The Jar Outlived the Dining Room
The chain reached more than 200 restaurants and closed its last 65 in 2004.
The Sombrero and the Song
The birthday routine never changed at that restaurant.
The servers appeared clapping. An oversized straw sombrero was placed on the birthday person's head while the singing began.
The fried ice cream came last. A scoop of vanilla rolled in cinnamon and crushed cereal, set on a crispy flour tortilla.
Before the singing, chips and salsa had already been on the table since everyone sat down. The basket was refilled without anyone asking.
The dining room was large and loud, with painted stucco walls and booths wide enough for a family of six. The margaritas arrived in glasses no one could finish.
The building sat in a suburban strip, its stucco arches visible from the parking lot. Every town that had one knew exactly what it looked like.
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The Name Was Worth More Than the Menu
The chain was called Chi-Chi's. It opened in 1975 in Richfield, Minnesota, a suburb of Minneapolis, co-founded by Max McGee, a former Green Bay Packers player.
The surface business was sit-down Mexican food in a festive room. Customers thought they were paying for chimichangas, enchiladas, nachos, and oversized margaritas.
In 1987, the company licensed its name to a packaged-foods producer for grocery products: salsa, chips, tortillas, seasonings. The grocery line required no dining rooms, no waitstaff, no leases. The most durable product the chain ever made sat on a grocery shelf, sold by a company that never operated a restaurant.
First to the Table Across Half the Country
In the late 1970s, sit-down Mexican food was still a novelty across most of the Midwest and East Coast. Chi-Chi's filled that gap with large, colorful dining rooms. The menu had almost no local competition.
The ingredients were cheap: beans, rice, cheese, tortillas. Competing casual chains carried higher costs on steak cuts and prime rib, while margaritas carried high margins. A plate of enchiladas cost less to prepare than a sirloin, and the bar's margins ran well above the kitchen's.
The birthday ritual turned the restaurant into a celebration destination, a place families chose for every milestone. They came back for graduations, anniversaries, and every other occasion the calendar offered.
By the mid-1980s the chain operated more than 200 restaurants across the country. Annual revenue peaked at roughly $269 million in 1984, with net income reaching $16.7 million that year.
By the late 1980s the novelty had worn off. Chains selling burgers, pasta, and ribs had filled the same suburban strips, and regional Mexican restaurants opened in the same towns where Chi-Chi's had once been the only option.
The dining rooms had been built for crowds that no longer had only one choice. A fast-food operator bought the chain in 1988 for $235 million and tried to reshape the menu. Sales fell by more than half within two years.
The chain was sold again in 1994. By the end of the decade the count had fallen to about 165.
Chi-Chi's had existed because most of the Midwest had nowhere else to sit down and eat Mexican food. Once that gap closed, the oversized rooms became a cost without a monopoly.
Sixty-Five Doors Closed in a Weekend
The parent company collapsed first. Chi-Chi's filed for bankruptcy on October 8, 2003.
A month later, a hepatitis A outbreak at a single Pennsylvania location sickened roughly 660 people and killed at least four.
In August 2004, a steakhouse chain paid $42.5 million for the rights to 76 of the properties. It did not buy the name.
On the weekend of September 18, 2004, the chain closed all 65 of its remaining restaurants.
The Salsa Stayed on the Shelf
The restaurants are gone. The grocery brand is not.
The licensing deal signed in 1987 was generating $60 million a year by 1996. It required no leases, no kitchen staff, no dining rooms.
A restaurant needed a building, a staff, and a crowd every night to stay open. The jar needed a label.
The name still sits on supermarket shelves across the country, produced by a company that has never served a customer a meal.
The sombrero came off. The jar stayed on.
