Defunct Tex-Mex Restaurant Chain Chi-Chi’s Is Mounting a Comeback

Remember Chi-Chi’s, the casual Mexican restaurant chain that was once the place to go for fried ice cream and chimichangas? Michael McDermott is hoping you do. The entrepreneur is looking to relaunch the franchise after a 20-year sabbatical.

According to The New York Times, McDermott—the son of one of the chain’s co-founders, Marno McDermott—is looking to revive the brand in 2025. Two locations will open in Minnesota; others may follow in the Midwest and East Coast.

The allure of the chain lied in its homogenized Tex-Mex dishes. An archived menu lists Mexican pizza, taco salad, and delicious combinacions like the Yucatan (a beef, cheese, and onion enchilada with a side taco), the Puerto Vallarta (chili relleno), as well as tostadas, tacos, and burros. Those with a more Western palate could opt for a hamburguesa, which appears in the Favoritas Norte Americanas section.

The elder McDermott opened the first Chi-Chi’s in 1975 in tandem with Green Bay Packers player Max McGee, though it changed ownership hands several times throughout its run. According to CNN, the brand was a popular themed restaurant staple throughout the 1990s, with over 200 locations at its peak. It’s downfall came in the early 2000s: Weeks after the company filed for bankruptcy, a hepatitis A outbreak traced to a Pittsburgh location led to hundreds of people falling ill and numerous lawsuits. Outback Steakhouse bought the franchise’s locations with an eye on converting its real estate, though it's unclear how many Chi-Chi's were repurposed into Australian-themed eateries.

Despite his family history, McDermott’s claim to the Chi-Chi’s legacy wasn’t guaranteed. He needed to strike a deal with Hormel Foods, which has controlled the brand’s trademarks since 1987. (Hormel is also the home of SPAM, Corn Nuts, and Skippy peanut butter, among other brands.)

Chi-Chi’s is part of a long list of defunct casual dining restaurant chains that saw their fortunes wane in the new millennium. Others—like Red Lobster, Applebee’s, T.G.I. Friday’s, and Denny’s—have closed locations in an effort to offset diminished profits. It seems this latest reboot is meant to capitalize on nostalgia, which has proven to be a winning strategy in a highly competitive restaurant industry.

“You can’t underestimate how challenging it is to build a brand name from scratch,” Jeffrey Sharlach, a New York University Stern School of Business management communication professor, told the Times. “So there is value in the nostalgia, not only in the name recognition and awareness, but also in that emotional appeal.”

Chi-Chi’s, however, never disappeared completely. The brand is still used in retail packaging for Hormel offerings like chips and salsa.

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