The Rise, Fall, And Resurrection Of Chili's

It seems like Chili's has always been around. It's the United States' leading sit-down chain restaurant specializing in Tex-Mex-inspired cuisine, but it's also a bar and grill, and a spot to grab classic American pub food. As such, Chili's is very proud of and aggressively markets several disparate menu items: margaritas, fajitas, chicken strips, big hamburgers, and ribs. It also sells all manner of sandwiches, salads, and hefty appetizer platters to suit almost everyone.

Present in hundreds upon hundreds of shopping malls and suburban commercial centers, it's hard to believe that Chili's originated as a tiny, Texas-only phenomenon for years before both the business and menu rapidly expanded. By the early 2000s, Chili's was everywhere, but then began a decline that looked to be full of doom. Nowadays, Chili's is back and outdoing the competition. Here's the story of how Chili's was born, grew into a favorite spicy and boozy dining destination, fell into the brink of extinction, and crawled its way back out, surviving by the skin of its baby back ribs.

The eatery that grew into a chain took its name from the dish it started out with at a single location in Texas, a state where chili looms large in the cultural identity and culinary history. The Original Chili is purportedly made with the exact same combination of beef, onions, and secret spices as the initial recipe, and remains a staple of the menu at Chili's more than 45 years after the restaurant was founded.

The acts of making and eating the spicy, meaty stew also had a hand in naming the restaurant. Back in 1967, Larry Lavine went to the first ever Terlingua Chili Cook-Off in Terlingua, Texas. Lavine thought about the Southwestern-style food served, as well as the fun and camaraderie on display at the event, while he considered opening an informal sit-down restaurant in 1975. Hence, the Chili Cook-Off gave way to Chili's. To attract Texans with certain expectations of a restaurant, Lavine placed chili right at the top of the menu. "It was something people would talk about," he told WFAA Dallas. "People don't talk about spaghetti and meatballs."

There are a few broad and clearly differentiated categories into which most restaurants can fit into, like fast food or fine dining, and casual dining fits somewhere in between. These establishments serve mainstream, populist food in social, family-friendly, and even loud environments at prices that are cheaper than fine dining but slightly more expensive than fast food (even if the food is similar in quality and variety to the latter). 

Before casual dining chains like Applebee's, Red Robin, and Buffalo Wild Wings opened up hundreds of outposts around the United States, the first Chili's in Dallas largely helped create the format. "Chili's was among the first of its kind, pioneering the world of casual dining, with a full-service restaurant boasting a fun, funky, and laid back atmosphere," Jim Foster wrote in the Pioneers of Dallas County Facebook group (per Lake Highlands Advocate). 

At first, Chili's sold a menu dominated by big, messy burgers presented to customers in baskets, not on plates. Also, for what at the time was a novelty, Chili's offered mixed drinks as well as beer. In 1971, four years before Chili's opened, Texas legalized the sale of cocktails in restaurants.

As of 2024, Chili's menu is sprawling with options for everyone, to the point that it's broken down into 20 different sections. Created as a burger and loosely Southwestern-themed restaurant, it still sells many variants of beef on buns and Tex-Mex items, along with salads, sandwiches, pizza, ribs, fish, soup, fried appetizers, desserts, and a number of alcoholic beverages.

At the first Chili's in Dallas in 1975, it was much a simpler time. The menu took up a single side of a sheet of standard-size paper, copied from a hand-written original. The bill of fare was separated into four brief categories. "Homemade Chili" included the house blend, one with beans (violating the one breakable rule of Texas chili), and one served over chips. "Burgers" counted six choices, including the basic "Oldtimer," a bun-less version, and the thickly-stacked "Terlingua Pride." The "Tacos" section consisted of soft tacos or a side of tostadas with hot sauce. The drinks menu listed three items: a frozen margarita, a homemade-style restaurant sangria, and a mug of beer — Schlitz brand. And that was it.

The restaurant's full, official name is Chili's Bar and Grill, implying that its extensive array of alcoholic drinks, classic cocktails, and bespoke adult beverages are as important to the chain as its food items. To match its Mexican-inspired lineup of fajitas, quesadillas, and Southwestern Eggrolls, Chili's serves up many different margaritas and margarita-like chilled drinks, such as an ever-changing "Margarita of the Month." Chili's even has its own bespoke, in-house take on the classic cold cocktail, the Presidente Margarita. Held in such esteem that Chili's trademarked the drink's name, it's constructed out of carefully selected high-end brand-name tequila, brandy, and orange liqueur, and available in a variety of fruit flavors.

Every year in March, Chili's deeply discounts the Presidente Margarita to around $5, and the promotion doesn't seem to be detrimental to the chain's finances. No business in the U.S. of any kind sells more margaritas than Chili's does. If it were an independent nation, it would come third in a global ranking of countries that purchase, use, and sell the most tequila, Mexico's famously most misunderstood spirit.

In keeping with its foundational concept of Tex-Mex and Southwestern cuisine, fajitas get prominent placement on the menu at Chili's. It sells enough orders each year to justify a 60 million-pound fajita meat purchase, covering all three preparations on offer: steak, chicken, and shrimp. One of the ways that Chili's has made its own fajitas so popular is with some psychological trickery and indirect peer pressure.

When an order of fajitas is ready to come out of the kitchen, a server carries the hot metal tray of meat as it loudly and fragrantly sizzles. This gets a lot of attention via several stimuli, and it leads other people to order fajitas, too. This happens in plenty of other restaurants, not just Chili's, and it's called "The Fajita Effect," a term coined by Joel Beckerman and Tyler Gray in their science of sound book "The Sonic Boom." 

Here's where the Chili's innovation comes in. A cooked plate of fajita meat doesn't really keep on making noise and emitting steam as it travels from flattop to tabletop. Chili's concocted some kitchen theatrics: The kitchen staff squirts a solution made mostly of oil onto the plated fajitas to encourage the sizzle, steam, and smells.

By 1983, Chili's had expanded only moderately, as a small chain of 23 restaurants in the Dallas and Houston metropolitan areas selling little more than hamburgers and chili. It was struggling, too, bringing in $1 million in annual revenue against $1 million in holdings and $8.5 million worth of debt. Chili's was saved, and ascended to its position as one of the leading casual dining restaurant chains in the United States, after a buyout and rescue from Norman Brinker.

An early Jack in the Box franchisee in the 1950s so successful that he became president of the company, Brinker launched the mid-price steakhouse chain Steak and Ale in the 1960s, and then Bennigan's Grill and Tavern in the 1970s. In 1976, he sold those companies to Pillsbury, which then hired Brinker to run its new restaurant division. In the early 1980s, he tried to absorb Chili's for his employer, but after being rebuffed, he left his position and bought Chili's outright. Seeing expansion as the future of the restaurant, he brought in a massive cash infusion by offering stock in Chili's in 1984 and acting as chairman and CEO. Brinker also ordered a new menu, urging the restaurants to offer lots more items, particularly Tex-Mex favorites like fajitas. By the time Brinker retired in 2001, there were hundreds of Chili's outposts from coast to coast.

Apart from the kind of foods offered and the lack of a dress code, another thing that separates fine dining establishments from casual eateries is the presence of touchscreen kiosks on the tables across a chain's hundreds or thousands of locations. These digital portals offer many services that streamline or enhance the restaurant experience. Rather than wait for a server to approach the table, customers can put in food orders (particularly for appetizers and desserts) or play one of the included games.

These are all over the casual dining sphere in the 21st century, and Chili's was the first chain to take the leap. By 2014, Chili's had placed about 45,000 Ziosk-made touchscreen tablets at around 800 locations. Research shows that patrons particularly like to use the devices to settle their checks and to impulse-buy extra items. Stores with tablets installed enjoyed a 20% increase in sales of appetizers and desserts.

Both Chili's and the restaurant industry agree that its signature menu items are hamburgers, fajitas, boneless chicken strips (or "Chicken Crispers"), and margaritas. Absent from this list is the entree for which Chili's is most associated with, due to a long-running ad campaign built around an all-timer of an earworm.

In 1986, Chili's, recently acquired by a restaurant consortium and making a go at being a national chain, debuted its first TV commercials to feature a jingle titled "Welcome to Chili's." It's better known by its repetitive, hooky, lyrical refrain: "I want my baby back baby back baby back" and resolution "Chili's baby back ribs / barbecue sauce." Commissioned by Austin, Texas, advertising agency GSD&M, the tune was conceived by the company's Executive Creative Director, songwriter Guy Bommarito, who got Tom Faulkner to sing the main melody and Willie McCoy to come in on the "barbecue sauce" low notes.

Chili's re-recorded the song in 1996, by which point the lyrics had entered the vernacular and joined the canon of near-universally known ad jingles. In 2002, Chili's soft rebooted the campaign again, hiring boy band of the moment NSYNC to sing the song in a series of commercials. More recently, Boyz II Men collaborated with Chili's on a new "Baby Back" jingle in 2022.

Even those who lived in Chili's-free places in the 1990s were aware of Chili's. The often-aired "I want my baby back baby back baby back" TV commercial song grew so entrenched that it served as a pop culture reference-meets-joke in the blockbuster comedy "Austin Powers: The Spy Who Shagged Me." The large statured villain Fast Bas***d attempts to lure and eat the very small villain Mini-Me, singing the Chili's jingle as a way to comically make his intentions known.

Chili's was also vital to many of the most memorable episodes of "The Office," NBC's Americanized remake of the U.K. TV hit of the same name. Paper company branch manager Michael Scott likes to woo his clients by taking them out for abundant, boozy lunches at the local Chili's, also the setting for his Dunder Mifflin annual awards ceremonies, "The Dundies."

Steve Carell, the actor who played Michael Scott, is reportedly a real-life Chili's aficionado and got into a bit of a mock-rivalry with the restaurant chain in 2010. He filmed a sketch for the ESPY Awards parodying LeBron James' "The Decision," announcing he would "take his appetite to the Outback Steakhouse" and leave behind Chili's (as James had similarly announced his move to the NBA's Miami Heat). Chili's president Wyman T. Roberts responded with an open letter (via Cargo Collective), joking, "This shocking act of disloyalty from our homegrown 'funny man' sends the exact opposite flavor of what we would want our children to taste."

Chili's grew rapidly in the early 2000s. In 1999, about 600 locations were open for business in the U.S. and just nine years later, Chili's was a 1,312-unit mega-chain raking in most of operator Brinker International's $4.2 billion a year in revenues. Unfortunately, The Great Recession, lasting from 2007 to 2009, negatively and seriously impacted Chili's, and the casual dining industry on the whole, as many Americans lost a lot of discretionary income during that economic turndown. And slowly but consistently, Chili's-branded restaurants started to close down. 

Between its peak of 2008 and 2022, when Brinker International hired a new CEO to help save the company, more than 80 restaurants had gone out of business. It had made some costly moves over that time, like taking on too many menu expansions, which caused the quality of the products and dining experience to suffer. Additionally, the choice to invest heavily in takeout and delivery programs, such as when Brinker went all in on virtual restaurants, was an expensive one.

As fast casual restaurants have fallen or stagnated in the 2020s, Chili's is thriving. In 2024, Chili's quarterly revenues increased by nearly 15% versus 2023 figures. Umbrella company, restaurant group Brinker International, brought in $4.42 billion in fiscal 2024, the most money it ever made in a year, and more than 85% of that came from Chili's. Kevin Hochman stepped in as CEO in 2022 and oversaw a plan to make Chili's a viable, modern restaurant chain with its marketing plan. The chain also consolidated its resources and is spending less money on food by eliminating about a fifth of its menu. "That simplification has worked," Hochman told CNBC. Brinker International also reallocated some of its funds, spending $200 million to improve the quality and atmosphere of hundreds of Chili's locations.

Chili's has long operated under a business model of a combination of company-owned restaurants and franchised locations. In order to get as much revenue as possible out of the eateries it didn't own outright, but merely licensed, Chili's started to buy out its franchisees. In 2019, parent company Brinker International purchased 116 mostly Midwestern locations from large-scale operator ERJ Dining in a move estimated to bring in $300 million in yearly income. Two years later, Brinker bought another 23 East Coast Chili's locations from franchisee Chesapeake Foods and 37 restaurants from Quality Dining Inc., moves that will continue to pay off for the company in the future.

In 2022, Chili's launched 3 For Me, a casual dining take on fast food combo meals that included a burger or chicken sandwich, fries, an appetizer (bottomless chips and salsa, soup, or a salad), and a soft drink with free refills, for $10.99. The 3 For Me brought in so much business to Chili's during its lunch hours that it allowed the company to compete with fast food chains. And when rampant inflation led to higher cost drive-through combo meals, Chili pointedly promoted the 3 For Me anew in the spring of 2024 as an alternative to fast food, reworking the deal slightly to include a revamped Crispy Chicken Sandwich or a brand new Big Smasher cheeseburger as the entree, and endless chips and salsa as the only appetizer. It all still cost $10.99 for more food for roughly the same price as eating a burger, fries, and soda in your car at lunchtime.

Six months after reasserting the 3 For Me, Chili's greatly extended the deal to include 11 entrees, such as composed bowls and Chicken Crispers, and hiring competitive eater Joey Chestnut as the program's spokesperson. That expansion came just weeks after Chili's released a quarterly earnings statement. Thanks in large part to ideas like the 3 For Me, Chili's experienced a tremendous financial turnaround. The average restaurant in the chain saw annual sales volumes increase by nearly $500,000 a year over the previous 24 months.