Chip City, the New York-born cookie chain that expanded rapidly in recent years with backing from a prominent hospitality investment firm, has closed all of its locations nationwide.

"Despite extensive efforts to stabilize our business in the face of significant macroeconomic headwinds, we have made the very difficult decision to close all of our Chip City locations. We are grateful to our dedicated employees and loyal customers who have supported us for the past 10 years," the company said Friday.

The shutdown marks a dramatic reversal for Chip City, which grew from a single store in Astoria, Queens, into a multistate cookie chain while attracting millions of dollars in outside investment.

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Childhood friends Peter Phillips and Teddy Gailas founded Chip City in 2017. The company became known for oversized cookies and a rotating menu that has featured more than 180 flavors.

Its growth attracted Enlightened Hospitality Investments, a growth equity fund affiliated with restaurateur Danny Meyer's Union Square Hospitality Group. EHI announced a $10 million investment in Chip City in 2022 to help accelerate the chain's expansion.

At the time, Chip City operated 14 locations and was preparing to expand beyond its New York base into additional markets.

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The company ultimately expanded into several states, including New Jersey, Connecticut, Maryland and Virginia.

Chip City was still publicly focused on growth earlier this year. In announcing Nicolas Baizan's promotion to president, the company said he would help lead its "next phase of growth, with a focus on strengthening revenue performance and profitability across its 39 locations."

The closure also comes as Chip City is involved in a legal dispute with Phillips, its co-founder and former CEO.

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Phillips alleges in a lawsuit filed Sept. 28 that Chip City failed to pay compensation and benefits he says he was owed after stepping down as CEO in March. The lawsuit also names Enlightened Hospitality Investments and company executives Nicolas Baizan and Fred LeFranc as defendants.

Phillips is seeking compensation and benefits he alleges remain unpaid. The allegations have not been proven in court.

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The company's social media accounts had continued advertising its cookies shortly before the closure announcement, including promoting a seasonal Crisp Apple Fritter Cookie on Thursday.

Representatives for Chip City did not immediately respond to FOX Business' requests for comment.