Dive Brief:
- Tropical Smoothie Cafe is considering going public and may target a $1 billion valuation, Bloomberg reported Thursday. Sources close to the deal told Bloomberg that private equity firm Levine Leichtman Capital Partners, which bought Tropical Smoothie Cafe in 2020, was working on an IPO with Morgan Stanley and Jefferies Financial Group.
- None of the companies responded to Restaurant Dive's requests for comment before press time.
- Restaurant IPOs performed well in 2021, and with Cooper's Hawk also considering a public debut, the restaurant IPO rush may continue this year.
Dive Insight:
The IPO rumors surrounding Tropical Smoothie and Cooper's Hawks may indicate restaurants are still eager to enter the market, though it is unclear what investor appetite for fresh foodservice IPOs will look like this year.
Tropical Smoothie's high target valuation would, in part, be driven by the company's strong same-store sales, which are up 29% compared to 2019, according to a press release shared earlier this month. The chain also opened 133 new stores in 2021, its largest single-year expansion, and signed the most franchise agreements in its history. Of the 332 new agreements, more than 70% were signed with existing franchisees, signaling operator confidence in the brand's potential.
"We are committed to carrying our phenomenal momentum into 2022. We're not planning on slowing down," CEO Charles Watson said in a statement.
Even if the chain does go public, however, its valuation dreams may not hold water. Of all of the major restaurant chains that went public last year — including Sweetgreen, Portillo's, Dutch Bros, First Watch and Krispy Kreme — only Dutch Bros remains above its IPO price as of Jan. 20. Most of the chains performed well initially, but a general market correction, driven in part by the Federal Reserve's announced interest rate increases, has pushed stock values down overall in recent weeks, according to the Wall Street Journal.
