Thread by @DanDawes

This restaurant made more than $60 million with ZERO locations.

For 20 years, they sold products from a chain that didn't exist.

Now they're coming back, and fans are losing their minds.

Here's how free "chips" created the most profitable ghost business in America:

1975: In Minneapolis, two unlikely collaborators had an idea.

Marno McDermott proved Mexican food worked with his Zapata restaurant chain. Former Packers star Max McGee owned the ideal downtown bar.

Full-service Mexican dining was wide open in the midwest.

Enter Chi-Chi's...

Every Chi-Chi's felt like a fiesta:

- Bright colors
- Massive margaritas
- Servers in festive uniforms

Lots of Mexican joints had that. But Chi-Chis took the Mexican mentality to the next level...

Every table got endless chips and fresh salsa.

Completely free.

Behind the scenes, it was pure marketing genius: customers stayed longer, ordered more drinks, and always came back for those legendary chips.

The numbers show the power of the previously unconventional strategy:

1981: 1 company-owned restaurant
1983: 46 locations, $9.1 million profit
1985: 42 locations opened in ONE year
1986: 200+ new restaurants nationwide

Weekly sales hit $70,000-80,000 per location.

Their branding built loyalty and cemented the brand as Tex-Mex royalty:

Slogan: "Life always needs a little salsa"
Corporate philosophy: "A celebration of food"

In 2001, they tried to trademark the word "SALSAFICATION."

The Patent Office rejected it, but the audacity was legendary...

That free chips strategy created what we now call "behavioral loyalty."

Customers fell in love with more than the food - the entire experience hooked them.

Dedicated fans visited the restaurant often - they even found a way to take the Chi-Chi's feeling home:

In 1987, Chi-Chi's licensed their brand to Hormel Foods for grocery products, pioneering the retail empire model.

By 1996: $60 million annually in retail sales

Today: They are still generating massive revenue 20 years after their restaurants closed...

The loyalty was so strong it survived business failure.

When Chi-Chi's restaurants closed in 2004 due to financial struggles and ownership changes, something incredible happened:

Customers kept buying the retail products and begging for the restaurants to return.

That emotional brand loyalty created a 20-year waiting list:

- Sites tracking ancient restaurant locations
- Social media Chi-Chi's memories
- Forums recreating the salsa

The brand never died in customers' hearts - this is why nostalgia marketing works:

Modern restaurant chains spend millions trying to build emotional connections.

Chi-Chi's already had that from their loyalty-first approach in the 80s and 90s.

They built lasting customer relationships that endured decades.

Now the founder's son is cashing in on that nostalgia:

Michael McDermott is spear-heading the brand revival of the year:

- The first locations are opening in Minnesota
- The revered endless chips and salsa return
- Same great taste with modern influences

They're even offering equity stakes to customers through crowdfunding!

Chi-Chi's proved that giving something away for free can be your most profitable strategy.

Their "loss leader" chips created:

- Longer visits
- Higher check averages
- Word-of-mouth marketing
- Unbreakable customer loyalty

The comeback story proves that authentic customer loyalty strategies never go out of style.

When you genuinely care about the customer experience, they'll wait 20 years for you to come back.

I'm Dan Dawes:

- Building the future of data-driven marketing
- Obsessed with business growth
- Making every message matter

Follow @DanDawes for more stories about consumer behaviour.
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Media Sources:
youtube.com/watch?v=DcLuOw…
startengine.com/offering/chi-c…
youtube.com/watch?v=t9tTRA…