Two decades after the once-popular Mexican chain Chi-Chi’s closed its doors, the restaurant is about to make its return.
This week, Hormel Foods, the owner of Chi-Chi’s trademarks, announced a new deal with Michael McDermott, the son of the brand’s founder. The deal will allow the businessman to open restaurants under the same Chi-Chi’s name.
The chain, created by Marno McDermott (whose wife’s nickname was “Chi Chi”) and former Green Bay Packer Max McGee, first emerged in 1975. The Tex-Mex restaurants served favorites like chips and salsa, nachos, fajitas, and chimichangas, and soon became a massively popular dining spot. By 1980, there were around 150 Chi-Chi’s restaurants nationwide. Eventually, that number topped more than 200.
However, competitors like Olive Garden, Outback Steakhouse, and Texas Roadhouse began to slow foot traffic to Chi-Chi’s. Increased competition in the Mexican industry spelled big trouble for the brand by the early 2000s, as fast casual chains like Chipotle, which opened in 1993, followed by Moe’s Southwest Grill in December 2000, were gaining popularity.
Then, in 2004, a foodborne illness outbreak struck Chi-Chi’s. The illness turned out to be Hepatitis A which came from a batch of tainted green onions. Four people died and at least 660 were sickened by the outbreak, causing chaos for the chain and ultimately destroying its reputation with consumers. The incident, the largest hepatitis A outbreak in United States history, drove the already struggling brand into bankruptcy.
Outback Steakhouse acquired Chi-Chi’s in a $42.5 million deal and closed the restaurants that hadn’t already shuttered. The restaurants came back as Outback Steakhouses, Bonefish Grills, and more. However, Chi-Chi’s branding stuck around, and is still used on packaged food, like salsa, chips, margarita mix, and more, today.
With younger generations leaning hard into vintage trends—everything from digital cameras to low-rise jeans—there could be room for Chi-Chi’s to gain traction with Gen Z. Other oldschool chains, like Chili’s, have seen massive success after certain menu items have gone viral on TikTok. Gen Z can’t get enough Cracker Barrel, either. On the flipside, those who remember the chain fondly may be drawn in, not by TikTok, but pure nostalgia.
Whatever the draw, Michael McDermott said he believes the time is right. “We have seen the impact our restaurant has had on individuals and families across the country and believe there is a strong opportunity to bring the brand back in a way that resonates with today’s consumer—an updated dining experience with the same great taste and Mexican flavor.
The new Chi-Chi’s restaurants are expected to open in 2025.
