Dutch Bros accelerates development with plans to open 130+ stores by end of the yearDutch Bros accelerates development with plans to open 130+ stores by end of the year

Joanna Fantozzi

Dutch Bros Coffee — which went public for the first time last fall — is optimistic about its development pipeline, despite external inflationary pressures that are affecting the entire restaurant industry. The Oregon-based coffee chain’s same-store sales declined 3.3% for the second quarter ended June 30, 2022, but on the flip side of that, the company just opened its 600^th shop and said it is on track to open 130 more by the end of the year.

CEO Joth Ricci told Nation’s Restaurant News that the company is well on its way to achieving founders’ Travis and Dane Boersma’s goal of 800 stores open by the end of 2023.

“It all started with a good plan,” Ricci said. “[…] We were very diligent with what type of systems we needed to build, monitor and analyze, to make sure that our class of stores that we built would perform at a level of our expectations. And actually, we probably have surpassed everything that we had a vision for at that time.”

The mixed quarterly results were particularly impacted by disappointing performance in the West Coast market, driven by skyrocketing gas prices. Ricci said that if you take out certain markets on the West Coast out, their same-store sales would be down only 1%. Like many of its industry colleagues, Dutch Bros has taken a 3% price increase to offset these macroeconomic challenges. But that does not mean that the company will continue down this path:

“We listen to the customers first,” Ricci said. “Our founder always said, ‘never give people a reason not to come.’ And so I think we’ve taken the moderate approach, and have shared in some of the consumer pain by taking on quite a bit, financially. […] We’ve done that in the effort to maintain the long-term relationship with our customer, and never put our team members in a position where they're having to explain a very difficult situation to the customer.”

The sales momentum Dutch Bros did gain in Q2 2022 was driven by cold beverage sales, which comprise 80% of the company’s sales mix, especially within the Freeze frozen coffee category.

“We have been a cold drink business for a long time and have always indexed much higher than the rest of the industry,” Ricci said. “Our customers love to customize these drinks, and our iced classic drinks (like lattes and mochas) are also a big category for us.”

Dutch Bros Coffee reported a 44% increase in revenue to $186.4 million in the second quarter of 2022 compared to $129.2 million in the same period of 2021. The company’s net income was at a loss of was $(1.8) million as compared to net income of $11.9 million in the same quarter last year. Dutch Bros opened 31 shops across nine states last quarter, bringing the total systemwide store count to 603.

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