition in the U.S. Bankruptcy Court for the Western District of Kentucky on Oct. 1, according to PacerMonitor.
The debtors had owned as many as three Crumbl locations in the Louisville area by February 2024, according to National Restaurant News.
Chain has over 1,000 locations
Crumbl launched in Logan, Utah, in 2017 after the founders Jason McGowan and Sawyer Hemsley developed what they believed was the perfect chocolate chip cookie. The cookie chain has expanded in less than 10 years to 1,071 locations worldwide with over 29,000 employees, according to its website on Oct. 7.
The company emerged from the Covid-19 pandemic with an aggressive growth plan, opening 100s of stores and generating $1 billion in revenue a year by 2024 with unit volumes rising by 17%, according to Restaurant Business.
Crumbl also launched a product initiative, which executives thought would increase sales by 20% and almost double unit volumes to $2 million.
New product underperforms
The company in July 2025 unveiled its line of “dirty sodas” that would be offered in its stores, but the new product did not help generate significant revenue and both unit volumes and sales declined.
Unit volumes reversed course from the previous year, declining by 16%, from an average of $1.35 million in 2024 to about $1.14 million in 2025.
Crumbl’s economic performance worsened in 2026, leading store operators to close at least 57 stores, with some claiming that more could close. Franchisees have listed about 55 locations for sale on broker websites, Restaurant Business reported.
Sales and traffic declined
Sales in August 2026 were 70% lower than the same month two years earlier, and several franchises said it was the worst month in company history.
Plummeting sales were driven by decreased foot traffic at the company’s stores, which declined by 32% year-over-year in August 2026, according to the traffic tracking firm Placer.ai.
Despite dozens of closures, certain successful franchisees continue opening locations.
The closing of the St. Matthews store and bankruptcy filing by the franchisee comes shortly after another Kentucky Crumbl ownership group, led by Nicholas Jewell, Joshua Jewell, and Raven Turner, opened their fourth Louisville-area franchise in the Valley Station neighborhood on the Dixie Highway in August 2026.
City fund benefits restaurants
The Valley Station Crumbl’s opening was aided by a $45,000 funding from the $3 million South End Loan and Investment Fund offered to new Louisville South End businesses, which also benefited three other restaurant establishments opening on the Dixie Highway: Longhorn Steakhouse, Freddy’s Steakburgers and Custard, and Derby City Pizza Co., according to Spectrum News 1.
Crumbl offers its classic chocolate chip cookies and pink sugar cookies, along with a rotation of weekly cookie flavors, currently listed through Oct. 10 as the White Drop Cookie with Hershey’s Cookies and creme, Raspberry Cheesecake, Biscoff Ice Cream Cookie, Cinnamon Roll Cookie, Chocolate Peanut Butter Brownie with Reese’s Pieces, and Pumpkin Chocolate Chip Cookie.
Related: 45-year-old pizza chain closed more than 90 locations and filed bankruptcy 3 times