Tropical Smoothie Cafe is an American fast-casual restaurant franchise that specializes in smoothies, wraps, sandwiches, flatbreads, and other healthy foods. The company was founded in 1997 in Destin, Florida by Eric and Jordana Leptin. Tropical Smoothie Cafe began franchising in 1999 and has since grown to over 900 locations across the United States. But who actually owns and operates the Tropical Smoothie Cafe franchise today?
The History of Tropical Smoothie Cafe
As mentioned, Tropical Smoothie Cafe was founded in 1997 by Eric and Jordana Leptin in Destin, Florida. The concept was inspired by the couple’s vacation to Jamaica, where they discovered the energizing effect of real tropical fruit smoothies. They opened their first cafe in a small space next to a surf shop, with a menu featuring smoothies, wraps, and sandwiches. The fresh, health-focused concept was a hit, and the company began franchising just two years later in 1999.
The early 2000s saw rapid expansion for Tropical Smoothie Cafe through franchising. In 2006, the company was acquired by Summit Partners, a private equity firm. This provided the funding for continued growth of the franchise system. By 2010, Tropical Smoothie Cafe reached 300 locations across 28 states. The company continued to open dozens of new cafes each year in new markets and territories across the U.S.
In 2016, Tropical Smoothie Cafe was acquired again, this time by another private equity firm, BIP Capital. This second acquisition allowed for accelerated growth through franchising, revamped menu innovation, and technology investments. Just two years later in 2018, Tropical Smoothie Cafe opened their 800th location and celebrated their 20th anniversary.
Current Ownership and Management
Today, Tropical Smoothie Cafe is still owned by private equity firm BIP Capital. They acquired the company in August 2016 for an estimated $200 million. BIP Capital is an investment firm based in Atlanta, Georgia that provides investment and advisory services for growth companies in the health, wellness, and sustainability sectors. Some of their other investments include companies like Kazoo Snacks and Vital Farms.
Under BIP Capital’s ownership, Tropical Smoothie Cafe hired Charles Watson as CEO in 2017. Watson has overseen impressive growth for the company, expanding store count and systemwide sales. He has over 25 years of experience in the restaurant and hospitality industries, previously working for brands like Papa John’s Pizza and Applebee’s.
The company headquarters is located in Atlanta, Georgia. Along with the CEO, the executive leadership team includes:
- Chief Operating Officer – Mike Burkemper
- Chief Financial Officer – Cheryl Chapman
- Chief Marketing Officer – Janie Sweeney
- Chief Development Officer – Greg Hamann
- SVP of Operations – Bret Osburn
Together, this leadership team oversees corporate operations, finance, marketing, franchise development, and more for the Tropical Smoothie Cafe brand and franchise system.
The Franchise Model
Tropical Smoothie Cafe utilizes a franchise business model. This means that nearly all locations are operated by independent franchisee owners, who purchase the rights to open and run a Tropical Smoothie Cafe restaurant in their market. As of 2021, there were over 920 Tropical Smoothie Cafe locations open across 42 states, with over 90% operated by franchisees.
To open a Tropical Smoothie Cafe franchise requires an initial investment of $246,150 – $569,000. This includes the franchise fee, which ranges from $25,000 – $50,000 based on location. Franchisees pay an ongoing royalty fee of 6% of gross sales to the corporate parent. The current franchise agreement term lengths are 10 and 15 years.
Tropical Smoothie Cafe provides training and support to franchisees in areas like site selection, building and decor, equipment sourcing, marketing support, opening team training, and ongoing operations. However, franchisees are responsible for providing the capital to build out and operate their cafe location. They manage daily operations like staffing, inventory, customer service, marketing, and financials.
Top Tropical Smoothie Cafe Franchise Owners
While Tropical Smoothie Cafe corporate owns just a small number of cafe locations, some franchise owners operate many units. Below are some of the top franchise owners by unit count:
| Franchise Owner | Number of Locations |
|---|---|
| DMTT, LLC | 61 |
| Knoxville Tropical SA, LLC | 18 |
| LFA Cafe Partners, LLC | 17 |
| Bravo Tropical, LLC | 16 |
| Atlantic Smoothies, LLC | 15 |
As the table shows, DMTM, LLC is by far the largest franchisee, owning 61 Tropical Smoothie Cafe locations. This exemplifies the franchising model, with corporate owning just a small minority of total units.
Tropical Smoothie Cafe’s Growth and Performance
Since being acquired by BIP Capital in 2016, Tropical Smoothie Cafe has achieved impressive growth and performance metrics:
- They opened 131 new cafes in 2019 and signed 113 franchise agreements.
- Systemwide sales broke $600 million in 2019.
- Average unit volumes (AUVs) grew to over $648,000, among the highest in the industry.
- Same store sales were up 7.1% in 2019.
- In 2020, Tropical Smoothie opened 30 new cafes despite the pandemic.
- 2021 saw the opening of 50 new locations and a 13.1% increase in year-over-year AUV.
This growth has been driven by menu innovation, new technology for online ordering, aggressive franchise sales, and nationwide expansion. Tropical Smoothie Cafe plans to open over 100 new franchise units in 2022 as it continues growing in new markets like the Midwest, Northeast, and South.
Competitors and Market Positioning
The smoothie and health-focused fast casual category has become increasingly crowded over the past decade. Tropical Smoothie Cafe competes with national chains like:
- Smoothie King
- Jamba Juice
- Juice It Up!
- Robeks
- Freshii
- Planet Smoothie
- Tropical Smoothie also competes with newer juice bar and smoothie concepts like Pressery, Playa Bowls, and Daily Juice.
However, Tropical Smoothie Cafe is the established market leader in the smoothie cafe segment with over 900 locations. Smoothie King is their closest competitor with around 940 domestic locations.
Tropical Smoothie differentiates itself by offering food menu items beyond smoothies like sandwiches, wraps, and flatbreads. They also utilize real fruit and custom combinations as smoothie ingredients rather than relying heavily on artificial flavors and syrups.
The company’s successful franchise system and continued expansion provides further competitive advantages. By focusing on franchising, Tropical Smoothie Cafe can expand quickly into new markets while leveraging local owner knowledge. This allows the brand to stay ahead of emerging competitors.
Key Investments and Initiatives
Under BIP Capital’s ownership, Tropical Smoothie Cafe has invested significantly in technology, menu innovation, franchising, and more to drive strategic growth. Some key initiatives include:
- Digital and Mobile Ordering – Developed new mobile app and online ordering system to boost digital sales and improve customer experience.
- Restaurant Remodels – Invested $20 million to refresh 130 existing cafes to the “Tropical Hideaway” design with modern decor.
- New Menu Items – Focused on menu innovation with new seasonal options, sandwiches, bowls, and healthier entrees.
- Sustainability Efforts – Launched initiatives to reduce plastic usage and food waste across all franchise locations.
- Targeted Franchise Outreach – Expanded franchise sales team and provided incentives to attract multi-unit operators.
These investments have strengthened Tropical Smoothie’s value proposition, unit economics for franchisees, and long-term positioning in the health-focused fast casual segment.
Conclusion
In summary, Tropical Smoothie Cafe was founded in 1997 and has grown through franchising to over 900 locations nationwide today. The company is currently owned by private equity firm BIP Capital after being acquired in 2016. Under this ownership, Tropical Smoothie Cafe has achieved impressive growth and remains the category leader in smoothie cafes. While they face increasing competition, Tropical Smoothie Cafe continues investing in technology, menu, sustainability, franchising, and other areas to maintain and grow their market position. With further nationwide expansion planned, the Tropical Smoothie Cafe brand has established itself as a leader in the smoothie and juice bar industry.
