The report about Tropical Smoothie Cafe’s sale exploration comes the same week as a similar report about Chuck E. Cheese, signaling that restaurant M&A activity may be picking up.
Seems the M&A market is picking up steam at the end of the year. Reuters reported Thursday that Tropical Smoothie Cafe might be exploring a sale targeting a price tag as high as $2 billion.
The smoothie chain, which was acquired by private equity firm Levine Leichtman Capital Partners in 2020, finished 2022 with just under 2,000 U.S. units, according to Datassential. This marked a 160% year-over-year increase versus 2021, making it one of the fastest growing chains in the industry. Tropical Smoothie finished 2022 with $1.1 billion in sales, a 15.6% increase over 2021.
The report comes the same week Reuters also reported that Chuck E. Cheese is also exploring a potential sale and FSC Franchising announced its acquisition of Newk’s Eatery. Otherwise, aside from Subway’s deal to Roark Capital and Darden’s acquisition of Ruth’s Chris, the M&A market has been relatively slow this year.
During a recent interview, Mike Esposito, Franchise Equity Partners’ co-founder and managing partner, predicted mergers and acquisitions activity would start to pick up after a slow 2023 that was driven by sellers who were reluctant to go to market because of weakening earnings and traffic patterns.
“There will be more (M&A) activity in 2024 than 2023, but sellers will settle for less. So, there will be more activity and deals getting done, but at lower multiples,” he said.
Contact Alicia Kelso at [email protected]
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