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NRN’s 2015 Second 100: Why Tropical Smoothie Café is the No. 7 Fastest-Growing Chain

Tropical Smoothie Café saw its domestic systemwide sales grow by 23.2 percent in the most recent year as it opened a net 51 units, giving the chain a total of 411 unites at the end of the year, an increase of 14.2 percent.

The Atlanta-based chain that sells smoothies, sandwiches and salads helps keep its customers interested with limited-time offers every eight weeks. Trend-forward LTOs offered last year included a coconut curry chicken wrap and coconut lime chicken salad, and seasonal holiday items including a pumpkin pie smoothie and a roasted turkey & apple club sandwich. The chain also introduced an avocado smoothie that CEO Mike Rotondo said sold three times better than expected. It also introduced an “Island Green” smoothie, made with spinach, kale, mango, pineapple & banana that is now the chain’s top seller.

In the second half of 2014, Tropical Smoothie Café rolled out an inventory program that helped reduce food costs of participating restaurants by 1.73 percentage points, according to Rotondo.

Its parent company, private equity firm BIP Capital, which acquired the chain in 2012, last year provided capital for an internal Franchisee Finance Program to help single-unit franchisees open more locations. Rotondo said he signed 101 franchise agreements in the last year, of which 60 percent were from existing franchisees.

“I love that metric,” he said. “If 60 percent of your deals were coming from existing franchisees, you’ve got to be doing something right.”

Keys to growth

Financing franchisees: Parent company BIP Capital has set up a program that allows Tropical Smoothie Café to underwrite loans for existing franchisees.

Menu innovation: Limited-time offersare introduced around every eight weeks, helping to drive sales, energize franchisees and keep customers engaged.

Responsiveness to franchisees: Tropical Smoothie Café surveys its franchisees each year to determine what the parent company is doing right and wrong and responds to that feedback. Current initiatives based on that feedback include an online ordering module that’s underway and a series of subcommittees with franchisee members around topics such as distribution, construction and information technology.

Training: Tropical Smoothie Café holds webinars in advance of every LTO to walk franchisees through all components of the new menu items.

 

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Source: Nation’s Restaurant News

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