Tropical Smoothie Cafe to be acquired in reported $2 billion deal

Tropical Smoothie Cafe is getting a new owner.

Los Angeles-based private equity firm Levine Leichtman Capital Partners has entered into a definitive agreement to sell its portfolio company, Tropical Smoothie Café, to private equity funds managed by Blackstone. Terms of the transaction were not disclosed, but The Wall Street Journal reported that the deal values the fast-casual chain at about $2 billion.

Headquartered in Atlanta, Tropical Smoothie is a leading franchisor of fast-casual restaurants. It has more than 1,400 locations across 44 states. 

In a statement, Tropical Smoothie Cafe CEO Charles Watson, said that LLCP’s deep expertise in franchising combined with their management-centric approach “made for the perfect partner in scaling our business.”

LLCP bought Tropical Smoothie Cafe, which was founded in 1997, in September 2020. At the time, the chain had more than 870 locations. The company opened more than 175 new locations in 2023, 70% of which were opened by existing franchisees.

“Charles Watson and the Tropical Smoothie Cafe 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, managing partner, LLCP. “Tropical Smoothie Cafe has been a phenomenal investment for LLCP given the company’s robust franchise development activity and exceptional same-store sales growth.”

Frankel said the chain’s growth  was driven by several key 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.  

“Blackstone has deep experience helping accelerate the expansion of leading franchise businesses as one of our highest-conviction investment areas,” stated Peter Wallace, a senior managing director in Blackstone’s private equity business. “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.” 

Baird served as the lead financial advisor, with support from North Point and BofA Securities. Kirkland & Ellis LLP served as legal counsel to Tropical Smoothie Cafe. Barclays served as financial advisor and Simpson Thacher & Bartlett LLP served as legal counsel to Blackstone.