Disclaimer: This is a personal investment thesis written for my own records and published for educational purposes only. It is not investment advice. I invested $259.81 in Chi Chi's Restaurants via StartEngine in September 2025. All equity crowdfunding investments are highly speculative and carry a significant risk of total capital loss. Please conduct your own research before making any investment decision.
A note on honesty: This memo is different from the others. I am not going to pretend this was a rigorous framework decision. It was not. I am documenting it anyway, because the most useful thing I can do for anyone reading this is be honest about the investments that were driven by emotion rather than analysis — and what I learned from them.
Company Snapshot
Chi Chi's Restaurants is the revival of the iconic Tex-Mex casual dining chain that closed its last US restaurant in 2004 following a hepatitis A outbreak and subsequent bankruptcy. The brand is being relaunched by Michael McDermott, son of co-founder Max McGee, with the first two locations planned for Minnesota in 2025 and a franchise model designed for national expansion.
The company is raising on StartEngine under Regulation CF, targeting up to $3.5 million at a $10.01 million pre-money valuation.
Investment date: September 2025
Amount: $259.81 USD
Platform: StartEngine
Security type: Equity (Common Stock)
Shares received: 179
Price per share: $1.54
Company valuation at investment: $10,010,000
Funding goal: $20K – $3.5M
The Honest Preamble
I grew up going to Chi Chi's. For a certain generation of Americans — particularly those who grew up in the Midwest and Mid-Atlantic in the 1980s and 1990s — Chi Chi's was not just a restaurant. It was a ritual. The fried ice cream. The sizzling fajitas. The birthday song. The sopapillas.
When I saw the StartEngine campaign in September 2025, I did not run the SBC framework. I did not score the Wave, the Surfer, the Moat, or the Valuation. I read the pitch, felt a wave of recognition, and invested $259.81.
I am telling you this because the whole point of Small Batch Capital is to document what this process actually looks like — not a sanitised version where every decision was rational and disciplined. Some decisions are emotional. This was one of them. The question is not whether to acknowledge that, but whether to learn from it.
The Case That Could Be Made
If I were being generous to my September 2025 self, here is the investment case:
Brand equity is real. Chi Chi's was a top-10 casual dining chain in the US at its peak, with 200+ locations and revenues exceeding $300 million annually. The brand had genuine cultural resonance with a demographic that is now in its 40s and 50s — the highest-spending cohort in the casual dining market. Nostalgia brands have worked before: Dunkaroos, Crystal Pepsi, Surge, and more recently Jamba Juice and Friendly's have all demonstrated that dormant brands can be reactivated.
The valuation was modest. At $10 million, the ask was not outrageous for a brand with this level of recognition. The $1.54 share price and the franchise model meant the capital requirements were relatively contained.
The founder had skin in the game. Michael McDermott is not a random entrepreneur who bought a brand. He is the son of the co-founder. There is a personal and family dimension to this that creates a different kind of accountability than a purely financial operator.
The $95 billion Mexican restaurant market is the largest casual dining segment in the US. Chipotle, Chili's, and On the Border have all demonstrated that the category supports large, scalable businesses.
The Case Against (Which I Did Not Make at the Time)
Here is what I did not think about carefully enough:
The brand carries baggage. Chi Chi's did not simply close — it closed in the aftermath of a hepatitis A outbreak in 2003 that killed four people and infected hundreds more. For a food and beverage brand, that is not a neutral historical footnote. It is a reputational liability that any serious operator would need to address directly and transparently. The campaign materials did not address it.
The franchise model is unproven. The pitch was built around a franchise expansion model, but there was no evidence of signed franchise agreements, no disclosed franchisee pipeline, and no demonstrated ability to replicate the brand experience at scale under new ownership.
The team was thin. Michael McDermott's connection to the brand is genuine, but his operational track record in restaurant management and franchise development was not clearly articulated in the campaign materials. Running a restaurant brand with 200+ locations is a fundamentally different skill set from launching two locations in Minnesota.
The $3.5 million target was modest for the ambition. National franchise expansion requires significant capital for training infrastructure, supply chain development, marketing, and franchisee support. $3.5 million would not get the company far down that road.
I was investing in a memory, not a business. The honest truth is that I was not evaluating Chi Chi's Restaurants, Inc. I was evaluating my childhood. Those are not the same thing.
The Numbers: Valuation and Position Sizing
At $10 million, the valuation was the most defensible part of the investment. For a brand with genuine cultural recognition and a plausible path to franchise revenue, $10 million is not an unreasonable starting point.
The $259.81 position size was not a framework decision — it was approximately what I had available in my StartEngine account at the time. It was not sized against a risk model or a conviction level. It was sized against my account balance.
This is the clearest signal that this was not a disciplined investment. Position sizing is one of the most important decisions in portfolio construction. When the position size is determined by account balance rather than conviction and risk, the investment process has broken down.
What This Investment Taught Me
This is the investment that made me build the framework.
Not because it was obviously wrong — the Chi Chi's thesis is not without merit, and the company has since opened its first Minnesota location and reported early positive customer response. But because the process was wrong. I made a financial commitment based on an emotional response, with no systematic evaluation of the market, the team, the competitive position, or the valuation.
The SBC framework — Wave, Surfer, Moat, Valuation — was designed specifically to prevent this. Not to eliminate emotion from investing (that is neither possible nor desirable), but to ensure that emotion is a factor in the decision rather than the decision itself.
If I applied the framework to Chi Chi's today:
- Wave: 5/10 — The Mexican casual dining market is large but mature. The nostalgia tailwind is real but narrow.
- Surfer: 5/10 — Genuine brand connection, but limited operational track record in franchise development.
- Moat: 4/10 — Brand recognition is the only moat, and it carries significant reputational baggage.
- Valuation: 7/10 — The $10M entry is modest and the downside is contained.
- Total: 21/40 — No-Go.
I would not have made this investment under the framework. I made it before the framework existed. That is the honest accounting.
Current Status (March 2026)
Chi Chi's opened its first location in St. Louis Park, Minnesota in October 2025. Early reports suggest positive customer response and strong nostalgia-driven foot traffic. The company is continuing to raise capital on StartEngine and has not yet announced signed franchise agreements.
The investment is active. Whether it will ever generate a return depends on whether the franchise model gains traction — a question that will not be answered for several years.
| Metric | At Investment (Sep 2025) | Current (Mar 2026) |
|---|---|---|
| Investment Amount | $259.81 | — |
| Shares | 179 | 179 |
| Price Per Share | $1.54 | ~$1.54 |
| Company Valuation | $10,010,000 | $10,010,000 |
| Estimated Value | $259.81 | ~$259.81 |
| Return | — | 1.0× (nominal) |
| Status | Active | Active |
All financial data sourced from the Chi Chi's Restaurants StartEngine campaign page, the SEC Form C filing, and public news coverage. This article will be updated as new information becomes available.
