Nostalgic Restaurant Series #7 - CHI-CHI'S
Founded in Richfield, Minnessota in 1976, Chi-Chi's was founded by Marno McDermott and former Green Bay Packer, Max McGee. Marno's wife carried the nickname Chi Chi which is why the Mexican restaurant was so-named. It was known as the first Mexican-inspired restaurant chain.
In 1987, Hormel Foods acquired the rights to produce and market Chi-Chi's branded salsa and related products in the United States. By 1996, revenues eclipsed $60M annually.
By 1995, the chain had grown to 210 locations and was owned by Prandium Inc who had filed for Chapter 11 bankruptcy in 1993 (as Restaurant Enterprises Group) and would again file in 2002. Chi-Chi's would file for Chapter 11 bankruptcy in 2003 due to the proliferation of family-owned Mexican restaurants that took market share as well as poor operations and deteriorating food quality.
"In November 2003, a month after filing for Chapter 11 bankruptcy, Chi-Chi's was hit with the largest hepatitis A outbreak in American history, with at least four deaths and 660 other victims of illness...The hepatitis was traced back to green onions at the Chi-Chi's at Beaver Valley Mall near Monaca, Pennsylvania...Chi-Chi's settled the hepatitis A lawsuits by July 2004. At the time the suits were settled, Chi-Chi's had only 65 restaurants, fewer than half of the number of four years prior." [Wikipedia]
With no business to speak of due to the consumer's fear of getting sick, Outback Steakhouse bid on its choice of 76 properties in late 2004 (but not the Chi-Chi's intellectual property) with plans to convert as many as possible to Outback Steakhouse locations. The conversions did not go as planned and the majority of these locations were sold to Kimco Realty.
Comeback? "On December 3, 2024, it was announced that the restaurant chain will re-launch in the United States in 2025. Michael McDermott, son of original owner, Marno McDermott, will lead and operate the new restaurants under Chi-Chi's Restaurants, LLC. Hormel Foods, the current owner of the Chi-Chi's trademark, has allowed the use of the Chi-Chi's name for the physical restaurant locations." [Wikipedia]
