Risk Score
Pending analysis
Investment Range
$1,806,195 - $6,515,695
Franchise Fee
$40,000
Min Cash Required
$525,000
Total US Locations
1,214
Business Summary
Chili's Grill & Bar operates full-service casual dining restaurants that feature a casual dining atmosphere and a full-service bar. Chili's also offers a smaller, abbreviated format known as Chili's Special Venue, which typically has reduced square footage and a smaller menu. The restaurants emphasize serving substantial portions of high-quality food in a casual dining environment and often include a variety of freshly prepared appetizers, chicken, beef, and seafood entrees, hamburgers, sandwiches, salads, barbecue ribs, fajitas, and other Southwestern-style cuisine.
Corporate History
The history of Chili's Grill & Bar traces back to Chili's, Inc., a Texas corporation formed in August 1977, which began operating Chili's Restaurants in 1975 and offering franchises in 1984. Brinker International, Inc. (BII) was incorporated in 1983 to succeed Chili's, Inc. In 2010, Brinker International Payroll Company, L.P. became the franchisor for Chili's Restaurants, assuming all existing franchise agreements from its predecessor and parent, BII. Brinker International Payroll Company, L.P. itself was originally incorporated in 1987 as CBS Development Company, undergoing several name and structure changes before becoming a limited partnership in 2001. Beyond Chili's, BII acquired Maggiano's Little Italy in 1995 and started franchising Maggiano's restaurants in 2017.
Financial Overview
Investment Range
$1,806,195 - $6,515,695
Franchise Fee (Low)
$40,000
Franchise Fee (High)
$60,000
Minimum Cash Required
$525,000
Royalty %
1.25%
Marketing %
2.82%
Equipment Costs (Low)
$925,000
Equipment Costs (High)
$4,810,000
Working Capital
$625,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements for Chili's indicate a concerning financial condition, with the franchisor's parent company, Brinker International, Inc., showing a negative shareholders' equity of $(144.3) million in 2023, although it became positive at $39.4 million in 2024. The FDD explicitly states that the franchisor's financial condition, as reflected in these statements, "calls into question the franchisor's financial ability to provide services and support" to franchisees. Despite this, the independent auditors provided an unqualified opinion on the consolidated financial statements. The parent company provides an unconditional guarantee of performance for the franchisor's obligations.
Financing Details
Chili's does not offer any direct or indirect financing to its franchisees. Additionally, Chili's does not guarantee any loans, leases, or other financial obligations that franchisees may enter into with third parties.
Performance Metrics
Total US Locations
1,214
Franchised Units
97
Corporate Units
1,117
Avg Square Footage
5,000
Franchising Since
1984
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
Chili's parent company, Brinker International, Inc., is currently involved in one pending putative class action lawsuit, known as In re: Brinker Data Incident Litigation. This case, originally filed in May 2018, arose from a cybersecurity incident at company-owned Chili's Restaurants involving customer payment card information. The plaintiffs allege violations of various state deceptive trade practices acts and are seeking over $5 million in monetary damages, as well as injunctive and declaratory relief and attorney's fees. The district court partially granted class certification in April 2021. However, the Eleventh Circuit Court of Appeals decertified the class in June 2023 but upheld the plaintiffs' damages methodology, remanding the case to the trial court. Brinker's petition for review by the United States Supreme Court on the damages methodology was denied. The case, now continuing in the trial court as a single plaintiff action, is awaiting a ruling and further instruction on class recertification. Chili's believes it has defenses and intends to continue defending the litigation.
Bankruptcy History
Chili's has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To renew, Chili's franchisees must meet several conditions. These include providing written notice between 12 and 24 months before the initial term expires, undertaking renovations and modernizations of their Chili's Restaurant to meet current brand standards, and ensuring they are not in default of any current agreements and have paid all monetary obligations to Chili's and its affiliates. Franchisees must also secure the right to remain at their restaurant location for the entire new agreement term, sign a general release, and comply with Chili's current qualification and training requirements. The new successor franchise agreement may have terms materially different from the original, including higher fees.
Training & Support Program
Franchisor Assistance
Chili's provides comprehensive support to its franchisees starting before the restaurant opens and continuing throughout its operation. Before opening, Chili's assists with site selection, offers optional demographic and market data reports for a fee, and provides a free initial construction/design evaluation for the first restaurant (additional evaluations are reimbursed by the franchisee). Franchisees receive standard prototype plans and specifications. Initial operational training is provided for the Managing Owner, Operating Partner, and up to five managers, with Chili's covering the on-site training costs for the first two restaurants (subsequent training or re-training may incur a fee). Chili's may also offer on-site pre-opening and opening supervision, including an optional opening crew at the franchisee's expense, and provides access to the Chili's Franchise Manual. Ongoing support includes advisory assistance, research data for merchandising, marketing, and advertising, and revisions to the operations manual. Chili's continuously updates its Franchise Manual (CFM) and provides advice and written materials on restaurant management, including new developments in equipment, food products, and preparation. Chili's also administers national or regional advertising programs and may require local advertising. Furthermore, franchisees have access to public relations and crisis communications guides, and Chili's Public Relations department is available for counsel and assistance. Chili's requires franchisees to install and maintain specific computer systems, including the Aloha POS and QSR kitchen display systems from designated suppliers, a mandatory online ordering platform called Olo, and a loyalty program called My Chili's Rewards. Chili's also supports an optional table management system called NoWait, and for virtual product offerings like "It's Just Wings," franchisees must enroll in approved third-party delivery platforms.
Initial Training Hours
300
Training Location
Certified Training Restaurants located throughout the U.S.
Ongoing Support
Chili's provides ongoing advisory assistance and offers other training programs as deemed appropriate. Franchisees receive research data and materials related to merchandising, marketing, and advertising, and Chili's reviews and approves all promotional materials. Chili's continuously updates its Franchise Manual (CFM) and provides advice and written materials on restaurant management, including new developments and improvements in restaurant equipment, food products, packaging, and preparation. Chili's also administers national or regional advertising programs and may require local advertising. Furthermore, franchisees have access to public relations and crisis communications guides, and Chili's Public Relations department is available for counsel and assistance.
Franchise Requirements
Ideal Candidate Profile
Chili's seeks franchisees who can designate a Managing Owner, who must hold the largest ownership share (at least 10%), have the authority to bind the franchisee, and ensure compliance with agreements. Unless an Operating Partner is designated, the Managing Owner must commit full-time effort to the restaurant's operations without other business commitments. If an Operating Partner is appointed, they must be approved by Chili's, have the authority to bind the franchisee, dedicate full-time effort to the restaurant's operations without other business commitments, and reside within a 100-mile radius of each restaurant in the territory. Both the Managing Owner and Operating Partner must successfully complete Chili's training programs.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
full-time
Territory Type
Limited
Territory Size Requirements
Chili's Grill & Bar does not grant an exclusive territory for individual franchise agreements. However, for those entering into a Development Agreement to establish multiple Chili's Restaurants, a specific geographic area, referred to as a 'Territory,' is assigned. The size of these development territories can vary considerably, from a portion of a city or an unincorporated area to a multi-county or multi-state region. These territories are typically defined by established county or state lines, or by descriptions of municipal boundaries. It's important to note that certain locations, such as airports, schools, government institutions, military installations, stadiums, sports arenas, casinos, and 'big box' retail stores, are explicitly excluded from these territories, even if they fall within the defined geographical limits. For Franchise Agreements that are not part of a Development Agreement, no territorial rights are granted, and any participation in delivery or takeout programs would also be on a non-exclusive basis.
Staffing Notes
Chili's restaurants require a competent, well-trained staff, including a minimum of four fully-trained, full-time managers unless otherwise agreed by Chili's. Franchisees are responsible for ensuring employees maintain good customer relations and adhere to dress code standards. Chili's may also mandate 'above-restaurant' supervision, such as area or regional directors, who must also be fully trained. Franchisees retain sole responsibility for all employment aspects, including hiring, termination, discipline, compensation, and benefits, and must ensure employees understand that the franchisee, not Chili's, is their employer.