Although Chi-Chi’s itself is long gone in
the United States, vanished in a perfect storm of financial mess and food poisoning, it has
left behind it quite a legacy. Let’s celebrate the silliness that was Chi-Chi’s,
and figure out why they disappeared. The businessmen who dreamed up Chi-Chi’s actually
had a pretty solid idea in the beginning. It was the 1970s, and Mexican food options
were pretty nonexistent. Even Taco Bell hadn’t gone nationwide at that
point. A group of Minnesota entrepreneurs felt the
time was right for a sit-down Mexican restaurant in the Midwest and at first, their profits
went way beyond their expectations. That first year in business, they took in
$2 million — five times their projected revenue. Things were looking good, and it seemed like
the sky was the limit for America’s new favorite chain. Naturally, success like that does not escape
the ever-watchful eyes of big money investors. Within a few years, the franchise operation
was bought out, and control was given to one of the bigwigs at Kentucky Fried Chicken. While he moved company headquarters from Minneapolis
to Louisville, the chain’s expansion in the ’70s and early ’80s remained centered on the
Midwest. Those Midwestern restaurants remained quite
successful, mostly due to the fact that they faced little or no competition or expectations
when it came to Mexican food. But when Chi-Chi’s tried expanding into other
markets like New York and Miami, they just didn’t catch on. Their failures in Texas, California, and New
Mexico were, perhaps, to be expected, but when Chi-Chi’s failed to take hold even in
New England or the deep South, it started to seem like the fiesta might be starting
to wind down just as it was getting started. Ironically, Chi-Chi’s success was one of the
things that set the stage for its subsequent doom. In the early ’80’s, Chi-Chi’s was one of the
hottest chains going, opening 45 new restaurants within a two-year period between 1981 and
1983. Frequently, these new restaurants would see
profits of up to $80,000 per week, which was big stuff for the early ’80s, as was the annual
overall profits of over $9 million. By 1984, Chi-Chi’s net income was over $16
million, and by 1986 there were more than 200 Chi-Chi’s restaurants throughout the nation. And this was pretty much as good as it got. But even as they were at their peak, their
profits were starting to slide. It seems that the larger restaurants, which
averaged between 10,000 and 12,000 square feet, were just too large to operate at a
profit. Too-rapid growth also contributed to numerous
problems at the corporate level, with an insanely high 80 percent management turnover rate leading
to inconsistencies in food and service that did the chain no favors. While Chi-Chi’s might have introduced Mexican
food to certain markets like the Midwest, it also opened the door for other Mexican
restaurant chains such as El Torito, Casa Gallardo, and On the Border, all of which
would soon be expanding to compete with Chi-Chi’s throughout the U.S. What’s more, Mexican fast food was also becoming
a thing with the rise of Taco Bell, which would pose itself as a serious Chi-Chi’s competitor
in the 1990s with its purchase of casual dining chain Chevy’s Fresh Mex. Even McDonald’s would get into the Mexican
food game, adding breakfast burritos and limited-time chicken fajitas to their menus. Then came the new millennium, and with it
the rise of fast casual. Suddenly, restaurants like Baja Fresh, Qdoba,
and the big dog Chipotle creating a market for the budget burrito, and that was bad news
for Chi-Chi’s. Non-Mexican casual dining restaurants would
also cut into Chi-Chi’s target audience, as diners wishing for a fun but affordable and
not too fancy evening out could, by the ’90s, choose from other options including Olive
Garden, Macaroni Grill, and Chili’s. This last-named even offered a southwestern-ish
kind of menu, and could actually boast Texan roots. One of the things Chi-Chi’s was known for,
back in the day, was perhaps something they’d have preferred not to publicize. According to anecdotal evidence unearthed
on the internet, certain Chi-Chi’s were popular among teenage drinkers. Not all that surprising, when you think about
it, since a cheap pitcher of strawberry margaritas is obviously going to appeal to a high school
crowd more than, say, a selection of single malt scotches. What you need to keep in mind, however, is
that in Chi-Chi’s earlier years, a certain amount of teenage drinking was actually legal. Yes, believe it or not, boomers and early
Gen X-ers were legally able to imbibe at age 18, right up until 1984 when the National
Minimum Drinking Age Act raised the drinking age to 21. Chi-Chi’s profits took a tumble after that
year. The higher drinking age cut out the 18-20
crowd, at least those not possessed of convincing fake IDs. Needless to say, this eliminated not only
high schoolers, but a good chunk of the college crowd. Not to mention, the Reagan-era “Just Say No”
philosophy was beginning to affect drinking habits in general, with stiffer state laws
being enacted in order to curb drunk driving and control bar happy hours. The resulting drop in public alcohol consumption
nationwide affected the restaurant industry as a whole, and Chi-Chi’s restaurant profits
were definitely feeling the hangover. As the population of Mexican immigrants continued
to grow and expand throughout the United States in the latter part of the 20th century, these
new immigrants brought their food traditions with them. What this meant, particularly for those not
living in one of the southwestern border states, was that we were finally able to taste Mexican
food as it was meant to be. And we found, much to our surprise, that it
was nothing whatsoever like the food that Chi-Chi’s had been dishing up. With real Mexican food, cheese is cotija,
not cheddar or processed. Beans are fresh, not from a can. Sour cream does not smother everything. Not every type of food can or should be deep
fried. Chimichangas aren’t even a thing. And who even knows what a Chajita is? As discerning diners came to know Mexican
cuisine in all its glorious diversity, from fine dining to bodegas, and even taco trucks,
the days of the El Grande Burro were drawing to a close. After Chi-Chi’s struggles in the ’80s, they
were bought out by Foodmaker, Inc., the fast food conglomerate that owned Jack-in-the-Box. Things started looking up again for a bit,
profit-wise, but the menu certainly didn’t improve. Any original menu items even remotely resembling
Mexican cuisine were replaced by Tex-Mex and American items like pizza, pasta, burgers,
and stir-fry. Sales soon started to slip again, and restaurants
kept on closing. From a 1986 high of 200 restaurants, Chi-Chi’s
was down to 150 and still dropping by the end of the ’90s. In 2002, Chi-Chi’s debt-ridden parent corporation
Prandium declared Chapter 11 bankruptcy. While Prandium would emerge intact from their
own bankruptcy proceedings the next year, Chi-Chi’s themselves would file Chapter 11
in 2003, and for them there would be no recovery. By 2004, Outback Steakhouse would purchase
76 remaining Chi-Chi’s restaurants, complete with all furniture and fixtures, with the
stated intent to convert at least some of the properties to its own brand of restaurants. Some of these closed Chi-Chi’s were not repurposed
as Outbacks, however. A number of them were eventually sold to be
demolished or used to house other businesses. Still other old Chi-Chi’s, creepily, are still
haunting the landscape, long abandoned but perhaps still filled with the ghosts of sombrero-wearing,
margarita-drinking revelers from times gone by. “Hey, what’s wrong chip hat” ““What is wrong? I’m just chillin’, with the guac from my chip hat.” While many businesses not only survive but
thrive after bankruptcy, Chi-Chi’s was dealt a fatal blow by something totally unexpected
— a massive hepatitis outbreak. Health department investigations traced the
source of this October 2003 outbreak to the Chi-Chi’s at the Beaver Valley Mall in Monaca,
Pennsylvania. While they originally suspected unsafe food
handling practices, the source was eventually determined to be green onions used as an ingredient
in a number of dishes, including salsa. By the time the outbreak was over, it had
made 660 people, including 13 restaurant employees, sick. What’s worse, four people had actually died. Over 9,000 people exposed to the hepatitis
had needed to be inoculated against the disease, and even though Chi-Chi’s had declared bankruptcy
prior to the hepatitis outbreak, the bankruptcy court nevertheless modified the order to allow
hepatitis victims to proceed with lawsuits against the chain. Among the payouts Chi-Chi’s subsequently made
were an $800,000 class action settlement paid out to those who’d needed to be immunized
and a $6.25 million settlement to a man whose hepatitis had caused him to require a liver
transplant. Before Chi-Chi’s folded, they’d had to shell
out at least $40 million in hepatitis-related settlement payouts. They, in turn, sued the green onion supplier,
but were unsuccessful. By that point it was too late anyway, since
Chi-Chi’s had long since said hasta la vista, baby. While Chi-Chi’s restaurants are completely
absent from America, they do still exist in a few locations overseas. It would seem, however, that Chi-Chi’s Asian
and North African locations have now gone the way of their western hemisphere counterparts. Both the Indonesian and Kuwaiti locations
have long been social media silent, which is never a good sign, while the Abu Dhabi
Chi-Chi’s now appears to have been replaced by different dining options. An article published in 2014 on global business
website RetailDetail makes mention of Chi-Chi’s restaurants in Germany and China, and those
seemed to still be in operation as of 2016. A menu from Chi-Chi’s in Brussels shows they’re
still serving some of the old favorites, so fans should definitely plan on stopping by
if they’re ever in the neighborhood. Chi-Chi’s are still in the Netherlands, and
Luxembourg, too, where there seem to be several restaurants still in operation. There is also at least one Austrian Chi-Chi’s,
located in Vienna. And good news! It looks like fried ice cream remains on the
menu, along with strawberry margaritas. If you’re still craving Chi-Chi’s, you won’t
need a time machine, just a plane ticket. “Hi, I need a ticket. Just one?” If Chi-Chi’s logo looks familiar to you despite
the fact that you’ve never eaten in any of their restaurants, it’s because Chi-Chi’s
is actually still around, just in a different way. They are even continuing to serve up chips
and salsa and margaritas. No, not at a table, you’ve got to supply your
own there. Chi-Chi’s today is strictly about the products,
and they’re only putting out a relatively limited number of those. Rebranded as a producer of retail food items,
their current line includes a dozen different salsas, a queso dip, six different varieties
of tortilla chips, various sizes of flour and corn tortillas, several types of seasoning,
corn cake mix, and chopped green chiles. Chi-Chi’s pre-mixed cocktails are owned by
a different outfit, the Sazerac Company. These drinks are available in 1.75 liter handles,
and aren’t limited to margaritas alone. Margaritas co me in six different kinds: original,
strawberry, peach, ruby red, golden and skinny margaritas, but there’s also a Chi-Chi’s-branded
Mojito, two types of Long Island iced tea, pina colada, and even dessert drinks: Mexican
Mudslide, White Russian, orange cream, and chocolate malt. Pick up a few of those, some Chi-Chi’s chips
and salsa, maybe some queso, and there you have it, DIY happy hour. Just add a tacky sombrero, and you’re all
set to get your fiesta on. “Uhhh so boring.” If you’re jonesing for some Chi-Chi’s food
that goes beyond chips and salsa or corn cakes, and you can’t afford a plane ticket to Europe,
you can always try Googling the old recipes. There are a plethora of Chi-Chi’s copycat
creations out there, including knockoff nachos grande, chimichangas, and salsa verde chicken
kabobs. You may, just may, be able to get your hands
on a few of the genuine Chi-Chi’s recipes if one urban legend turns out to have a core
of truth. As the story goes, a disgruntled ex Chi-Chi’s
employee stole some of the top-secret recipes on his or her way out the door. These purportedly once-classified documents
were published in 2010 in several local newspapers. Included among them were recipes for chili
con queso, mild salsa, and seafood nachos, perfect for fans desperate for a little bit
of 1980s nostalgia. When it comes to a recipe for the mysterious
Chajita, though, your guess is as good as ours. Check out one of our newest videos right here! Plus, even more Mashed videos about your favorite
stuff are coming soon. Subscribe to our YouTube channel and hit the
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