Published on 12 Oct 2021 Time 7 min read Last update by 29 May 2024

Tropical Smoothie Franchise Cost & Profit for 2024 Explained

Play Video

This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.

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.

Contents

Listen to this article

Apple Podcast    Spotify    Google Podcast

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.

1 tropical

Additional Cost Breakdown

The following costs are part of the upfront costs included in the initial investment. Many of these are one-time fees that are needed to launch the franchise.

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:

Royalty Fee: 6% of Gross Sales

Local Advertising Cooperative Contribution: 2% of Gross Sales

tropical-smoothie-franchise

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. 

2 tropical

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.


CTA a

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.

4 tropical

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.

Speak to a franchise specialist today.

Discover which franchise is best for you.

Speak to a franchise specialist today

Visit Franchise Profiles mentioned

See more profiles

Access to unbiased franchise data.

Easy to access franchise data for everyone from first time franchise buyers to institutional investors buying whole franchise systems to everyone in between.

Submit
Feedback