Blackstone to Purchase Tropical Smoothie Café

Blackstone and Tropical Smoothie Cafe

The Acquisition from Levine Leichtman Capital Partners Includes over 1,400 Tropical Smoothie Locations Across 44 States

Blackstone Inc. has announced that it will buy Tropical Smoothie Café from Levine Leichtman Capital Partners, which is the franchise’s private equity owner. Media sources said the deal for the rapidly expanding fast-casual restaurant brand was valued at $2 billion, including debt.

The global market for fast-casual restaurants was $169.9 billion in 2022, according to Straits Research. That market is estimated to reach more than $407.2 billion by 2031, Straits said, with a compound annual growth rate of 10.2% during the forecast period of 2023 to 2031. 

About Tropical Smoothie

Founded in 1997, Tropical Smoothie Café began with one location on a Florida beach and now has more than 1,400 fast-casual restaurant sites in 44 states, Reuters reported. Tropical Smoothie added 175 new restaurants in 2023, with 70% of those from existing franchisees, according to  Nation’s Restaurant News. 

Levine Leichtman bought the Tropical Smoothie Café brand in September 2020. At the time, Tropical Smoothie Cafe franchised more than 870 fast-casual restaurants in 44 states, Nation’s Restaurant News reported. 

Tropical Smoothie’s same-store sales rose during the first quarter of this year. Reuters attributed the boost to the franchise’s introduction of new menu items such as its tropic bowls containing fruits, vegetables, and grains; Tropical Smoothie Café also serves wraps, sandwiches, quesadillas, and about 20 types of smoothies. Headquartered in Atlanta, the franchisor had U.S. system sales of almost $1.3 billion in 2023, Restaurant Business reported, citing Technomic Ignite data. That is more than twice the sales it generated in 2019. 

Blackstone Likes Franchises

Blackstone, a New York City-based private equity company, has invested aggressively in franchises. In 2007, it bought Hilton Hotels and SERVOR, a franchisor that specializes in the cleanup and restoration of structures after catastrophic events such as fires and floods. Restaurant Business noted that “Blackstone is a massive investor” and had tried to acquire the Jersey Mike’s sandwich franchise for some $8 billion, but the deal never materialized. 

The Wall Street Journal assessed the Tropical Smoothie purchase as “another example of Blackstone starting to put money to work again in private equity after mostly sitting out 2023, along with the rest of the industry. High interest rates cut into portfolio valuations and made it more expensive for firms to borrow.”

Reaction from Franchise CEO and Blackstone

In a news release quoted by Fox Business, Tropical Smoothie CEO Charles Wason said, “The key to this business is delivering an outstanding experience for each guest who walks through our doors. From high-quality products to exceptional guest service, our franchisees make our mission to become a beloved brand a reality day in and day out, and we are thrilled to see how the brand will continue to grow with Blackstone’s outstanding global resources behind it.”

Peter Wallace, senior managing director in Blackstone’s private equity business, said in the news release that “Tropical Smoothie Cafe has had an impressive growth trajectory, consistently building on its loyal customer base as it has scaled nationwide. … We believe our capital and resources will help position Tropical Smoothie Cafe for continued success and innovation for the benefit of its guests and franchisees.”

Barclays is Blackstone’s financial adviser on the purchase. Baird serves as Tropical Smoothie’s lead financial adviser, with support from Bank of America Securities and North Point.

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