Combine the sugar and cinnamon in a small bowl and set aside.
For the chocolate sauce, place the chocolate in a heatproof bowl. Heat the heavy cream in a saucepan over medium heat.
When the cream comes to a gentle simmer, remove from the heat and pour over the chocolate. Cover with plastic wrap and let stand for about 5 minutes.
Remove the plastic wrap and whisk until smooth.
To make the churros, combine the water, butter, sugar, and salt in a saucepan over medium heat. Bring to a simmer.
Once simmering, slowly stir in the vanilla and flour using a wooden spoon and reduce heat to low. Continue stirring until the mixture forms into a ball. Remove from heat and allow to cool for a few minutes.
After the mixture has cooled slightly, add the egg and stir until well combined.
Heat several inches of vegetable oil in a heavy bottomed pot until it reaches 375°F. Line a baking sheet with paper towels.
Transfer the churro dough to a piping bag fitted with a star tip and carefully pipe about 2 1/2" of dough into the hot oil (use kitchen shears to cut the dough). Do about 3-4 churros at a time so you don't overcrowd the pan.
Fry until golden brown and crispy, about 4 minutes. Remove using a slotted spoon and drain on the paper towel lined baking sheet.
Immediately sprinkle with the cinnamon sugar to ensure that it sticks. Repeat with the remaining dough.
