Published on: May 13, 2025
Source: Franchise Times
With new owner Blackstone, Tropical Smoothie Cafe is confident it can speed up growth as a major national marketing push gets underway. Blackstone’s buy captures the Deal of the Year in the 13th annual Franchise Times Dealmakers project.
Max Wetzel isn’t worried about Tropical Smoothie Cafe fatigue, despite eating 10 to 15 meals there each week.
“You can have every meal at Tropical Smoothie Cafe,” said Wetzel, the brand’s CEO. “It’s all connected to who the brand is. Like 85 percent of our guests order a smoothie, but when we get them to move over and also try our food, there’s a massive unlock in loyalty.”
Wetzel took the top spot at Atlanta-based Tropical Smoothie in November, just six months after Blackstone, one of the world’s largest private equity firms with more than $150 billion in assets under management, bought the brand from Levine Leichtman Capital Partners. He replaced former CEO Charles Watson, who held various leadership roles at Tropical Smoothie since 2010. (Watson was named CEO of burger franchise Smalls Sliders in April.)
The sale, for a reported $2 billion, came less than four years after LLCP purchased the chain from BIP Capital. Blackstone’s previous franchisor acquisitions include Hilton Hotels and disaster restoration company Servpro; it made a growth investment last year in 7 Brew Coffee.
In its Dealmakers nomination, adviser William Blair wrote LLCP’s growth strategy for Tropical Smoothie was “still being executed” during the sale. But it was the right time for LLCP to find a buyer who would carry on that development plan. Blackstone did not comment for this story.
“Blackstone leveraged its franchise experience and global reputation for strategic investments to secure the winning bid and immediately identified how to continue the current strategy while beginning to implement changes,” the adviser wrote in the nomination. “Maintaining seamless operations and revenue targets was of primary concern—but it was not a significant challenge for savvy private equity investors with franchise experience.”
William Blair and Barclays served as financial advisers to Blackstone. Baird served as the lead financial adviser to Tropical Smoothie.
At a time when the M&A market was expected to slow down significantly, Blackstone bought Tropical Smoothie in one of the biggest franchise deals of the year in terms of dollar amount.
LLCP’s resources helped Tropical Smoothie enhance the customer experience, and the franchise expects to continue that innovation with Blackstone.
“Blackstone will unleash further innovations and capital improvements that will enable Tropical Smoothie Cafe to provide its franchisees with the menu options, marketing support and other resources that will deliver increased sales,” a William Blair representative wrote.
In a statement at the time of the acquisition, Blackstone Senior Managing Director Peter Wallace said Tropical Smoothie’s “impressive growth trajectory” was a major factor in the deal.
LLCP sold a handful of noteworthy brands in recent years, including Nothing Bundt Cakes in 2021 and Hand & Stone Massage and Facial Spa in 2022. It’s also bought a few brands, including Kilwins Chocolate and Synergy HomeCare.
Blackstone started this year by finalizing its purchase of Jersey Mike’s Subs in a deal with a reported valuation of $8 billion.
Under LLCP, Tropical Smoothie increased its earnings before interest, taxes, depreciation and amortization, or EBITDA, three-fold, according to the brand.
Its average unit volume, meanwhile, had been in decline, dropping from just over $1 million in 2021 to $979,491 in 2023. It added more than 450 new stores in that time, and last year opened another 161 stores, nearly three-quarters of which came from existing franchisees. The AUV rose in 2024, again to just over $1 million.
Tropical Smoothie had 1,515 cafes open in 44 states as of January.
‘Obsessed’ with development
In just five years, Tropical Smoothie doubled its footprint from about 750 to 1,500-plus cafes.
“If you think about our journey over the last five years, it’s been explosive development growth,” Wetzel said. “We will continue to drive development, but we’re going to be driving development and putting a tremendous amount of focus on AUV growth … improving franchise profitability even further.”
Wetzel brings experience from leadership roles at Hardee’s and Carl’s Jr. owner CKE Restaurants and Papa Johns. Taking the helm of Tropical Smoothie was “too great of an opportunity to pass up,” he said. His superfan status started a decade ago when Tropical Smoothie had about 200 cafes.
Blackstone’s bolstering of the Tropical Smoothie executive team didn’t stop at Wetzel. The brand hired Baskin-Robbins vet Jonathan Biggs as chief operating officer and promoted Chris Sasser to chief financial officer and Karen Wickliffe to general counsel.
“We’re obsessed with growth,” Wetzel said. One way to propel that growth is to implement more technology in its stores to improve ease of operation. “We’re having a lot of fun putting all of our thinking together.”
The brand has only one corporate store, which is located near the company’s headquarters in Atlanta. There, Tropical Smoothie tests new ideas before rolling them out on a larger scale. During a visit in late March, the cafe had digital menu boards and ordering kiosks—though most customers that afternoon seemed to be ordering at the register.
“We’re going to become even more of a more digitally forward company over the next three years,” Wetzel said. “We already have a really strong digital base.”
‘Turn on the marketing firepower’
Deborah von Kutzleben, Tropical Smoothie’s chief marketing officer, is focused on launching a national marketing campaign this summer. Franchise development has long been the priority, so now it’s time to “turn on the marketing firepower,” von Kutzleben said. “We’re really going to be focused on driving brand awareness. That’s really job No. 1 in marketing.”
That will include building awareness in Tropical Smoothie’s existing markets as well as in new ones as it competes with the likes of Smoothie King, Jamba, Planet Smoothie and a host of other players in the space.
“Franchisees are excited to be at the party, say where they work and people recognize it and know it and love it,” von Kutzleben said. “They feel like it’s time. We’re at the scale now where moving to more national media makes a lot of sense from an efficiency standpoint as well. It’s a better use of dollars.”
The brand charges a national marketing fee of 5 to 6 percent of gross sales.
Franchisees feel optimistic about the ownership change, Wetzel said. Operators, store managers and vendors congregated in March for a national convention to share Tropical Smoothie’s ambitions and plans going forward.
“The sentiment was extremely positive, a lot of excitement about the things that we’re talking about,” he said. “It’s like a family reunion. Everybody’s together and, of course, it’s got a tropic vibe.”
“It’s so fun,” von Kutzleben said of the convention. “It’s also awesome to see some that have come in with a single unit, and now they’ve grown their business to be multi-unit.”
Tropical Smoothie’s “better-for-you” positioning is attractive to consumers in multiple dayparts. The menu includes smoothies and acai bowls, as well as wraps, flatbreads, quesadillas, sandwiches and salads.
Von Kutzleben’s go-to is the peanut butter banana crunch flatbread, a warm bread topped with sliced banana, peanut butter, granola and honey. “It’s so unique. There’s nothing out there like it,” she said.
It’s one of Wetzel’s favorites, too. “I had that for dinner the other night,” he said. “I might be our most frequent customer at this point.”
