Dive Brief:
- Blackstone, via private equity funds it manages, entered into a definitive agreement to buy Tropical Smoothie Cafe from Levine Leichtman Capital Partners, the company said in a press release Wednesday.
- Terms of the transaction were not disclosed, but The Wall Street Journal reports it is worth roughly $2 billion.
- Blackstone said this is the first transaction made using its flagship private equity vehicle, and it plans to continue growing Tropical Smoothie Cafe by investing in menu innovation, operations and marketing.
Dive Insight:
Levine Leichtman originally bought the chain in 2020 when the company had 870 units. Tropical Smoothie has since grown to over 1,400 units.
“Tropical Smoothie Cafe has had an impressive growth trajectory consistently building on its loyal customer base as it has scaled nationwide,” Peter Wallace, a senior managing director in Blackstone’s private equity business, said in the press release. “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.”
Blackstone tends to invest in franchised businesses that can grow without significant investment, according to The Wall Street Journal, which originally reported on the pending deal Wednesday.
Tropical Smoothie Cafe CEO Charles Watson said in a separate press release from LLCP that the fast casual chain benefited from its prior parent company’s “management-centric approach” as it grew its footprint.
Part of Tropical Smoothie Cafe’s development has focused on menu innovation. In January, the restaurant brand added bowls to its permanent menu, marking the first major change to its offerings in six years. The company also is doubling down on franchising, securing recent partnerships with multi-unit operators.
This deal comes just over a week after TGI Fridays agreed to be acquired by a U.K. franchisee for $220 million. The transaction also will take Fridays public on the London Stock Exchange. Jersey Mike’s and Bob Evans are rumored to be seeking sales. Earlier this year, Tijuana Flats gained new owners through a bankruptcy, and Benihana’s parent company sold to One Group Hospitality.
