The Tex-Mex restaurant chain that introduced many Americans to Mexican cuisine is making an unexpected comeback. Chi-Chi’s, which closed its doors in 2004, will return in 2025 under the leadership of Michael McDermott, son of the chain’s original co-founder.
Hormel Foods, which owns the Chi-Chi’s trademark, announced Tuesday, Dec. 3, that it had granted McDermott permission to revive the restaurant brand that his father, Marno McDermott, launched with Green Bay Packers player Max McGee in 1975. The chain grew to more than 200 locations before its dramatic closure, according to CNN.
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Michael McDermott brings substantial industry experience to the revival. In 2019, he founded and sold Kona Grill to The ONE Group Hospitality, Inc. (STK steakhouse’s parent company). He currently operates Rojo Mexican Grill, with two locations in Minnesota, per Tasting Table.
“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,” McDermott said in a press release via CNN.
The chain’s troubled history began when its parent company, Prandium, Inc., filed for bankruptcy in 2002. The following year, a devastating hepatitis A outbreak at a Monaca, Pennsylvania location was traced to green onions in complimentary salsa. The incident, which became the largest hepatitis A outbreak in U.S. history, affected approximately 650 people, resulted in four deaths, and led to thousands of lawsuits. Thanks to a bankruptcy court ruling, 9,489 people who required immune globulin shots for protection were able to file claims against the company, Tasting Table reports.
Following the outbreak, Outback Steakhouse acquired Chi-Chi’s in a $40 million deal, converting locations into various restaurant concepts, including Outback and Bonefish Grill. The final Chi-Chi’s restaurant, located in Vienna, Austria, closed in 2024.
While the Chi-Chi’s name has endured through Hormel’s line of packaged foods and margaritas, sold since the late 1980s, the restaurant revival faces modern challenges. Industry analyst R.J. Hottovy of Placer.ai explained the current landscape to CNN: “While restaurants continue to face challenges like rising food costs, labor shortages, and higher buildout expenses, nostalgia has emerged as a powerful driver of customer visits. Strategies like reintroducing beloved menu items or offering exclusive collector’s items have resonated with consumers, suggesting these tactics could also work well for reviving these classic brands.”
The timing of Chi-Chi’s return coincides with mixed fortunes for nostalgic restaurant chains. While Chili’s reports strong earnings, competitors Red Lobster and TGI Fridays have recently filed for bankruptcy, with Fridays quietly closing another dozen restaurants in recent weeks. McDermott’s challenge will be modernizing the brand’s former image of piñatas, serapes, and giant sombreros while maintaining the flavors that made Chi-Chi’s famous for its fajitas and fried ice cream.
Specific details about locations, menu items, and restaurant designs have not yet been released, though the announcement suggests a significant update to appeal to contemporary diners while honoring the chain’s heritage in its eclectic interior design and expansive Tex-Mex menu.
