Chi-Chi's Makes a Comeback 20 Years After Closing Its Last Restaurant

New York (CNN) — Chi-Chi’s, the beloved Mexican restaurant chain that shuttered its doors two decades ago, is set to make a triumphant return.

Hormel Foods, the current owner of the Chi-Chi’s trademark, announced on Tuesday that it will allow Michael McDermott, son of one of the chain’s co-founders, to revive the iconic name with plans to reopen restaurants in 2025. Details regarding specific locations, menu items, and restaurant designs are yet to be disclosed.

Originally founded in Minnesota in 1975 by Marno McDermott and Green Bay Packers player Max McGee, Chi-Chi’s once expanded to over 200 locations across the United States.

The chain's operations came to a halt in 2004 following a devastating hepatitis A outbreak linked to green onions served in its complimentary salsa at a Pittsburgh-area restaurant. This outbreak affected approximately 650 individuals and tragically resulted in four deaths along with numerous lawsuits. It marked the largest hepatitis A outbreak in U.S. history and prompted significant changes in food safety regulations nationwide.

Following this incident, Outback Steakhouse acquired Chi-Chi’s for $40 million but subsequently closed all remaining restaurants. The company repurposed these locations for its other dining concepts like Outback and Bonefish Grill.

Michael McDermott is now poised to breathe new life into Chi-Chi’s, which was known for its vibrant décor and wide-ranging Tex-Mex menu featuring dishes from sizzling fajitas to indulgent fried ice cream. He brings extensive industry experience with him; he previously launched Kona Grill before selling it to STK's parent company in 2019.

“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 stated.

The Chi-Chi’s brand continues to thrive through packaged food products such as chips and salsas sold at stores; Hormel has produced these items since the late 1980s.

The revival of Chi-Chi’s coincides with varying fortunes among nostalgic restaurant chains. While Chili’s has reported strong earnings this year, brands like Red Lobster and TGI Fridays have faced challenges including bankruptcy filings. Red Lobster has introduced a new happy hour along with other menu innovations under new leadership; meanwhile, TGI Fridays has quietly closed several restaurants recently.

“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,” noted R.J. Hottovy, head of analytical research at Placer.ai.

“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.”