Tropical Smoothie Cafe, with more than 1,000 franchise units, is one of the leading smoothie brands in the U.S. Also, they are one of the fastest-growing franchising concepts; they opened more than 450 new locations in the last three years.
This franchisor is seeking new franchisees thru the whole U.S., so we decided to present to interested investors all information about the Tropical Smoothie Cafe franchise cost, fees, and the profit that can make the owner of this brand store.
The smoothies market is one of the fastest-growing industries in the United States, and now is the ideal time to get involved in it.
How Much Does The Tropical Smoothie Cafe Franchise Cost
The total estimated Tropical Smoothie Cafe franchise cost is in the range from $257,500 to a maximum of $560,500; in this financial prediction is included an Initial Franchise Fee of $30,000, cost of the Grand Opening Marketing Program of $10,000, and all other expenses that are necessary to prepare the store for the opening day.
The most significant starting expense will be to prepare the leasehold building according to franchisor requirements. Leasehold improvements cost will go in the range from $143,500 to $260,500; if the owner decides that he want to have a drive-thru, then Tropical smoothie franchise cost will be higher by approximately $40,000
These franchised stores approximately have 1,400 to 1,600 square feet, and the cost for leasing this type of real estate usually goes between $2,000 to $5,000; the exact price will depend on the state where the location is.
Every new investor must know that building preparation will take some time (6 to 12 months). It will be wise to negotiate with the landlord about reducing renting costs until the new Tropical Smoothie Cafe franchise is not ready to start making a profit to its owner.
List of Tropical Smoothie Cafe franchise costs:
- Initial Fee: $30,000 – Veterans have 50% discount
- Grand Opening Marketing Program: $10,000
- Leasehold Improvments: $143,500 – $260,500
- Fixtures, Furniture and Equipment: $76,500 – $134,000
- Profesional fees: $6,500 – $15,500 (this is cost of hiring designer architect, attorney and accountant)
- Initial Inventory: $4,500 – $18,500
- Signage: $4,000 – $13,000
- Initial Training: $500 – $9,000
- Initial Deposits: $1,000 to $17,000 ( cost of paying landlord, Insurance, and gov. agencies)
- Working Capital for 3 – 6 months: $1,000 – $53,000
- Estimated Total Investment: $257,500 – $560,500
Tropical Smoothie Cafe Franchise Fees
The Tropical Smoothie Cafe fees are a one-time Initial Fee that costs $30,000 and ongoing monthly fees that are all combined 11% of the monthly Gross Sales that the franchise unit makes. The Royalty Fee is 6%, National Ad Fee is 3%, and Local Ad Fee is 2%; franchisees have obligations to pay these ongoing fees every week.
This franchisor is a member of the VetFran program, so they offer some benefits to honorably discharged members of the U.S Army Forces. The veterans who want to start the Tropical Smoothie Cafe franchise will have a 50% discount which means that the cost of this fee for this group of investors will be $15,000.
Although this brand has one of the highest ongoing fees, that will not burden franchise unit profitability. Tropical Smoothie Cafe franchise profit margins are high, and there will be plenty of room to fulfill monthly obligations to the franchisor, and still, a nice chunk of Gross Sales will stay in the owner’s pocket.
Tropical Smoothie Cafe franchise list of fees:
- Initial Fee: $30,000 – one time cost
- Royalty Fee: 6% of the monthly Gross Sales – an ongoing cost
- National Ad Fee: 3% of the monthly Gross Sales – an ongoing cost
- Local Ad Fee: 2% of the monthly Gross Sales – an ongoing cost
- Managed Firewall Fee: $103 per month – an ongoing cost
- Mobile Application Fee: $75 per month – an ongoing cost
This company doesn’t offer in-house financing, but they maintain connections with third-party funding sources, which means that they can assist a new franchise owner to more affordable cover Initial Fee and all other starting costs.
Tropical Smoothie Cafe Franchise Profit
Tropical Smoothie Cafe franchise owner can expect that his franchised business will produce an $840,000 of yearly Gross Sales with a Profit Margin of 15%. So, the owner’s annual salary will be $126,000 if the franchise unit makes yearly Gross Sales that are an average for this brand franchises.
According to Tropical Smoothie Cafe Franchise Disclosure Document, their franchises make on average Gross Sales of $840,622 per year. This doesn’t mean that every unit will produce the same amount of income; the exact amount of profit will depend on the area where the franchised store operates and the owner’s managerial skills.
Also, Tropical Smoothie Cafe FDD doesn’t show the everyday operational expenses that their franchise units have. Hence, we calculate how much profit margin is by putting the average for the Smoothie Industry minus ongoing fees (11% from Gross Sales). This franchisor’s monthly ongoing fees are high for this industry, but that doesn’t mean that there will not be plenty of room for owners’ profit.
These brand franchises do not offer only smoothies; tacos, sandwiches, salads, and a wide range of hot and cold beverages are on their menu. These are all food products with good margins, which means that the owner will have profit from many directions, not only from smoothies.
We must conclude that the Tropical Smoothie Cafe owner can expect a good annual profit from this brand franchise. This company doesn’t offer a franchising concept that will produce millions of dollars of profit, but $126,000 per year is a very nice salary.
Tropical Smoothie Cafe Review
This brand’s first cafe was opened in 1993 in Florida, and since 1997 they have offered franchise opportunities for investors who want to start a business under the framework of this company. Today, this company is one of the faster-growing brands in the Smoothie Industry, and they make a lot of effort to attract new franchisees.
Tropical Smoothie Cafe is a medium-cost franchise and can be a good franchising opportunity for rookie entrepreneurs who have the necessary investing funds but don’t dare to start an independent business venture. To become a candidate for the owner of the Tropical Smoothie Cafe applicant must have a Net Worth of $350,000 and own a Liquid Capital in the amount of a minimum of $125,000.
This franchisor’s Initial training is very comprehensive, it lasts approximately 250 hours, and primarily it takes place on the already existing franchise, which means that on an opening day franchisee will have the knowledge to run everyday business operations without any significant problems.
Although this franchisor has slightly higher ongoing advertisement fees than other brands from this industry, we must outline a Local Advertising Fee that is 3% of the Gross Revenue as a good business practice. The local Ad campaigns will attract more new customers, which means that business profit will be higher.
It is anticipated that the Return of Investment for this franchised business will be three years because, on average, the Tropical Smoothie Cafe franchise’s yearly profit is approximately $126,000. Also, the Franchise Agreement has 15 years duration, so the franchisee can plan a long-term future in partnership with this company.
Summary
When we analyze how much is Tropical Smoothie Cafe franchise cost and potential profit that franchisee can expect, we can see that this brand smoothie outlet can deliver a relatively quick Return of Investment. But will be a franchisee capable of fulfilling his franchise unit full business potential that will depend primarily on his managerial skills.
Every day more people are searching for healthier food options, which means that this and similar types of business will become even more popular in the future. The smoothie market is not oversaturated with similar companies, so starting the Tropical Smoothie Cafe franchised store can be, in the long run, a very lucrative business investment.