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FDD Talk 2017: What You Need to Know About the Tropical Smoothie Cafe Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on June 12, 2017

in FDD Talk 2017: Food Franchises, Franchise Earnings, Smoothie Franchise

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Tropical Smoothie Cafe Photo by RetailByRyan95

In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Tropical Smoothie Cafe franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Tropical Smoothie Cafe franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Tropical Smoothie Cafe franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Tropical Smoothie Cafe’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016, 2015, and 2014 average and median net revenues, number of stores, and number and percentage of stores that surpassed the average net revenues in the category for the top 10%, top 25%, top 50%, top 75%, and all franchised traditional Tropical Smoothie Cafe stores that had been open for at least one full year as of the end of the company’s fiscal year

Section I – Background Information

14 Things You Need to Know About the Tropical Smoothie Cafe Franchise

Strong First Quarter for 2017

1.  In early April, Tropical Smoothie Cafe announced that during the first quarter of 2017, the company signed franchise agreements to open 30 restaurants, which will expand the brand’s presence in new and existing markets nationwide, including Idaho, South Carolina, Maryland, California, and Arkansas.

2.  Also during the first quarter, Tropical Smoothie Cafe opened 30 new locations, resulting in a total of 570 open restaurants at the end of the first quarter.

3.  Tropical Smoothie Cafe CEO Mike Rotondo says that the accomplishments in Q1 have motivated the company “in all aspects of the business from franchise expansion, positive sales growth, and ongoing menu innovation.”

4.  Tropical Smoothie Cafe also reports comp sales exceeding 26 percent over the last three years at the end of 2016 and that it closed out the first quarter with positive comp sales of 4 percent.

5.  Riding the momentum of Q1, the company announced that it plans to open over 100 restaurants nationwide throughout 2017. Tropical Smoothie Cafe’s long-term goal is to have over 1,000 stores open across the U.S. by the end of 2020.

Growth Positively Impacts Job Market

6.  In early May, Rotondo was featured on a Fox & Friends segment to talk about the anticipated impact the restaurant industry will have on jobs in 2017. According to the news segment, 1 in 10 Americans are expected to be employed by the restaurant industry.

7.  With nearly 600 locations and 100 more planned to open this year, Tropical Smoothie Cafe says that it is responsible for over 2,000 jobs nationwide and that the smoothie chain’s growth proves that customers are looking for healthier food options.

Using Technology to Build Brand Loyalty

8.  Tropical Smoothie Cafe has helped itself stand out in the smoothie shop segment by using technology to engage with customers, particularly millennials. The company assembled a Digital Experience Team to tap into digital tools such as social media platforms, brand websites, paid media, eClub, and the Tropical Rewards App to help Tropical Smoothie Cafe build brand loyalty.

9.  According to the smoothie franchise, the app has already proven successful with over 1.5 million downloads since its launch during summer 2016. Paula Rotondo, a member of the Digital Experience Team, says that the app helps Tropical Smoothie Cafe see purchase behavior, frequency, and demographic information for its guests, which helps the team better understand its customers.

10.  In addition to marketing campaign development, the Digital Experience Team interacts daily with guests and franchise owners – handling community management, content creation, and feedback on the customer side, and training franchise owners to become digital ambassadors.

Company History

11.  Tropical Smoothie Cafe began as a single smoothie shop founded in 1993 by Eric and Delora Jenrich and David Walker in Destin, Florida. Tropical Smoothie Franchise Development Corporation was organized in 1997 and the first franchised location was opened in Tallahassee, Florida.

12.  In 1999, the company created a niche in the smoothie category by adding healthy food items such as sandwiches and wraps to its menu. As more Tropical Smoothie Cafes began to open, individual locations went through design changes and the stores’ décor evolved to a more tropical theme with bamboo walls, palm trees, bright colors, and original Bob Stedman artwork.

13.  By 2007, the franchise had over 200 locations and celebrated its 10th anniversary. Today, there are over 550 Tropical Smoothie Cafes in the U.S.

Entrepreneur’s Franchise 500

14.  Tropical Smoothie Cafe has ranked on Entrepreneur’s annual Franchise 500 list every year in the last decade except in 2013, 2012, and 2011. The company’s highest rank was No. 127 in 2007, while its lowest rank was No. 408 in 2015. Tropical Smoothie Cafe also ranked on Entrepreneur’s Top Global Franchises list in 2008 at No. 124.

Section II – Estimated Costs

  • Please click here for detailed estimates of Tropical Smoothie Cafe franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Tropical Smoothie Cafe’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

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