After less than four years in its portfolio, Levine Leichtman Capital Partners is selling Tropical Smoothie Cafe to Blackstone.
In separate announcements Wednesday evening, the two private equity firms said they’ve entered a definitive agreement that will put the 1,400-unit cafe and smoothie franchise in Blackstone’s sprawling investment portfolio. While terms of the deal weren’t disclosed, The Wall Street Journal reported earlier April 24 that Blackstone agreed to pay nearly $2 billion for the chain.
Tropical Smoothie, which serves smoothies, bowls, sandwiches, salads and other items, did an estimated $1.3 billion in systemwide sales last year from 1,372 stores. That’s nearly three times the sales it generated in 2018, according to Franchise Times Top 400 data. It’s seen 40 percent unit growth since 2020, when Los Angeles-based Levine Leichtman acquired the brand from BIP Capital.
Blackstone, which said this is the first transaction from the most recent vintage of its flagship private equity vehicle, snapped Tropical Smoothie up just two months after LLCP brought the deal to market. Peter Wallace, senior managing director in Blackstone’s private equity business, noted the brand’s “impressive growth trajectory,” and in a statement called franchise businesses “one of our highest-conviction investment areas.”
Blackstone’s previous franchisor acquisitions include Hilton Hotels and disaster restoration company Servpro.
Tropical Smoothie CEO Charles Watson declined to comment until after the transaction closes. He’s been with the brand since 2010 and in the chief executive role since late 2018. In an interview with Franchise Times last year, he credited innovations in the company’s tech stack and the use of customer analytics to understand guest engagement for helping propel growth.
For Levine Leichtman, the sale is one of several notable franchise exits for the company in recent years. It sold Nothing Bundt Cakes to Roark Capital in 2021, and the following year sold Hand & Stone Massage and Facial Spa to Harvest Partners. On the buy side, LLCP purchased ice cream and confections brand Kilwins last year, earning it a Franchise Times Dealmakers award.
In the company’s announcement of the Tropical Smoothie sale, LLCP Managing Partner Matt Frankel cited the brand’s accelerated unit signings and openings, digital sales growth and an increase in average unit volume for drive-thru locations as key achievements.