Chili’s is a recognizable brand loved by people around the globe. Noted for its Baby-Back-Ribs and other foods, Chili’s serves over 1 million people every day. Over 315 locations in 35 states, in addition to international sites in dozens of countries, exist bringing that mouthwatering southwest Texas flavor to everyone.
Chili’s is not only a leader because of their popularity and food, but they are also a leader through innovation. Chili’s was one of the first restaurants to include touch-screen ordering from the table through their Ziosk interface. This technology accelerates customers’ ability to order, receive their order quickly and receive excellent service. It also streamlines food preparation, reduces bookkeeping functions for franchise owners, monitors inventory more accurately, increases the speed of back-office tasks and helps managers and owners understand the operation of their franchise comprehensively.
This fusion of family foods, technology and service along with the fun atmosphere of each and every Chili’s’ location makes it the perfect place for people of all ages to eat with friends or family.
Year Business Began: 1975
Franchising Since: 1984
Headquarters: Dallas, Texas
Estimated Number of Units: 1,605
Franchise Description: The franchisor is Brinker International Payroll Company, L.P. The franchise is for a Chili’s Grill & Bar or a Chili’s Special Venue restaurant. Chili’s Grill & Bar restaurants are full service restaurants featuring a casual atmosphere and a varied menu of freshly prepared appetizers, chicken, beef and seafood entrees, hamburgers and other sandwiches, salads, barbecue ribs, fajitas and other southwestern and Mexican-style cuisine, flatbreads, desserts and a full service bar. Chili’s restaurants are typically free-standing restaurants located in a metropolitan area or surrounding suburbs. Proximity to office buildings, shopping malls, shopping centers and other high traffic areas is desirable. Chili’s Special Venue restaurants are an abbreviated format that typically is based upon reduced square footage and/or a reduced menu.
Training Overview: The managing owner or operating partner and up to five managers (if franchisees open only one restaurant) or 10 managers (if franchisees open two or more restaurants) must attend and complete initial management training program to the franchisor’s satisfaction. All new managers hired by the franchisee and any managing owner or operating partner later appointed by the franchisee must attend and complete the initial training program to the franchisor’s satisfaction. The initial training program will generally last 15 weeks. All required pre-opening training will be held at one of the franchisor’s certified training restaurants and must be completed to its satisfaction at least two months (but not more than five months) before the restaurant opens. The franchisor may send an opening team to the restaurant to help with the opening if the franchisor believes it is necessary, considering factors such as the franchisee’s previous restaurant experience and the size and location of the restaurant. If the franchisor does, its training representatives will be at the restaurant for a period of approximately 20 total days before and after the opening date. The franchisor may require the franchisee’s personnel to attend supplemental training programs. In addition to required training programs, the franchisor may provide conferences for general managers in a designated area. The franchisor may also hold annual conferences for general managers and quarterly meetings for unit supervisors.
Territory Granted: The Franchise Agreement grants franchisees the right to operate the restaurant only at the approved location. Franchisees may not relocate the restaurant without first obtaining written consent. There are no territorial rights granted with the Franchise Agreement. There is no requirement that franchisees achieve any specified sales volume or market penetration under the Franchise Agreement. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls.
Obligations and Restrictions: When franchisees sign the agreements, they must designate an individual to serve as their “managing owner.” The same person must act as the managing owner under the development agreement and all franchise agreements between the franchisor and the franchisee. If franchisees are individuals, they will be the managing owner. If franchisees are operating as a corporation, a partnership or other business entity, the managing owner must (i) own the largest percentage share of ownership, but in no event less than 10%, (ii) be authorized by to bind franchisees in any dealings with the franchisor and authorized distributors, suppliers, and contractors, (iii) be authorized to direct any actions necessary to ensure compliance with the agreements, and (iv) unless an operating partner is appointed, devote his or her full time and best efforts to the operations of the restaurant and operations under the development agreement with no operational or management commitments to other businesses. The managing owner must also satisfy training requirements. Franchisees must use the restaurant premises solely for the operation of the Chili’s restaurant and must keep the restaurant open and in normal operation for the hours and days specified in the manual or otherwise in writing. Franchisees must refrain from using or permitting the premises to be used for any other purpose or activity at any time without first obtaining the franchisor’s written consent. Franchisees must meet and maintain the highest applicable health standards and ratings. Franchisees must operate the restaurant in strict conformity with the methods, standards, and specifications the franchisor requires.
Term of Agreement and Renewal: The initial franchise term begins on the effective date of the Franchise Agreement and, unless terminated sooner, will expire on the last day of last calendar month of the 20th year following the date on which the franchised restaurant is opened for business. The term of the successor franchise agreement will be 20 years if requirements are met.
Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee any notes, leases or other obligations franchisees may make to others.
Investment Tables:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $40,000 | $60,000 |
| Leasehold Expense | $8,500 | $28,000 |
| Pre-Construction | $45,000 | $350,000 |
| Construction Costs | $500,000 | $2,500,000 |
| Site Work | $50,000 | $1,000,000 |
| Exterior Signage | $15,000 | $150,000 |
| Furniture/Fixtures/Sound System/TVs | $55,000 | $600,000 |
| Kitchen/Bar/Equipment | $190,000 | $400,000 |
| Opening Advertising | $5,000 | $10,000 |
| Initial Training | $60,000 | $250,000 |
| Opening Team Costs | $100,000 | $150,000 |
| Working Capital | $20,000 | $30,000 |
| Inventory | $75,000 | $100,000 |
| Bar/Kitchen Accessories | $40,000 | $60,000 |
| Liquor License | Varies | |
| Computer POS System/Kitchen Display System/Installation | $75,000 | $90,000 |
| Online Ordering | $695 | $695 |
| Additional Funds (3 months) | $525,000 | $725,000 |
| ESTIMATED TOTAL* | $1,804,195 | $6,503,695 |
<small>*The estimated initial investment range covers from a Chili’s Special Venue up to a Chili’s Grill & Bar.</small>
| Type of Fee | Amount |
|---|---|
| Royalty Fee | 1.25% of gross sales. |
| Technical Services Fee | 2.75% of gross sales. |
| Advertising Production Fee | 0.5% of gross sales. |
| Local Advertising Program (LAP) Fee | Minimum 2.5% of gross sales. |
| Regional Advertising Program (RAP) Fee | Maximum 4% of gross sales. |
| National Advertising Program (NAP) Fee | Currently, 2.22% of gross sales; Maximum – 4% of gross sales. |
| Supplemental Marketing Programs | Currently, 0.10% of gross sales. |
| Replacement and Supplemental Training | Currently, $4,000 plus costs of the franchisee’s personnel attending training. |
| Product Testing Fee | Approximately $1,500 per product annually typically charged to the supplier; additional product testing may be required due to specification non-compliance. |
| Supplier Facility Inspection | Currently, approximately $1,025 per day plus travel expenses normally charged to the supplier or distributor. |
| Licensing Fees | Currently, none. |
| Restaurant Inspection | Varies. |
| Mandatory Sanitation and Food Safety Program (SAFE) | Currently, approximately $181.31 per visit. |
| Transfer Fee | Franchise/Development Agreements – the greater of $5,000 or an amount necessary to reimburse the franchisor for its expenses, with a single transfer maximum of $25,000. |
| Offering | Franchise/Development Agreements – $10,000. |
| Audit | Cost of audit, including travel, lodging, wages, and legal and accounting costs. |
| Late Charge and Interest | $500 late charge for each delinquent payment, and the lesser of 18% per annum or maximum legal rate (the maximum legal rate in California is 10% per annum). |
| Indemnification | Franchise/Development Agreements – Will vary depending on loss. |
| Enforcement Costs | Franchise/Development Agreements – Will vary. |
| Liquidated Damages for Failure to Meet Development Schedule | $10,000/month; Maximum period: 1 year. |
| Relocation or Reconstruction | Minimum royalty and technical services fee agreed by the franchisee and the franchisor. |
| Successor Fee | 100% of the then-current franchise fee. |
| Décor Items, Certain Furniture and Fixtures | Currently, the prices that the franchisor charges its company-owned restaurants for the items, including a 15% administration fee; prices are subject to change with prior written notice. |
| Gift Cards | Approximately $1,500 per year/per restaurant. |
| Management Services | 10% of gross sales. |
| Mandatory Remodeling | Actual costs franchisees incur. |
The above information has been compiled from the FDD of Chili’s. Year of FDD: 2023.
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