Fast-growing, Oregon-based drive-thru coffee chain Dutch Bros has got the industry’s giants in its sights. This week they posted continued upward sales and outlet growth and are aiming for $1.2 billion in revenues in 2024.
Dutch Bros, mainly a West Coast and southwest preserve, is heading east to Davenport, Florida later this month on its way to 4,000 outlets.
Dutch Bros opened 159 new stores last year – 146 of which were company-operated – to reach 831 sites across 16 U.S. states. For the final quarter, it opened 37 new shops, 32 of which were company-operated, across 10 states, and it is currently the fourth largest branded coffee chain in the U.S. by outlets, behind only Starbucks
SBUX
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Earlier this week, Dutch Bros reported total revenue up 25.9% to $254.1 million in the fourth-quarter (ended Dec. 31). For the full year, total revenue grew 30.7% to $965.8 million.
Dutch Bros reported a net loss of $3.8 million, for the quarter, compared with a loss of $2.8 million, in the prior year period in 2022, and adjusted net income came in at $7.4 million.
Dutch Bros Store Growth
Its four main markets are Texas, Arizona, Oregon and California, where its format has proven a hit with suburban customers especially, and Florida is about to be added to the list as its reach continues to extend.
Alongside 24% year-over-year outlet growth, Dutch Bros is experiencing unprecedented growth. Dutch Bros opened more than 30 new stores for the tenth consecutive quarter in the three months ending 31 Dec. 2023 and expects to open more than 160 net new stores this year as it moves closer to its goal of 1,000 outlets by 2025.
The drive-thru chain set a goal in 2018, when it had approximately 300 stores across seven states, to reach 800 outlets by the end of 2023. Dutch Bros has longer-term ambitions to operate 4,000 stores in all.
Capital expenditure was estimated at between $280 million to $320 million, primarily related to new outlet construction.
Suburban customers have helped drive growth at Dutch Bros. Photographer: Maranie Staab/Bloomberg
The drive-thru coffee chain is also seeking to develop its Dutch Rewards loyalty program in 2024, including a pilot test and mobile order functionality in its app. More than 60% of fourth quarter transactions came from Dutch Rewards members.
“We had an exceptional 2023 and entered 2024 with great momentum. We continued to drive steady new shop growth, and Q4 marked our 10th consecutive quarter of 30+ new shop openings. We are optimistic for our next phase of growth,” said Dutch Bros CEO Christine Barone.
“Early last year, we began a series of traffic-driving initiatives outlined on our Q1 call in May. We saw the impact of these efforts culminate with a 5.0% increase in system same-shop sales in Q4, driven by a sequential improvement in customer traffic.”
Dutch Bros Gains On Rivals
That is an impressive achievement according to Placer.ai, which said that its analysis of footfall changes in monthly visits to the chain since 2019 revealed: “Near constant growth over the past few years – a noteworthy feat considering the challenges facing the space over Covid and during the recent inflation. And while some of Dutch Bros. visit increase is likely due to its expanding store fleet, the consistency and magnitude of the growth suggests that the chain is keeping its new customers coming back.”
The drive-thru coffee chain also announced a large-scale reorganization of its support center operations, with approximately 40% of its back office staff relocating to its Phoenix, Arizona office this year.
Dutch Bros said it plans to maintain a significant presence in southern Oregon, where its roasting, accounting and select other support functions will continue to be based.
“We recognize the importance of continuing to attract top-notch talent, and we believe adding a significant presence in the Phoenix market positions us to better compete for this talent. We also believe this expansion will enable easier access to our operations as we grow across the U.S.,” Barone said.
In January, Dutch Bros announced three additions to its leadership team: Sumi Ghosh, incoming president of operations; Josh Guenser, incoming CFO
CFO
The company began with a single coffee cart in Grants Pass, Oregon and has grown over the last 32 years to over 830 shops across 16 states employing approximately 24,000 people.