Blackstone has agreed to acquire Tropical Smoothie Cafe, a franchisor of fast casual restaurants, from Levine Leichtman Capital Partners (LLCP).
Atlanta-headquartered Tropical Smoothie Café (TSC) serves “better-for-you” smoothies, wraps, sandwiches, bowls, salads, and flatbreads that are available for breakfast, lunch, dinner, dessert, and any time-of-day snacks.
TSC was founded in 1997 with a single location on a beach in Destin, Florida, by Eric and Delora Jenrich, and David Walker. The company’s first franchised location opened in 1998 in Tallahassee, Florida.
LLCP acquired TSC, in partnership with the company’s management team, from BIP Capital (formerly Buckhead Investment Partners) in September 2020. At that time, the company had more than 870 stores across 44 states. Today, the company has more than 1,400 locations in 44 states, and it opened more than 175 new locations in 2023 alone, 70 percent of which were opened by existing franchisees. In 2024, for the fourth year in a row, the brand was ranked #1 in the Smoothie/Juice Category by Entrepreneur Magazine’s Franchisee 500.
“It has been a pleasure partnering with the LLCP team through this time of unprecedented growth, and we would like to thank them for their strategic insights and close relationship with our team over the years, and valuable contributions to our success,” said Charles Watson, the CEO of TSC. “LLCP’s deep expertise in franchising combined with their management-centric approach made for the perfect partner in scaling our business. We have appreciated LLCP’s support in advancing our strategic initiatives and have benefitted greatly from the collaboration.”
“Charles Watson and the TSC team have been terrific partners during a period of rapid growth with unit count nearly doubling since LLCP partnered with management to purchase the company,” said Matthew Frankel, a managing partner at LLCP. “TSC has been a phenomenal investment for LLCP given the company’s robust franchise development activity and exceptional same-store sales growth. The accelerated growth we achieved working alongside their management team was driven by several key value creation initiatives, including accelerated unit signings and openings; strong digital sales growth; menu innovation; expansion of the management team; an increase in the proportion in higher AUV drive-thru units; supply chain improvements; and completing several highly strategic area developer buybacks. We are grateful for the partnership we had with the TSC team and wish the company, their employees, and franchisees all the best in their next chapter of growth with Blackstone.”
“TSC has had an impressive growth trajectory consistently building on its loyal customer base as it has scaled nationwide,” said Peter Wallace, a senior managing director at Blackstone. “Blackstone has deep experience helping accelerate the expansion of leading franchise businesses as one of our highest-conviction investment areas. We believe our capital and resources will help position TSC for continued success and innovation for the benefit of its guests and franchisees.”
“The key to this business is delivering an outstanding experience for each guest who walks through our doors,” concluded Mr. Watson. “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.”
LLCP invests in US and Europe-based middle-market companies across numerous industries including franchising, business services, education and training, engineered products and manufacturing, healthcare, and light manufacturing. Since its founding in 1984 by Arthur Levine and Lauren Leichtman, LLCP has managed $14.4 billion of institutional capital across 15 investment funds and has invested in over 100 portfolio companies. LLCP currently has $9.6 billion of assets under management with offices in Los Angeles, New York, Chicago, Miami, London, Stockholm, The Hague, and Frankfurt.
New York City-based Blackstone (NYSE: BX) invests in private equity, real estate, public debt and equity, non-investment grade credit, real assets, and secondary funds. The firm also provides financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory, and fund placement services.
Barclays was the financial advisor to Blackstone; and Baird, with support from North Point and BofA Securities, advised Tropical Smoothie Cafe.
© 2024 Private Equity Professional | May 1, 2024
