The chain was founded by a former partner of Papaya King, Nicholas Gray in 1973.

In the June 1, 2006, issue of Time Out New York, Gray's Papaya's hot dog was ranked first over its competitors Papaya King and Papaya Dog.
On March 3, 2008, The New York Times reported that Gray's Papaya had endorsed Democratic candidate Barack Obama in his campaign for the 2008 U.S. Presidential Election.
The former midtown location of Gray's Papaya closed in 2011 and the Greenwich Village branch closed in 2014 due to rent increases.
 A new midtown location has since opened.
The chain was founded by a former partner of Papaya King, Nicholas Gray in 1973.
In the June 1, 2006, issue of Time Out New York, Gray's Papaya's hot dog was ranked first over its competitors Papaya King and Papaya Dog. On March 3, 2008, The New York Times reported that Gray's Papaya had endorsed Democratic candidate Barack Obama in his campaign for the 2008 U.S. Presidential Election. The former midtown location of Gray's Papaya closed in 2011 and the Greenwich Village branch closed in 2014 due to rent increases.  A new midtown location has since opened.
Gray's Papaya