Dutch Bros is taking on the coffee incumbents one cup at a time

TODAY’S STORY

Dutch Bros, the drive-through coffee chain founded in 1992 in Grants Pass, Oregon, is quickly approaching 1,000 stores and $1Bn in annual sales. 

Dutch Bros stock is up 74% year-to-date (YTD), significantly higher than its peer set; Starbucks and Luckin Coffee are down 6% and 12% YTD, respectively. While Starbucks and Luckin Coffee are considerably larger in scale and are at a different phase of their growth lifecycle, and Dutch Bros likely being a bit overvalued based on a quick P/E check, investors have been attracted to Dutch Bros’ impressive unit economics and growth trajectory:

• Average Unit Volume (AUV)

  • Dutch Bros - $1.97MM

  • Starbucks - $1.82MM

  • Dunkin’ - $1.30MM

  • Tim Hortons - $1.26MM

Dutch Bros 3Q24 revenue is up 30% from last year, and the Company has opened 156 new stores over the same period. While primarily focused on the West Coast today, Dutch Bros expects to open 4,000+ shops in the next 10-15 years. In addition to new store openings, Dutch Bros was a little late to the mobile ordering game and expects to see a significant uptick of walk-up traffic in the coming years. 

Dutch Bros has carved out a niche in the competitive coffee industry because of its innovative drinks, exceptional customer service and unique company culture.  With a seasoned management team of industry veterans, the Company is showing no signs of slowing down anytime soon.

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