[citation needed] In December 2024, Party City filed for Chapter 11 bankruptcy,[5] laid off all administrative employees,[6] and announced they would liquidate and close most remaining stores in the United States.

Mandell recognized that the market for party goods was highly fragmented with a lot of small mom-and-pop operations and noticed that a large number of retailers carried limited supplies.

After scraping together $125,000, Mandell opened a 4,000 square feet (370 m2) store in East Hanover, New Jersey, naming it Party City.

By the end of 1990, Party City outlets numbered 11; five more franchised stores were added in 1991, 16 in 1992, and another 26 in 1993, bringing the total to 58.

During these first four years of operation, Mandell refined the Party City concept, including store design, product mix, choice of suppliers, and the implementation of systems.

In late 1993, with a successful store model in hand, Mandell decided to de-emphasize franchising in favor of opening company-owned stores, which would generate greater returns for the corporation than it could receive on fees and royalties from franchised outlets, as well as allow Mandell to better control the destiny of Party City.

While franchisees might maintain a tighter control on inventory, Mandell was insistent that company-owned units would be amply stocked with a wide range of merchandise.

[8][10] In 2005, the company was sold to a subsidiary of AAH Holdings Corporation, owner of Amscan, a designer, manufacturer and distributor of party goods in America.

In 2015, Party City Holdco Inc went public with Thomas H. Lee Partners retaining 55% and Advent International owning 19 percent.

[22] On January 17, 2023, Party City Holdco Inc. filed for Chapter 11 bankruptcy, weighed down by a confluence of factors including the COVID-19 pandemic and changing consumer behaviors.

[25] In December 2024, Party City warned that it would be preparing to file for bankruptcy for the second time in two years, as it was running out of cash to continue operating at several of its locations.