The owner of Tropical Smoothie Cafe is reportedly looking to sell the chain for roughly $2 billion, according to Reuters.
Sources told the publication that Levine Leichtman Capital Partners hired investment bank Robert W. Baird & Co. to start a sales process as early as January. The private equity firm bought the brand in 2020 when it had around 870 shops. Since then, the company has pushed past 1,335 units in 44 states. The chain ranked No. 36 on this year’s QSR 50 list, earning $1.075 billion in U.S. systemwide sales in 2022.
Tropical Smoothie is one of the hottest brands in the beverage segment. Through Q3 of this year, the chain reported positive same-store sales and opened 141 new stores. It also signed 166 franchise agreements. In the third quarter alone, Tropical Smoothie debuted 51 shops, many of them under existing franchisees.
CEO Charles Watson said at this year’s QSR Evolution Conference that the brand has room for 4,000 to 5,000 restaurants. In the beginning of September, there were 825 units in the pipeline, and it is expected that this number will rise to approximately 850 to 860 by the conclusion of 2023. Assuming Tropical Smoothie continues its historical trend of converting most of the locations under development into operational restaurants at a rate of 85 percent, this would result in the company having more than 2,000 outlets. Currently, 40 percent of the system contains a drive-thru. Of the 170 shops that will open in 2023, almost 45 percent are drive-thru.
“This business has gotten real complicated, real fast,” Watson said at the conference. “And we’re all scrambling and working our tails off to be able to provide that convenience and that fantastic product and that hospitality that has been the key to the restaurant business for as long as it’s been around.”
Reuters said the deal could value Tropical Smoothie at about 20 times its $100 million 12-month annual EBITDA.
Bloomberg reported at the start of 2022 that the company was considering going public. Sources told Reuters that Tropical Smoothie decided against it after the IPO market became too volatile.
In addition to the beverage concept, the owners of Chuck E. Cheese are thinking about a sale, a few years after the chain went through a bankruptcy process because of the pandemic.
