Franchisor Stories
“I want my money back, money back, money back, money back” — the casual dining franchise requires hefty startup costs, but does it have a strong potential for ROI?
Chili’s is a casual dining franchise, owned and operated by Brinker International, that serves a variety of appetizers, chicken, beef and seafood entrees, hamburgers, sandwiches, salads, barbecue ribs, as well as other Southwestern and Mexican-style cuisine such as flatbreads, shrimp tacos, quesadillas, fajitas, desserts and beverages. It competes against other casual dining franchises like Applebee’s, T.G.I. Friday’s and Friendly’s.
The chain was founded in 1975 by Larry Lavine in Dallas, Texas, where it is headquartered. Lavine aimed to create an informal, full-service dining restaurant with a menu featuring different types of hamburgers offered at an affordable price. The brand proved successful. By the early 1980s, there were 28 Chili's locations in the region, all featuring similar Southwest decor.
In 1983, Lavine sold the company to restaurant executive Norman E. Brinker, formerly of the Pillsbury restaurant group that owned Bennigan's. In 1984, Chili’s started franchising. By the end of the ‘90s, Chili’s had over 200 locations. In 2004, the franchise opened its 1,000th location.
With the COVID-19 pandemic affecting casual dining more than any other sector, Chili’s saw a major dip in sales. The company even pulled away from traditional advertising for three years, which the brand says hurt consumer awareness significantly. Chili’s has also seen a steady, year-over-year decline in total open units since 2018, according to Franchise Times.
Today, the Chili’s brand has over 1,600 stores in the U.S. and around the world. Brinker International also owns Maggiano’s Little Italy and two virtual brands — It's Just Wings™ and Maggiano’s Italian Classics™.
There are two kinds of restaurant formats you can choose from as a Chili’s franchisee:
Currently, Chili’s is only looking for franchise partners who are interested in multi-restaurant airport development and meet the following qualifications:
According to Item 19 of the FDD, the average and median gross sales for 279 franchised Chili’s restaurants were as follows for the calendar year of 2019:
The average and median gross sales for 917 company-owned Chili’s restaurants were as follows for the calendar year of 2019:
According to Chili’s Item 7, here’s the full breakdown of costs per restaurant format:
Chili’s Grill & Bar — Startup costs
| Type of Expenditure | Low | High |
| Initial Franchise Fee | $40,000 | $60,000 |
| Formation Costs | $3,083,195 | $4,728,695 |
| Marketing | $5,000 | $10,000 |
| Additional Fund | $525,000 | $725,000 |
| Operating Expenses | $95,000 | $130,000 |
| Total | $3,748,195 | $5,653,695 |
Chili’s Special Venue — Startup Costs
| Type of Expenditure | Low | High |
| Initial Franchise Fee | $40,000 | $60,000 |
| Formation Costs | $1,077,195 | $2,939,695 |
| Marketing | $5,000 | $10,000 |
| Additional Fund | $525,000 | $725,000 |
| Operating Expenses | $95,000 | $130,000 |
| Total | $1,742,195 | $3,864,695 |
The initial franchise fee is $40,000 to $60,000.
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