Combine sugar and cinnamon for dusting. Set aside.
In a small saucepan over medium heat, Combine water, butter, sugar and salt. Bring to the boil then remove from the heat.
Add flour and vanilla. Mix with wooden spoon or spatula until mixture forms a ball.
Let the dough cool a bit to prevent the egg from cooking, About 1-2 minutes. Then add the egg into the churros dough, stir until well combined.
Transfer dough mixture to a pastry bag fitted with a large open star tip.
Heat oil over medium high heat in a frying pan (around 350°-375°), add enough oil to come halfway up the sides.
Pipe strips of dough few inches (keep the tip close to the oil above hot oil to a length of about 4-6 inches, then use kitchen scissors to cut off dough from piping bag. Do not pipe too many churros in as they need space for frying.
Fry the churros until golden brown, about 2 minutes.
Immediately roll churros in cinnamon/sugar mixture until evenly coated. This will ensure that the dusting will stick.
Serve the churros with the warm chocolate sauce.
Chocolate Sauce
In a small saucepan over medium heat, heat up heavy cream until it comes to a simmer. Then add the chocolate chips and sugar. Whisk until dissolved. Remove from heat.
Recipe Notes
If you have no heavy cream, substitute it with milk-butter. 1 cup of heavy cream is equal to 3/4 cup milk and 1/3 cup butter
Control the heat of your oil, The churros must turn golden brown gradually. If the churros turn brown faster it means the oil is too hot then you need to lower your oil temperature
Make sure it is cooked slow and steady to get a perfect golden color and evenly cooked churros.
You can either pipe the churros directly into oil or pipe them onto a sheet of baking parchment first and then place these into hot oil.
Keep the tip close when piping the dough and cutting it, to avoid splashing of hot oil.