Tropical Smoothie Café in Rockwall, TX with Melissa Tinsley
Guest: Melissa Tinsley
Topics: Tropical Smoothie Cafe, real estate management
Chris Ressa 0:02
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Welcome to retail retold everyone. Today we have Melissa Tinsley. Melissa is a real estate manager for Tropical Smoothie Cafe, covering the south and southwest regions. Welcome to the show, Melissa.
Melissa Tinsley 1:13
Thank you. I’m glad to be here.
Well, Melissa, why don’t you tell us a little bit about you and who you are and how you ended up where you ended up?
Absolutely. So I
started my career. In 2007. Just a couple of years after I graduated from college, I accepted a position as the administrative assistant in the real estate department Tuesday morning. I spent about six years there learning about the business learning from from real estate managers and the director of real estate there. And after that six years I took what I have learned and went off on my own to Modesto America, which is the parent company for Allah Madeline. Burgers, bagels. Mimi’s cafe. I spent most of my time there about four years focused on Well, Madeline. And I spent a little bit of time there as well with the franchising side as well. Madeline was new to franchising. Learned about that side of the business, and then West medallist in 2017, to come over to Tropical Smoothie Cafe to work solely with franchisees. And that’s where I am today. I’ve been at Tropical Smoothie now three years.
And so tell us what’s going on at Tropical Smoothie today. What are you guys up to what are you guys doing?
So we are continuing to grow our plans this year in January, we’re to open about 130 cafes, which is very aggressive. Our franchisees move quickly. And we have a very aggressive development approach. Obviously Coronavirus, a little bit in that plan. But we’re we’re picking that back. And we’re going to push forward as quickly as you can.
You know, we own shopping centers in my experience in working with franchise groups on the deal side, we end up dealing with, you know, our interactions with the franchisee
at Tropical Smoothie.
Are you doing the individual deals? Or are you managing the process? Are you out touring sites? What is the role when you’re a real estate manager for a franchise organization, you know, which is different than some corporate organizations like when you were at Tuesday morning.
And comparing kind of what I’ve done with the corporate side versus the franchising side. So at Tropical Smoothie, we were responsible for managing the development that happens within our territory. Some franchisees need very little support, and some franchisees need a lot of support. So we sort of gauge that and what’s needed. We have a broker network that we provide when a new franchisee comes on. And we highly recommend that you use one of our brokers that’s already been vetted out, already knows our system and what we need and has likely already been surging in the market. We have loi template tools, as well as various other tools for them to use throughout the process. And so my role goes from site search until the lease is executed. And then we hand them off to one of our construction managers to help them through that phase of the process.
And how many locations is Tropical Smoothie Cafe
up to today?
So we’re up to about 842 cafes.
Wow, with that Are you guys we’re going to open or plan on developing another 100 130 this year? Yes.
Yeah, very, very
exciting stuff. And you mentioned the, you know, with the pandemic that slowed you down,
that slowed you down from what? What prospective? Was
it? Was it the construction was shut down? Was it that your franchisees were focused on their existing network of stores? Was it that, you know, there was liquidity challenges? What was the challenge?
So a couple of different challenges. So, for franchisees who had existing locations, they sort of had to pivot their focus back to those existing locations and sort of put a pause on new projects just for a short term. We also had a couple of franchisees who maybe weren’t close to closing on their loan, that then ran into challenges on lending. So they were unable to start construction. And then we had some who just did not want to go under construction. With the uncertainty of the pandemic.
That makes sense.
I like the three categories, you put that in, and your your franchisees, the majority on the you mentioned construction, or, you know, most of these freestanding buildings or most of these end caps. What are they all
across the board? They’re certainly all across the board, I would say we have made a significant push on more drive thru locations over the past couple of years. But we still do quite a few in line and cap locations where a drive thru was not available or was not an option.
And in most of the franchisees in the system, are they multiple unit operators.
At this point, most are single unit or may have two locations. But what we we are starting to sort of transition from just the single unit operators to multi unit operators. One thing that’s exciting is a lot of our single unit operators come back to buy another franchise agreement, or a third franchise agreement. So they they’ve seen success with the brand, they love the brand and they want to continue to grow.
That’s fantastic. And where are they coming from these new franchisees? Are they coming from other systems like a Wendy’s and trying Tropical Smoothie? Are they just entrepreneurs that are looking for the right concept?
So we see a little bit of both. One One great thing about Tropical Smoothie among you know, a lot of great things about the brand is that we do give you know those entrepreneurs or you know that that young, excited person that’s never been in the restaurant business, we gave them that opportunity with a lot of support to get them from no experience to owning their own restaurant.
that brings me to the next thing you said interesting work. You all consider yourselves in the restaurant business.
Yes. And so
when I when I think of smoothie, I put you in the personally just and how I know the brand. I’m I’m comparing you to like Smoothie King and places like that. Is that how you guys view competition?
So we’re looking
at direct competitors. We do consider Smoothie King, Planet smoothie, all of those concepts that are more smoothie and juice driven as direct competitors are smoothie sales are still at about 60%. But what surprises a lot of people is that our food sales are 40%. Wow, somewhere in that 35 to 40% range. So and that’s you know, that’s how we are going to continue to push forward with strengthening our a uv is growing our food component.
What is the average day up over Tropical Smoothie?
So the last number that I have from 2018 is 730,000. Wow, we’re continuing to see that number grow.
That’s pretty vary. And on the competitors
helped me understand what’s going on. It seems like over the past few years, there’s been this really big growth in the smoothie category. Now you said the restaurant category which we all know there’s a ton of restaurants. But why is there been this growth in the in smoothie
You know, that’s a great question. And I think overall just the general population out there is trying to Eat healthier and trying to make better choices. We’re not perfect. But what we see as our kind of our consumer is, is that person that’s doing their best that tries to go to the gym every day that’s trying to make better choices. And we see that as you know, that’s that’s kind of what we have to offer. And I think a lot of concepts are sort of starting to catch on to that, that, you know, customers want a healthier option. Yeah,
I saw something recently in some research. Well, there was, you know, in the restaurant world, there was
a ton of restaurant concepts that grew that were pre COVID, that were plant based restaurants. And there were, you know, that plant based seems to be a hot category going forward and not suggesting tropical smoothies. Only plant based just saying that, you know, speaks to the health conscious consumer nowadays. So, yeah. Interesting stuff.
Anything else about what you’re up to these days and Tropical Smoothie that we should know what’s moelis up to these days?
you know, just continuing to help grow this brand, and especially here in Texas, where I’m from basically based out of Dallas, you know, came in to Tropical Smoothie with one of our main goals and biggest growth areas is the whole state of Texas. And so we have been pushing Dallas, Houston, San Antonio, Austin, the valley, El Paso, West, Texas, all of those areas very hard over the last few years. And so, you know, as a native Texan, it’s been really exciting to see.
Yeah, what’s happening in Texas, as we spoke before, we own today, two assets in Texas, and the growth that’s going on in Texas has been pretty incredible. So I’m sure you guys will be successful. Given that that’s a place you guys are trying to grow. So
yeah. I want to pivot
to a story that you might have about any deal that you’ve worked on. So I’m hoping you can take us there take us to to a location Melissa. So
one that comes to mind is the cafe that we opened in Rockwall, Texas, which is about 30 miles east of Dallas. And that’s also currently where I live.
Awesome. That’s the you said rock wall.
Rockwall, Texas. Yeah. Okay. And so
we opened this cafe in March and then two weeks later Coronavirus hit so you know, it was a it’s definitely it was a tough road for the franchisee right when all of this happened, but he stayed positive and just a really cool journey that he was on to find his location that you know, I think overall, he’ll be just fine just like our other franchise owners, but getting them through that difficult time was certainly a challenge.
this is an interesting one to me, because this location is actually where you live. And so was this a first time franchisee like a lot of your franchisees?
So he signed a multi unit agreement he committed to three cafes in August of 2018. It took us about a year, we initially started the search in just east of Dallas, there’s a casa Linda area, East Richardson and some areas over there. After about nine months, we did not have success in in landing a site. So we shifted our focus a little further east. And right at about a year mark is when we executed an LOI in Rockwall and then we signed a lease the following month.
So you decide on rock wall and you live there. So you not only know this from a real estate perspective, you know this market from a consumer perspective. I imagine you were very picky
and very picky as you were looking and you know and I think sometimes when we have that local perspective without being biased, we can kind of guide the franchisee even even better than just you know, looking at a map. We actually have a little more boots on the ground insider knowledge of how that market works.
what give me a little bit of color about Rockwell I don’t know the market well give the audience what type of market is
Rockwall is is basically built up around Lake Ray Hubbard. You’ve got most of your retailers and restaurants are either along i 34 along Ridge Road or 205. So you’ve got your highway and then you’ve got two main thoroughfares. Most of your retailers, restaurants, your Chick fil A your Starbucks are on Ridge Road.
And the what’s the demographic there?
So the demographic is strong. Rockwall has continued year over year to grow in population. And then there’s areas out just outside of Rockwall that are also continuing to grow. And so it’s one of those communities that not only has a strong population, daytime, businesses, retailers restaurants, but it’s also growing out past rock wall and pulling people in from further out.
Got it. And so when
when you landed in Rockwall, and living there were you like, we have to be on Ridge Road, that’s where we’re going was that.
So I try not to be too specific when when going into a market because what we want to do is just look at the market as a whole and say, Where’s the most convenient place to be Tropical Smoothie as a convenience brand. We want people to see us when they’re driving by we want people to see us when they’re already out and about maybe going to the grocery store or going to the doctor’s office, things like that. We want to be top of mind convenient, all those things. And that’s, that’s really what brings me to Ridge Road is that’s what that area has to offer. I 30 is is a great positioning as well, but it’s not as convenient. So we might not have been as convenient as we are on Route. So
you land on Ridge Road, the owner of the shopping center is not your neighbor is he know is it a freestanding building? Is it a shopping center.
So it’s an existing strip center. There was a retailer in place there that was like a pharmacy and they had decided just to focus on their one location that they have in downtown Rockwall and close this other one. And so it actually ended up being great timing. It wasn’t another restaurant that had gone out, which you know, sometimes you ask why it was a retailer and they just decided it was a family business to just focus on their one location and so they closed
and do you prefer existing restaurants?
Because of the infrastructure Yeah, in some ways it can make things easier now. We typically don’t keep anything except maybe the freezer cooler. So it’s it’s typically going to be a you know, it’s going to be gutted anyway outside of that. But usually the layout of the space works well and then the drive thru window if there is one is probably decently position. So there’s there’s likely some cost savings there. And the utilities and all that stuff realities and all that stuff was pulled in. It depends you know what their requirements were for czars HVAC things like that could be too old, but in most cases there’s there’s significant savings.
So you the pharmacy
thing, did you know about this because you were living there did you not know until you called the landlord
so our brokers actually presented this site to us they were still operating in the space. Wow. So the brokers knew that this pharmacy group was wanting to leave and showed us the site and I told the franchisee Yes, you need to jump on this quickly. Got it
and and rock wall is space going fast or was it pre COVID
So in rock wall, there’s just very limited new development that’s well positioned. And especially right in the mix near Kroger you know, we’re near a Dunkin and some other restaurants and retailers and so in that particular area, there’s very little new development. Got it?
And so you jump on this you execute an
you know, out of the ordinary crazy about the lease anything like that.
There really weren’t any significant issues. That’s good. The change of use from retail to restaurant was probably our biggest hurdle with parking and making sure that the city approved it. And then the drive thru was on the right side of the building. So we had to kind of work through the drive thru stack, and where to put the menu board and things like that.
This this, so this local pharmacy had a drive thru. Yes. Wow. Good for him. You don’t see that too often? No. And so a couple things. So talk us through that a minute. So do you often have to get change of use in in markets? Or are retail and restaurant classified the same in most markets? What do you find? Um,
yeah, it depends on the market, I think because the pharmacy wasn’t selling any food products. So they were classified as a retailer. And so that’s how the parking was laid out in this in the center. So when we change to a restaurant use, and they required us to go back through and make sure that there was enough parking. And the landlord took care of that with the city. Yep.
So you do that
you sign the lease, how long from you sign the lease
to the store, construction being done in opening.
So lease was signed in August of 19. And then plans were started immediately. Construction started in December, and then we opened in March.
And you opened in March, and then you get shut down. He wasn’t able to be open for Drive Thru only or essential.
He was still open drive thru only. You know, unfortunately, because his hours were reduced. And he just wasn’t doing the sales volume that he did originally, you had to layoff some of his employees and he had just tired. So you know, challenging time for everyone. But thankfully, he stayed positive. And now he’s starting to reopen, and his hours are back to, to what they were and, and and things are looking much better.
Is the cafe inside open now.
So it’s open to come in for to go orders. But it’s still not open for seating.
And we have
tough, challenging times. So when when was he able to like quote unquote, I’m using air quotes everyone reopen at minimum to go peace.
So thankful. You mean just so people could walk in and do that I think the state of Texas was or like the early May, I think the first week of May. And I don’t think he did it right away. I think he waited until maybe the second week of May.
And so that you’re you’re the
first guest to come on to talk about obviously, given the timing of a store that opened and closed like in the midst of opened and closed during the pandemic. Really interesting story here. And I assume there’s got to be some new marketing that goes right because he had just opened and everyone’s flooded know about him. And then he was people were stuck inside and they How could they know? Was there? Was there anything done while they were shut down from a marketing or did you guys do anything new now? Is he doing anything? I was how are they?
How’s he looking at that?
Well the good thing was his drive thru was never shut down. So you know customers that heard about him that saw it on Facebook. You know, all the marketing that went out customers were still still able to come and go through the drive thru. They weren’t obviously weren’t able to come inside for for a few weeks. And so I know that they did some some media pushes on Facebook and things like that. I know he delivered coupons around the community. And so you know, definitely things like that, that he was able to do while social distancing.
Got it. Well, that’s
really interesting. I hope that sales continue to grow there and your family gets to have a Tropical Smoothie, really close to home. That would be cool since you since you since you work for them. That’s
really cool stuff. Anything else about that story
that we should hit on that we haven’t discussed yet?
No, I think we I think we hit on everything.
the last part of the show is called retail wisdom.
So I have three questions for you tell me when you’re ready. I’m ready. All right. Question one
best piece of commercial real estate advice for the listeners out there.
one thing that I feel like I wish I would have known earlier in my career is a quote that I’ve heard lately is dress for the job that you want, not the one that you have. And that has always stuck with me just, you know, when when I am in the office, obviously, I work remote. Just looking the part dressing professionally. Even if you don’t think anyone’s looking, people are always watching especially early in your career. Awesome. And then
I’m gonna I’m gonna I’m gonna, I’m gonna ask a follow up there. And I normally don’t ask follow
ups, okay. In with this whole
work from home crazy, and you normally work from home?
How do you see the whole entire world going from here?
Yeah, I do, I do certainly think that things will evolve because people are going to be at home more. For me, even working from home, I find that I’m more productive when I get up and get dressed. Rather than if I stay in, you know, loungewear all day. Not to say that I won’t do that. But it is important for me, especially as a face of the brand when I go out to meet with franchisees that there’s a level of respect. And that they know and feel confident that I know what I’m doing. And I think that how you dress and how you portray yourself as a as a lot to do with that.
Awesome, cool advice.
You’re the first one that said that and I love
and then I guess my other little piece of advice is just communication. Something I’ve learned throughout my career is if somebody takes the time to reach out to me with a site, even if we’re not developing in that area, or I’ve already seen that site, I will always do my best to respond even if it’s past.
So you know,
you never know when you might get that one site that comes to you that you end up signing the lease
on totally second question. Extinct retailer, you wish would come back from the dead
you’ll probably laugh at me but I would say blockbuster.
No not laughing laughing I’m a movie lover.
So you know, Blockbuster was always a big part of my childhood. There’s just something about going to the movie store picking out a movie for the family and taking it home and watching it you know physically walking up and down the aisles to search for a movie rather than sitting on the couch and browsing with the remote. And then you know the beloved blockbuster card that was like the only thing I had in my wallet but it was mine. So things like that you just don’t have that anymore and I always felt like that was special.
I’ll never forget the phrase be kind please rewind.
We don’t have to do that anymore. But
last question. We’re going to I am on and you have young children I am on the Pottery Barn Kids website. They have the Charlie low footboard bed
and I was perusing because my daughter’s getting up the age where she might be
moving from the the crib the crib.
Thank you. And now we are you know and we could be in the market for bed soon. So I was just perusing what is the Charlie low footboard bed on Pottery Barn Kids retail for
is it just the bed frame? Was the bed frame and the mattress
is just the bed frame? I think 450 So I guess there is some
add ons and differences. But it is 639 Right now limited time offer. It is normally 799 So you were almost there. Not quite but thank you for playing.
I will probably won’t be getting that bed. I’m sure it’s beautiful. Oh,
no worries. But listen, this has been fantastic. I really appreciate it. I’m looking forward to connecting in person when the world starts to, you know, really open up.
Absolutely. I certainly appreciate you including me in this is a great experience.
Thank you for listening to retail tolls. If you want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail retold at DLC mgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you’re a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode