Dutch Bros’ First Public Earnings Report: Record Q3 Store Openings

This is an English adaptation of a FoodBud historical article originally published on November 18, 2021.

Dutch Bros, the North American coffee chain, released its first earnings report after going public. In the third quarter, revenue reached $130 million, up 49.8% year over year and 3.94% above market expectations of $124.9 million.

The company reiterated its view that it has significant room to expand in the U.S. market, saying it could reach 4,000 stores.

Key Q3 Metrics

• Dutch Bros opened a record 33 new stores, including 30 company-operated stores, taking the system past 500 locations.
• Company-operated store revenue rose 62.9% year over year, from $66.7 million to $110 million in Q3.
• System same-store sales increased 7.3%; company-operated same-store sales increased 4.7%.
• Company-operated store AUV was $1.7 million in Q3.
• Company-operated store gross profit rose 18% year over year, from $19.3 million to $22.8 million.
• The company reported a net loss of $120 million and adjusted net income of $11 million.

Q4 Outlook

Dutch Bros guided for at least 30 new store openings in the fourth quarter and revenue of $125 million to $128 million. The article also states an expectation of at least 112 new stores in 2020.

Operator Takeaways

Dutch Bros completed its IPO on September 15, raising $560 million after commissions and other expenses. FoodBud had previously referenced the company’s listing at 471 stores and a $6.2 billion market value; at the time of this article, its market value had reached $10.2 billion.

The company positions itself as a beverage company rather than only a coffee chain. Based on its earnings call and CEO media interviews, FoodBud observed that Dutch Bros’ model is built around cup-based coffee and energy drinks, with customization as another important feature.

On the store model, Dutch Bros relies heavily on drive-thru. FoodBud compared the underlying logic to small-format pickup stores in China, while noting that the execution differs because market conditions are different.

Dutch Bros launched its loyalty program in February. By September 30, it had more than 2.8 million loyalty members, who contributed 60% of orders.

Note: IPO, market-value, expansion-target, and forward-guidance figures are historical as of the original article date, November 18, 2021.