Revitalizing defunct restaurant chains is not a common occurrence, but the sector has recent examples of successful relaunches.
Foxtrot's cafes and markets in the Chicago area in September 2024 reopened two locations and continued expanding after the previous owner-operator of Foxtrot and Dom's Market, known as Outfox Hospitality, filed for Chapter 7 bankruptcy on April 23, 2024, and shut down all locations without any notice to employees.
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Foxtrot's new owners now have five Chicago-area locations and two Dallas-area restaurants. The previous chain that liquidated had as many as 33 locations.
Related: Popular fast-food chain franchises file for Chapter 11 bankruptcy
Two other formerly defunct restaurant chains are making comebacks as casual restaurant chain Steak & Ale in July 2024 reopened with its first new location in Burnsville, Minn., and Ground Round was set to reopen a location in Shrewsbury, Mass., in January 2025 after Joseph Shea and his wife Nachi Shea purchased the intellectual property and rights to the brand to reopen operations.
Steak & Ale had shut down all its locations and filed for Chapter 7 liquidation in 2008. Ground Round shut down all locations over 20 years ago in February 2004.
Image source: Shutterstock
Chi-Chi's launches crowdfunding plan
And now formerly bankrupt and defunct Mexican restaurant chain Chi-Chi's hopes to rise from the dead in 2025 as the new company's owner launches a public investment platform through regulation crowdfunding.
Related: Las Vegas Strip casinos close more popular restaurants
Michael McDermott, son of the Chi-Chi's founder Marno McDermott, will offer public investments in the new venture through the crowdfunding platform StartEngine to raise $3.5 million from minimum investments of $250 in exchange for equity in the company, according to a statement.
More closings:
- Popular retail chain to close unprofitable store locations
- Bankrupt retail chain unloads store leases, key assets
- Popular discount retailer files bankruptcy, closes all stores
StartEngine was founded by Howard Marks in 2015 and is advised by "Shark Tank" star Kevin O'Leary.
"The enthusiastic response to our announcement about bringing back Chi-Chi'S was overwhelming – greater than I ever anticipated," McDermott said in the statement. "Millions of former customers and thousands of former employees were buzzing about it on social media, sharing fond memories of their experiences.
"I want to engage with the Chi-Chi'S community as much as possible with the comeback. This opportunity is open to eligible investors in accordance with applicable securities laws, and anyone who contributes is playing a pivotal role in the future of Chi-Chi's," McDermott said.
Chi-Chi's plans Midwest, East expansion
Chi-Chi's may use funds from the offering to expand as it relaunches the chain in the Midwest and East Coast. The company plans to open its first new restaurant this year in a converted Rojo Mexican Grill in St. Louis Park, Minn.
Investors will participate in an early-stage expansion strategy with company-owned and franchised restaurant locations.
McDermott in December 2024 signed an agreement with the restaurant's trademark holder Hormel Foods (HRL) to use the restaurant name on locations, which are expected to begin opening in 2025, according to a statement from the new company, Chi-Chi's Restaurants LLC.
Marno McDermott founded the Chi-Chi's chain with former Green Bay Packers player Max McGee in 1975 in Minneapolis. His son, Michael, built his career in the restaurant business as founder of Kona Grill and Rojo Mexican Grill.
The original Chi-Chi's operated about 200 locations nationwide at its peak and was sold several times in the 1980s and 1990s. The company filed for Chapter 11 bankruptcy in October 2003, and later that month, an outbreak of Hepatitis A in a Pittsburgh area Chi-Chi's led to 660 people contracting the disease and four deaths.
Over 300 people sued Chi-Chi's, which magnified the company's financial distress and led to the chain closing its remaining 65 locations in 2004 and ceasing operations.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
