Franchise Deep Dive: Chili's Franchise Costs, Fees, Profit and Data

“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?

By Luca Piacentini1851 Franchise Managing Editor

12:12PM • 06/03/23

LAST UPDATED: May 22, 2023

FRANCHISE WEBSITE: https://brinker.com/franchise

NUMBER OF LOCATIONS: 1,600+

REPORTED COST TO GET IN: $1,742,195 to $5,653,695

REPORTED ROI (Item 19): $2,531,000 (average gross sales)

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.

How Many Chili's Locations Are There?

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™.

What Is ChilI's Business Model?

There are two kinds of restaurant formats you can choose from as a Chili’s franchisee:

Chili’s Grill & Bar
Chili’s Special Venue

Currently, Chili’s is only looking for franchise partners who are interested in multi-restaurant airport development and meet the following qualifications:

Minimum five years experience in casual dining (or fast casual) as an owner/operator
Minimum five restaurants owned
Minimum fixed-charge coverage of 1.35x on a unit-level basis
Maximum debt to cash flow less than or equal to 8.0x
Minimum total equity greater than or equal to 20%
Minimum net worth greater than or equal to $500K per acquired restaurant
Minimum liquidity greater than or equal to $400K per restaurant to be developed (i.e. cash reserves)
An infrastructure dedicated to the development of our brand
Local knowledge and expertise in the areas of consumer preferences, real estate, government regulations, labor and distribution issues
Access to adequate capital, such that losses are sustainable for a two- to three-year period while continuing to develop additional units
Philosophically aligned

How Much Can Chili's Franchise Owners Make?

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:

Average Gross Sales: $2,531,000
Median Gross Sales: $2,337,000

The average and median gross sales for 917 company-owned Chili’s restaurants were as follows for the calendar year of 2019:

Average Reported Net Sales: $2,852,000
Median Reported Net Sales: $2,802,000

How Much Does It Cost to Open a Chili's?

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

What Is the Franchise Fee for Chili's?

The initial franchise fee is $40,000 to $60,000.

Who’s On Chili's’ Leadership Team?

What Helpful Articles Can I Read to Learn More About Chili's?

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