Inside the Deal: Tropical Smoothie Cafe
Tropical Smoothie Cafe Sale to Blackstone Punctuates Long-Tenured Partnership
Baird recently served as lead financial advisor to Tropical Smoothie Cafe, a leading franchisor of fast casual restaurants built on a mission to Inspire Better® with more than 1,400 locations across 44 states. Tropical Smoothie offers a menu focused on inspiring a healthier lifestyle and includes “better-for-you” smoothies, wraps, sandwiches, bowls, salads and flatbreads. On the heels of the deal, Baird’s Multi-Unit, Restaurants & Franchising team sheds light on the tremendous evolution of the brand and the long-tenured partnership with the Tropical Smoothie Cafe team.
What is the origin of the relationship between Baird and Tropical Smoothie and how has its longevity been sustained over time?
Baird’s relationship with the Tropical Smoothie team began over 7 years ago. At the time, the business had 540 cafes and was generating sub $10M in EBITDA – but growing unlike anything in the franchising space. The inspiring menu and differentiated value proposition resonated with consumers – fueling explosive growth as the system rapidly scaled. Baird served as a thought partner to the Tropical Smoothie team as they navigated from 540 cafes in 2016 to over 800 cafes by 2020, advising on topics ranging from strategic footprint growth and unit-level economics to optimizing the capital structure and evaluating potential capital partners. In late 2020, after navigating a tumultuous period impacted by COVID-19, Baird advised Tropical Smoothie on its sale to Levine Leichtman Capital Partners.
Following the 2020 sale process, and as the business continued to grow and evolve, how did Baird stay top of mind for Tropical Smoothie and its shareholders?
The beauty of the Baird platform is the breadth and depth of our firm’s expertise and capabilities, and our ability to adapt our partnership and advice to best meet the needs of our clients. As Tropical Smoothie scaled to new heights - insights, learnings and peer benchmarking courtesy of Baird’s award-winning restaurant sector research analysts became increasingly relevant. Same goes for Baird's broader equity capital markets expertise as Tropical Smoothie and its shareholders set out to explore a range of potential strategic alternatives, including the prospects of taking the company public. Ultimately, the decision was made to pursue a sale process in late 2023; thanks to years and years of collaboration and partnership - there was no firm better suited to advise Tropical Smoothie on this next phase of its journey.
Talk about tremendous outcomes for Tropical Smoothie and its shareholders – both in 2020 and 2024; what makes this story so special?
Tropical Smoothie epitomizes the beauty of the franchise model – and value creation opportunity throughout the lifecycle of a unique franchise concept. With the combination of a differentiated value proposition, a world-class team and a culture that revolves around franchisee success – Tropical Smoothie is a case study in the power of the franchise business model as it scales. And the fun is just beginning. Even at 1,400+ cafes in 44 states across the country - Charles Watson (CEO, Tropical Smoothie) will tell you - and we would agree - that the most exciting chapters of the Tropical Smoothie story are still to come. With the opportunity to meaningfully grow the current footprint, a commitment to continued culinary innovation and a national advertising strategy to supercharge brand awareness – we’re only just getting started on ‘Tropic Time.’
I can't say enough about how instrumental Chris, Ryan, Scott and the rest of the Baird team have been throughout the evolution of Tropical Smoothie Cafe. The Baird team has been a tremendous cheerleader for and partner to Tropical Smoothie Cafe since the early days – helping to elevate our brand profile and navigate the challenges and opportunities that accompany a rapidly scaling franchise concept. That partnership has only strengthened over time as Baird has been by our side for many of the business’ most important strategic milestones. There is no better advisor in the franchising space as far as I’m concerned – and the team and I look forward to their continued support through the next chapter of the Tropical Smoothie Cafe story.
Charles Watson, CEO, Tropical Smoothie Cafe
Interested in learning more about this transaction? Connect with Baird Global Investment Banking.
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