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Tropical Smoothie Franchise offers customers a variety of premium, handcrafted smoothies made with select fruit and vegetables blended fresh in the café using proprietary recipes, as well as specialty sandwiches, flatbreads, wraps, and bowls. A Tropical Smoothie Café is a better-for-you, fast-casual restaurant business offering freshly prepared food and smoothies served in a fun, friendly environment. There are currently 913 franchised locations and 1 company-owned restaurant.
Tropical Smoothie Café is a Georgia LLC organized on June 25, 2012. Charles Watson has been the CEO since December 2018. Tropical Smoothie Café was recognized as one of the Top 10 Fastest-Growing Chains, as well as Entrepreneur’s Best Franchises for Any Budget. We will examine if the initial Tropical Smoothie Franchise Cost is worth the potential return.
In addition to Tropical Smoothie Café, other notable franchises in the smoothie and healthy lifestyle segment include Pure Green, Red Mango, and Smoothie King.
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How Much is a Tropical Smoothie Franchise?
The Tropical Smoothie franchise fee is $30,000. This is the upfront fee that must be paid when opening a Tropical Smoothie Café franchise. You will also pay a grand opening marketing contribution of $10,000.
If you qualify to develop and operate multiple Tropical Smoothie Café’s, then you will pay $20,000 for each additional unit you decide to open.
Tropical Smoothie Franchise Cost
The estimated total investment necessary to begin operation of a Tropical Smoothie Café Franchise ranges from $277,000- $584,000.
Additional Cost Breakdown
Additional Cost Breakdown
| Type of Expenditure | Amount | To Whom Payment Is To Be Made |
|---|---|---|
| Initial Franchise Fee | $15,000 to $30,000 | Us |
| Professional Fees | $5,000 to $15,500 | Designated Licensed Architect, Attorney/Accountant |
| Restaurant Fixtures, Furniture and Equipment | $95,000 to $142,000 | Designated Equipment Vendor |
| Leasehold Improvements | $140,000 to $259,500 | Designated Licensed Contractor or Designated Source |
| Signage | $3,000 to $25,000 | Suppliers |
| Initial Inventory | $3,500 to $19,500 | Suppliers |
| Initial Training Expenses | $1,000 to $15,000 | Your Employees, Suppliers of Transportation, Food, Lodging |
| Initial Deposits | $1,500 to $25,500 | Landlord, Utility Providers, Insurance Companies, & Government Agencies |
| Grand Opening Contribution | $5,000 to $10,000 | Us |
| Additional Funds (Working Capital 3-6 months) | $8,000 to $42,500 | Third parties |
| Total | $277,000 to $584,000 |
Tropical Smoothie Ongoing Cost and Fees:
Tropical Smoothie Ongoing Cost and Fees:
Royalty Fee: 6% of Gross Sales
Local Advertising Cooperative Contribution: 2% of Gross Sales
How Much Do Tropical Smoothie Franchise Owners Make?
Tropical Smoothie Café Franchise Sales Figures
The table below represents 768 franchise locations that were in traditional units and have been in operation for at least 350 days in 2021.
Average Net Revenues in 2021
| Top 10% | 25% | 50% | 75% | Total | |
|---|---|---|---|---|---|
| No. of Restaurants | 77 | 192 | 384 | 576 | 768 |
| Avg. Net. Revenues | $1,743,007 | $1,491,802 | $1,289,351 | $1,142,572 | $1,009,803 |
| Median Net Revenues | $1,656,224 | $1,392,896 | $1,207,310 | $1,089,440 | $961,969 |
| No. that Attained or Surpassed Stated Result in Category (Cumulative) | 28 | 68 | 151 | 243 | 348 |
| Percent that Attained or Surpassed Stated Result in Category (Cumulative) | 36% | 35% | 39% | 42% | 45% |
| Range (Lowest-Highest) | $1,444,805 – $2,733,965 | $1,207,610 – $2,733,965 | $962,000 – $2,733,965 | $750,973 – $2,733,965 | $351,400 – $2,733,965 |
The highest-earning franchise made over $2.7 million in revenue, while the lowest-earning franchise made $351,000. These figures indicate that there is a wide spread of the potential earnings you can make, and it depends on how well the business is run, the location, and amount of time in operation. It is estimated that based on average net revenue of $1,009,803 and a profit margin of 15%, the average tropical smoothie franchise owner salary/ compensation is $126,000 per year.
From the moment you allocate your capital to invest in a food franchise, it can take up to a year to open the location and pass the breakeven point.
According to the 2020′ FDD, based on a midpoint investment of $409,000 with estimated profits of $126,000, we expect it to take a little over 4 years to recoup the initial investment in a Tropical Smoothie franchise.
Tropical Smoothie Franchisor Income Statement
Consolidated Statements of Operations
| Successor | Predecessor | ||
|---|---|---|---|
| 2021 | 2020 | 2019 | |
| Revenues: | |||
| Royalty revenue and franchise fees | $56,466 | $12,647 | $26,432 |
| Advertising fees | $42,394 | $9,467 | $20,978 |
| Supplier rebates and incentives | $42,394 | $9,467 | $20,978 |
| Company-operated restaurant sales, net | $841 | $220 | $529 |
| Other revenues | $2,014 | $390 | $528 |
| Total revenues | $119,603 | $26,622 | $58,435 |
| Cost of revenues and operating expenses: | |||
| Cost of Sales | $815 | $221 | $603 |
| Area developer fees | $454 | $186 | $987 |
| Advertising expenses | $35,190 | $7,290 | $16,611 |
| Selling general administrative expenses | $33,063 | $8,993 | $18,624 |
| Depreciation and amortization | $10,737 | $3,309 | $5,214 |
| Other operating expenses, net | $6,018 | $1,210 | $19,675 |
| Total cost of revenues and operating expenses | $86,277 | $21,209 | $61,714 |
| Operating income (loss) | $33,326 | $5,413 | ($3,279) |
| Income (loss) before taxes | $10,150 | ($1,082) | ($10,391) |
| Income tax expense (benefit) | $2,858 | ($366) | – |
| Net income (loss) and total comprehensive income (loss) | $7,292 | ($716) | ($10,391) |
| Net income (loss) per common share/membership unit: | |||
| Basic | $7,292.00 | ($716.00) | ($1.00) |
| Diluted | $7,292.00 | ($716.00) | ($1.00) |
| Weighted average shares/membership units outstanding: | |||
| Basic | $1,000 | $1,000 | $10,376,734 |
| Diluted | $1,000 | $1,000 | $10,376,734 |
Tropical Smoothie Café Income Statement Key Insights
-Analysis based off Predecessor 2020-
Overall, Tropical Smoothie Café is a profitable business, with a net income of $7.6 million in 2020. Total revenues were $58 million while expenses were only $41 million, indicating a healthy profit margin of around 30%. One of the biggest expenses seen in the income statement is $12 million spent in national advertising, indicating the franchisor’s commitment to expanding and growing their brand which in turn will help franchisees see success.
Tropical Smoothie Franchisor Cash Flow Statement
Consolidated Statements of Cash Flows
| Successor | Predecessor | ||
|---|---|---|---|
| 2021 | 2020 | 2019 | |
| Cash flows from operating activities: | |||
| Net (loss) income | $7,292 | ($716) | ($10,391) |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
| Depreciation and amortization | $10,737 | $3,309 | $5,214 |
| Deferred income taxes | $2,858 | ($366) | – |
| Non-cash interest income | $1,279 | $169 | $1,955 |
| Equity-based compensation expense | $4,560 | $924 | $13,930 |
| Impairment of related party receivables | — | — | $1,845 |
| Impairment of equity method investment | — | — | $506 |
| Change in operating assets and liabilities: | |||
| Accounts receivable | ($1,692) | $107 | $109 |
| Prepaid expenses and other assets | ($1,211) | $1,215 | $1,536 |
| Accounts payable and accrued expenses | $1,847 | ($1,168) | $3,050 |
| Advertising fund liabilities | $4,884 | $674 | $952 |
| Deferred franchise fees | $6,074 | $1,847 | $118 |
| Other assets and liabilities, net | $380 | $76 | ($15) |
| Cash provided by operating activities | $37,088 | $6,071 | $18,809 |
| Cash flows from investing activities: | |||
| Capital expenditures | ($577) | ($127) | ($616) |
| Principal payments on notes receivable | $90 | $25 | $18 |
| Purchase of acquired company, net of acquired cash | – | ($615,415) | – |
| Re-acquired area development rights | – | ($2,900) | ($65,692) |
| Issuance of notes receivable | – | – | ($211) |
| Cash used in investing activities | ($487) | ($618,417) | ($66,501) |
| Cash flows from financing activities: | |||
| Deferred loan costs | ($1,015) | ($3,848) | ($240) |
| Proceeds from senior credit facility | $59,500 | $150,000 | $65,692 |
| Proceeds from revolving line of credit | — | $1,500 | $2,500 |
| Proceeds from subordinated related party debt | — | $64,000 | – |
| Proceeds from notes payable | — | — | $2,029 |
| Principal payments on senior credit facility | ($23,300) | ($4,400) | ($500) |
| Principal payments on revolving line of credit | ($1,500) | — | ($3,500) |
| Principal payments on notes payable | — | — | ($542) |
| Equity contribution from parent company | — | $416,313 | — |
| Dividends | ($64,345) | — | — |
| Distributions | ($96) | — | ($1,892) |
| Cash provided by (used in) financing activities | ($30,756) | $623,565 | $63,547 |
| Net increase in cash and restricted cash | $5,765 | $11,219 | $15,855 |
| Cash and restricted cash, at beginning of year/period | $11,219 | — | $15,458 |
| Cash and restricted cash, at end of year/period | $16,984 | $11,219 | $31,313 |
| Supplemental disclosure of cash flow information: | |||
| Cash paid during the period for interest | $21,385 | $4,655 | $4,883 |
Tropical Smoothie Café Cash Flow Statement Key Insights
In 2020, Tropical Café Smoothie had a net income of $7.6 million, and their cash, cash equivalents, and restricted cash was $31.3 million at the end of 2020 an almost 100% increase from the cash they started with at the beginning of the year. This extra cash flow is mainly from proceeds from the revolving line of credit, which accounted for $65 million.
How many Tropical Smoothie Cafe units have opened and closed?
System-wide Outlet Summary
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 718 | 833 | +115 |
| 2020 | 833 | 913 | +80 | |
| 2021 | 913 | 1038 | +125 | |
| Company-Owned | 2019 | 1 | 1 | 0 |
| 2020 | 1 | 1 | 0 | |
| 2021 | 1 | 1 | 0 | |
| Total Outlets | 2019 | 719 | 834 | +115 |
| 2020 | 834 | 914 | +80 | |
| 2021 | 914 | 1039 | +125 |
On average, there has been more than 300 openings per year for the last three years. The strong, consistent growth indicates the success that Tropical Smoothie Cafés have been experiencing. It would be important to find out how many franchisees have multiple cafe locations.
Should you invest in Tropical Smoothie Café?
Tropical Smoothie Cafe has been seeing rapid franchise location growth with almost 100 new restaurants a year opened in the last three years.
Tropical Smoothie Café is in a new emerging market of healthy food options. However, this market is starting to grow in popularity with other companies such as Juice it Up, Jamba Juice, and Smoothie King capitalizing on the new wave of healthy eating and living.
We strongly recommend you speak to at least 5 Tropical Smoothie franchisees to better understand the financials (see questions to ask).
Think Tropical Smoothie is the right franchise for you, or are you interested in other franchise opportunities in the food and beverage industry? Check out our listings page on the Vetted Biz website for thousands of franchises available for your investment.
