A favorite restaurant is returning to the US after more than two decades away. The casual Mexican restaurant chain closed its last American locations in the early 2000s following financial problems and reputational damage. Since then, the brand has largely existed through frozen food products rather than sit-down restaurants.
However, that has changed with the opening of a new Chi-Chi’s location in St. Louis Park, Minnesota, its first US restaurant since 2004.
Rather than a nationwide rollout, the company is treating the location as a test to see whether the brand still appeals to modern diners in a restaurant market that has changed significantly since the chain’s peak.
The development follows a new agreement between Hormel Foods, which owns the Chi-Chi’s trademarks, and Michael McDermott. The deal grants McDermott, the son of founder Marno McDermott, the rights to operate new restaurants under the Chi-Chi’s name.
“I still have fond memories of growing up in the Chi-Chi’s restaurants that my father built throughout their time, instilling in me the passion and determination to pursue my own career in the restaurant industry,” McDermott said in a press release.
“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, updated menu McDermott posed with includes tacos, enchiladas, and chimichangas.
Chi-Chi’s first opened back in Minnesota in 1975 but closed its doors in 2004 after a hepatitis A outbreak at a Pennsylvania location dealt the chain a blow it could not recover from. The outbreak, traced to raw green onions served in the restaurant’s complimentary salsa, got around 650 people sick, caused four deaths, and triggered hundreds of lawsuits. It remains the largest hepatitis A outbreak in US history and led to changes in national food safety standards.
By that point, the company was already struggling. Chi-Chi’s had filed for Chapter 11 bankruptcy in 2002 after years of declining sales, oversized and costly restaurant layouts, failed expansion attempts in cities like New York and San Diego, internal management problems, and shifting dining trends.
Outback Steakhouse later purchased the Chi-Chi’s brand in a $40 million deal and shut down the remaining locations, converting many of them into Outback Steakhouse, Bonefish Grill, and other concepts owned by its parent company.
In today’s world when the restaurant business is crowded, costs are higher and it’s more difficult to keep customers loyal than in decades past, the long-term outlook for Chi-Chi’s remains uncertain. Nostalgia by itself has not buoyed many current revivals. Even so, Chi-Chi’s return is notable as a calculated bid by a one-time national chain to make a comeback without forsaking the original identity that once defined it.
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