For an emerging brand in hyper-growth mode like Dutch Bros, it can be easy to primarily focus on physical expansion into new markets. But as new Dutch Bros CEO Christine Barone said during Thursday’s J.P. Morgan forum, while the Grants Pass, Ore.-based coffee brand is keeping development front of mind — with Florida as its next target market — she wants to emphasize diverse means of growth.
For Dutch Bros, that means focusing on smart development with fanbase growth in mind, building brand awareness, and give the company’s tech stack a makeover.
“What we’ve historically seen as we go into new markets, is that customizable energy drinks are very popular with new guests, because they are new products to market,” Barone said. “When we first went into the Phoenix market, we had low AUVs — people didn't even know who we were. Now when we go into new markets like Florida, we already have fans in the market. National awareness of the brand can be driven by physical locations, and it can be driven by excited people on social media doing free marketing for you.”
As Dutch Bros grows, Barone said, the company is being hyper-aware of expanding into places that know who the brand is, but that there is still more room for growth to introduce potential new fans to Dutch Bros’ coffee and energy drinks.
“We’re still small enough that we can actually move quickly and get things into market as we see cool new trends happening,” Barone said. “A year ago, we were doing primarily retargeting or finding people who had already found us and just encouraging them to come again… the best way to be introduced to a brand is by a friend who loves it and so that multiples-based promotion that we did really allows someone who loves our brand to introduce a friend to the brand.”
Besides growth through word of mouth (and through promotions), Barone mentioned that the company has been growing its digital presence through rewards and omnichannel availability. Though the Dutch Bros rewards program is only three years old, Barone said loyalty guests’ purchases already comprise 65% of purchases. Plus, the Dutch team does not plan to just rest on its laurels:
“We’re probably at the second or third inning of our rewards program,” Barone said. “Last year… we took down the base rewards and created more incentive type rewards to help you find something that you love…. We’re just starting to segment our customer base, so eventually we will want to focus on the one-on-one personalization aspect of it. We’re still learning.”
Besides evolving the rewards program, Barone said the company also is focusing on pilot program of mobile order and pay, and is also looking to experiment with different types of store prototypes:
“We're all drive-thru but continuing to look at other ways that we can actually reduce build cost as we look at the mix of types of leases we do,” Barone said.
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