ST. LOUIS PARK, Minn. – Michael McDermott, the CEO of Chi-Chi’s Restaurants, had quite the manic Monday.
“We opened up at 11 o’clock, and we had people lined up starting at 10:30. We’re sold out for the week for reservations,” McDermott told The Food Institute, noting that one group of customers flew in from Orlando, Fla., to enjoy the Tex-Mex of their youth.
Customers are clearly excited to behold the rebirth of Chi-Chi’s, which has returned roughly 20 years after all the chain’s locations had ceased operations. The business is personal for McDermott, whose father, Marno, helped found Chi-Chi’s in the 1970s.
“I believe in divine timing with everything in life,” Michael McDermott said. “I was literally meditating one morning and a thought came into my head, to bring (Chi-Chi’s) back.
“I just believe that it’s the perfect time,” said the CEO, who has roughly 30 years of industry experience.
From Bankruptcy to Birria
The reopening of the Tex-Mex chain – which developed a cult following of sorts in the 1980s and ’90s – came less than a year after it was announced that Hormel Foods, the owner of Chi-Chi’s trademarks, struck a deal with McDermott that allows him to use the Chi-Chi’s name on restaurant locations. Chi-Chi’s was founded in 1975 in suburban Minneapolis by Marno McDermott and former Green Bay Packers star Max McGee, as noted in a recent article by TODAY.
The chain had 210 locations during its heyday in the mid-‘90s, before declaring bankruptcy and ceasing operations in 2004.
“We opened (when) I was nine years old,” McDermott recalled. “I have great memories of those first couple years that Chi-Chi’s was around. “It was always really busy.”
Chi-Chi’s thrived for much of the 1980s and ‘90s, thanks in no small part to the restaurant’s endless baskets of chips, fresh salsa, supersized margaritas, and sizable chimichangas.
The menu at Chi-Chi’s 2.0 features items like the Original Chimichanga, as well as entrees that have become popular in recent years, like Quesabirria Tacos. Entrees are priced between $15 and $24, while the chain’s trademarked Fried Ice Cream – scoops of vanilla, covered in cornflakes and dusted with cinnamon – costs $7.
“We make everything in-house. Everything is made from scratch,” McDermott said. “Our tortillas are made to order; we make the dough, we put them on the flat top. We have all the original recipes; my dad literally had them on a yellow legal pad, written out by hand. We’re going back to what was originally offered, starting in 1976 … and then we put some new stuff, like the quesabirria tacos or short rib tacos, that I think reflect what today’s consumer is looking for.”
Nostalgia: A Scalable Business Model?
In an era when many consumers can’t get enough of nostalgia, Chi-Chi’s 2.0 arrived at an ideal time.
“I can’t tell you how many tables I’ve talked to today with people that [said] their first date was 40 years ago at Chi-Chi’s,” McDermott noted.
“I felt like I could bring the concept back and still respect what my dad did,” the CEO said, “but yet make it relevant to today’s consumer.”
McDermott said Monday that he envisions eventually adding more Chi-Chi’s locations in the Midwest and along the East Coast. According to Chi-Chi’s, more than 2,000 people have already invested over $2.3 million through the brand’s equity campaign on StartEngine.
“I just think the Midwest and East Coast, logistically, make sense for us. And a lot of it will be driven by real estate – what becomes available and when,” McDermott said.
The restaurateur told FI late last year that he’s determined to honor his family’s legacy regarding Chi-Chi’s.
“We have seen the impact our restaurant has had on individuals and families across the country,” the CEO said, “and believe there’s a strong opportunity to bring the brand back in a way that resonates with today’s consumer.”
