At a time when many restaurant companies are struggling to get customers in the door, Dutch Bros is one of the better success stories for the first quarter of 2024. In Q1, the Oregon-based coffee chain saw 10% same-store sales growth, attributable mostly to menu pricing increases, discounting, and positive traffic trends.
Traffic will likely continue an upward growth trajectory after Dutch Bros starts accepting mobile order and pay, which the company will begin offering for the first time by the end of 2024, in partnership with Olo. The new partnership and mobile order and pay solution is currently in test mode at seven locations, and is meant to boost operational efficiency, especially for guests that want to cut down on wait times at the drive-thru lane.
“Mobile ordering is super prevalent across our industry, and it is the number one thing that our customers are asking for as an additional feature in our app,” Christine Barone, CEO of Dutch Bros, told Nation’s Restaurant News. “When we look at that kind of frictionless experience we can create, it's really just adding a new occasion that a customer could come in for. Like, maybe you’ve experienced a long line at Dutch Bros in the past, but today you’re in a huge rush, so you could come in even if you don’t want to wait on a huge line.”
The challenge, Barone said, will be to maintain that level of personal hospitality the brand is known for, even when technology makes the process a lot easier. When a mobile order guest picks up their order in the drive-thru lane, they’ll still be greeted by a broista, which is important as a brand differentiation, Barone added.
While mobile order is not quite rolled out yet, the current traffic growth is boosted by both menu innovation and listening to what customers want, like revamping the rewards program. Additionally, last quarter, Dutch Bros rolled out protein coffee and boba platforms, both of which have been so popular that they were soon added to the permanent menu. The consistent rollout of innovative beverages mixed with a focus on efficiency, quality and service is the formula behind Dutch Bros’ success, Barone said.
“We have been very focused on who we are and what makes us special, and what drives that connection that we have with our customers,” she said. “We’re always asking ourselves, ‘what do our customers want? What are they asking for? What are we seeing out in the market that that might make sense for us?’ The two big launches we had this quarter…really seemed to resonate with our customers, and something that we saw drive repeat purchase over time.”
In addition to rolling out new tech and menu innovations, Dutch Bros is focused on its fortressing development strategy. Last quarter, the company opened 45 new locations, and wants to continue that cadence on the road to 4,000 shops in the long-term, all while improving brand recognition and loyalty in new markets.
“One of the things that we're trying to balance when we're going into new markets is sometimes when we open a brand-new shop and a new market, we may have volumes that that are too high,” Barone said. “So, when we add a new shop very quickly right near that new shop, it balances out that volume.”
Dutch Bros’ revenue grew 39% to $275.1 million for the first quarter ended March 31, up from $197.3 million in the same quarter the year prior. Net income was $16.2 million or $0.08 per share, as compared with a net loss of $9.4 million or $0.07 per share the same quarter the year prior.
Contact Joanna Fantozzi at [email protected]