Dutch Bros, known for its drive-thru coffee shops, has experienced significant growth over the past four years. Since opening its first store in 1994 and beginning franchising in 1999, the company has expanded rapidly. By June 2021, Dutch Bros had 471 locations in eleven states, more than doubling to 950 locations by September 2024. The majority of these stores are company-operated, contributing to 91% of the company’s revenue in the first nine months of 2024.
During this period, Dutch Bros consistently increased its same-shop sales, opened new locations, and achieved high double-digit revenue growth. The company also expanded its adjusted EBITDA margins and remained profitable according to generally accepted accounting principles (GAAP) for nearly two years.
Using a cost-efficient “fortressing strategy,” Dutch Bros focused on opening new stores rather than costly marketing campaigns, allowing it to succeed while larger coffee chains like Starbucks faced challenges. Despite raising prices to combat inflation, Dutch Bros maintained strong revenue growth. The company’s growth outlook remains positive, with plans to open 150 new stores in 2024, aiming for a total of about 4,000 locations within the next 10 to 15 years.
Additionally, Dutch Bros intends to enhance its menu offerings by introducing more food options to complement its coffee business. With its current valuation considered reasonable, the company presents a potentially lucrative investment opportunity for those who believe in its long-term growth prospects.
Analysts expect Dutch Bros to continue its expansion, with plans for 160 new store openings in 2025 and further growth in 2026. Those interested in investing in the company are encouraged to consider its promising future and the potential for significant returns.
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(Stock Advisor returns as of December 30, 2024)
Leo Sun holds no positions in the stocks mentioned. The Motley Fool holds and recommends Starbucks, and also recommends Dutch Bros. The Motley Fool maintains a strict disclosure policy.
