Tasti D-Lite acquires Planet Smoothie

I didn’t see this one coming. Planet Smoothie is solid brand with a loyal customer base. I hope Planet Smoothie received a significant premium in this acquisition by Tasti D-Lite, and the existing franchisees have some protections. Tasti D-Lite was acquired by a private equity firm in 2007 majority owned by Jim Amos, who promptly appointed himself CEO after the acquisition. Amos was formerly CEO of Mail Boxes Etc before selling to UPS, former CEO of Sona MedSpa and I Can’t Believe It’s Yogurt. I don’t know Amos personally, but from what I have heard he is a classic promoter. He’s likable and has the right persona for a CEO. But, from what I hear he runs his mouth too much and gets into trouble confidently over-promising results and being extremely difficult with existing franchisees. He’s good as selling franchises and controlling the franchisor’s cash flow. He’s had to settle out of court in a dishonesty-related law suits in his previous CEO roles. The hybride ice cream/yogurt pumped by Tasti D-Lite is smooth and creamy thanks to multiple gums and thickeners, but most people only care about the relatively low calories versus full fat ice cream.

I understand the strategic benefit for Tasti D-Lite: they can distribute their frozen yogurt through the 100+ existing Planet Smoothie locations, the customer base has a lot of crossover, smoothie recipes can incorporate frozen yogurt, and hopefully per-unit increase sales will increase more than 25%.

It looks like the preferred transition option for franchisees is to allow units to co-brand the concept. I’m sure the Planet Smoothie franchise agreement was favorable for Amos. My guess is there is a clause whereby existing franchisees have to at least transition to selling the yogurt menu quite soon, but conversions to dual-branded units probably can’t be forced until the franchise agreement is up for renewal.

I hate to say this but I think the acquisition, all things considered, is probably good for Tasti D-Lite. I haven’t seen a concept work where frozen yogurt was a secondary offering, so Planet Smoothie franchisees may be the ones losing some return on their investment following the conversion.

I’m very interested to see how this situation progresses over the next year.

From press releases:

Earlier this year, the first drive-thru Tasti D-Lite location opened in Columbia, Mo., and the first on-campus store was opened at Duke University. In addition, Tasti D-Lite introduced its first self-serve model to the brand’s long-time full-serve model, and also introduced its first “store-within-a-store” location on Las Vegas Boulevard.

“This acquisition presents an opportunity to combine two iconic brands to create a winning combination for both the customer and the franchisee,” Amos said. “The consumer profiles of Tasti D-Lite and Planet Smoothie are very similar, so combining the two complementary brands will provide both brands an opportunity to increase the scale of the combined store network as well as sales at the store level.”

Following this transaction, Tasti D-Lite plans to offer new franchisees the option to own and operate in a co-branded store concept, which fully integrates both brands into a unique customer experience.

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.

One comment

  1. Ryan,
    Speaking on behalf of myself and possibly many other franchisees, the acquisition by Tasti was welcomed. While you called the brand solid (which I agree) the former CEO Chris Morocco was running the company into the ground. Many Franchisees were becoming, well shall we say, disenfranchised with the concept. The corporate office was a revolving door, the CEO was being accused of being (how do I say it nicely) self serving. Unlike you, I hope he did not get a premium but rightfully suffered a big loss on the sale. I will stop there as my goal is not to just lambaste the former CEO/owner.

    While I agree with your position that Jim Amos is a consummate promoter and yes a good role for the CEO. The new company has demonstrated that they have the infrastructer (sp) to lead both brands to possibly joint success. Planet Smoothie is already a great brand with great product and great customers, if Tasti does add 25% to the top line, then whoop whoop for us.

    My prediction is that Planet has the power to over take Tasti (already Planet Has 100+ stores vs Tasti’s 60 +/-. I think in the future you will see a Planet Tasti or Tasti Planet and Planet Smoothie will be the dominate product.

    As you mentioned the key attribute to the Tasti product is the lower calorie content. This makes the combination more of a synergistic fit that I think you realize. Planet Smoothie has always prided itself on offering a healthier product that many other fast food or snack outlets. While most froyo shops, which have become quite the rage in the last few years, offer a high calorie, sugar laden product that does nothing but contribute to the obesity/diabetes epidemic plaguing the country. Tasti offers additional line up to the Smoothie brand for customers that may not want a fruit smoothie but rather a Chocolate Caramel Meringue which does not deviate from from what it has always done, offer a healthier alternative than other fast food or snack outlets.

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