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"Margaritaville" was written about a drink Buffett discovered at Lung's Cocina del Sur restaurant (where High 5 is located today) at 2700 W. Anderson Lane in Austin, Texas, and the first huge surge of tourists who descended on Key West, Florida, around that time. He wrote most of the song one night at a friend's house in Austin, and finished it while spending time in Key West. In the United States "Margaritaville" reached number eight on the Billboard Hot 100 chart, and went to number one on the Easy Listening chart, also peaking at No. 13 on the Hot Country Songs chart. Billboard ranked it number 14 on its 1977 Pop Singles year-end chart. It remains Buffett's highest charting solo single.
Named for the cocktail margarita, with lyrics reflecting a laid-back lifestyle in a tropical climate, "Margaritaville" has come to define Buffett's music and career. The relative importance of the song to Buffett's career is referred to obliquely in a parenthetical plural in the title of a Buffett greatest hits compilation album, Songs You Know By Heart: Jimmy Buffett's Greatest Hit(s). The name has been used in the title of other Buffett compilation albums such as Meet Me in Margaritaville: The Ultimate Collection and is also the name of several commercial products licensed by Buffett (see below). The song also lent its name to the 2017 musical Escape to Margaritaville, in which it is featured alongside other Buffett songs. Continued popular culture references to and covers of it throughout the years attest to the song's continuing popularity. The song was mentioned in Blake Shelton's 2004 single "Some Beach".
"Margaritaville" has been inducted into the 2016 Grammy Hall of Fame for its cultural and historic significance.
Buffett maintains a resort chain by the same name.