Michael McDermott acquired the rights to use the Chi-Chi’s name on restaurants again. | Photo courtesy of Chi-Chi’s
Twenty years after bankruptcy and a foodborne illness outbreak forced it to close its doors for good, full-service Mexican chain Chi-Chi’s is preparing for a comeback. And it has a familiar name at the helm.
On Tuesday, Hormel Foods, the owner of Chi-Chi’s trademarks, said it had struck a deal with Michael McDermott, the son of the brand’s founder, that will allow McDermott to open restaurants under the Chi-Chi’s name starting next year.
In a press release, McDermott said he hopes to honor his family’s legacy by reviving the brand, which he said will feature an updated take on the classic Chi-Chi’s experience.
“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,” said McDermott, who is also the founder of Kona Grill and Rojo Mexican Grill.
Chi-Chi’s was created in 1975 in a Minneapolis suburb by Marno McDermott and Max McGee, a former Green Bay Packers player. It was known for its spicy Tex-Mex fare, chimichangas and fried ice cream, and helped translate Mexican food for a mainstream audience. It eventually grew to more than 200 locations across the country.
Chi-Chi’s changed hands several times during the 1980s and ‘90s, and by the early aughts, it was struggling under then-owner Prandium Group. In October 2003, Chi-Chi’s filed for Chapter 11 bankruptcy along with the Prandium-owned Koo Koo Roo.
But the final blow for Chi-Chi’s came later that month, when cases of hepatitis A in the Pittsburgh area were traced back to a Chi-Chi’s location at the Beaver Valley Mall in Monaca, Pennsylvania. The contagious virus was later tied to green onions served at the restaurant.
It would go on to become the largest hepatitis A outbreak in U.S. history, claiming 660 victims and resulting in four deaths. More than 300 people sued Chi-Chi’s for damages.
In 2004, the chain closed its remaining 65 restaurants, which were acquired by Outback Steakhouse for $42.5 million.
The brand would live on internationally as well as in grocery stores under Hormel, which acquired the rights to produce Chi-Chi’s-branded salsas, chips and other products in 1987. But its life as an American restaurant chain appeared over, until now.
Chi-Chi’s is just the latest defunct restaurant brand to attempt a comeback, following similar resuscitation attempts at Steak & Ale and The Ground Round. The efforts typically appeal to customers’ nostalgia while also freshening up the old brands for a new generation.
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