Dutch Bros (BROS) is Aiming to Double its Store Base in the Next Five Years

Stock (Symbol)

Dutch Bros (BROS)

Stock Price

$72

Sector

Data is as of

Expected to Report

Company Description

Dutch Bros Inc. is an operator and franchisor of drive-thru shops that focus on serving hand-crafted beverages.

The Company offers a variety of customizable cold and hot beverages to its customers.

Its hand-crafted beverage offerings include hot and cold espresso-based beverages, cold brew coffee products, Dutch Bros. Blue Rebel energy drinks, tea, lemonade, smoothies and other beverages.

Its other beverages include Iced Tiger’s Blood Lemonade, Birthday Cake Frost, Blended Aftershock Rebel, Golden Eagle Freeze, Hot Annihilator, Iced Caramelizer and Iced Electric Berry Rebel.

It also offers private reserve coffee sourced through their in-house coffee roasting facility and extracted using La Marzocco machines.

It operates approximately 538 shops in 12 states, of which 271 are Company-operated shops and 267 franchise shops. Its shops are located in Arizona, California, Colorado, Idaho, Kansas, Nevada, New Mexico, Oklahoma, Oregon, Texas, Utah, and Washington.Source: Refinitiv

Sharek’s Take

Dutch Bros (BROS) delivered an upbeat performance last quarter, reporting 56% profit growth on 29% revenue growth, while  beating estimates of 33% and 24%, respectively.

Dutch Bros is a quick-service drive-thru coffee shop chain that serves up iced coffee, energy drinks, and a few snacks. Dutch Bros started began when two brothers who were third-generation dairy farmers bought a double-head espresso machine and opened a pushcart espresso bar in 1992 on the side of the railroad tracks in the state of Oregon. They were quickly making more than $100 a day, and put the money back into the business until one pushcart became five. The company had its first franchise in 2000 and has since grown into an operation with 982 coffee shops, as of December 31, 2024. Of the 982 shops, 670 are company owned and 312 are franchises.

Here’s some more interesting points about the company:

• One of the fastest-growing quick-service beverage brands in the U.S. by location count.
• The menu focuses on iced coffee and energy drinks.
• BROS business model is built around drive-thrus, and most have walk-up windows and party patios.
• Cold beverages make up 80% of the menu mix.
• Its Blue Rebel energy drinks choices include Electric Berry, Shark Attack, Unicorn Blood, and OG Gummybear.
• The menu is light on snacks, with just a granola bar and some muffins to choose from (but this is good because it gives the company room to grow).
• In 2021, the company moved away from its paper-stamp card loyalty rewards program, and launched the Dutch Rewards program. In 2024, about 68% of all transactions were made by Dutch Rewards members.
• Average Unit Volume (AUV) was $2 million at the end of 2024.

Dutch Bros is a compounding story, as management has plans to grow from 1000 shops to 4000 during the next 10 to 15 years. Analysts give the stock an Estimated Long-Term Growth Rate of 26% a year. I imagine profits might have the ability to climb 30-35% a year in the long-run. BROS is in my Growth Portfolio.

One Year Chart

The 120 P/E is high but the company is young and growing profits briskly. Although this P/E looks high here, I don’t feel the stock is overvalued as it sells for a reasonable 7x 2025 revenue estimates.

The Est. LTG is 27%, which I feel is accurate.

Porfit growth has been erratic this past year.

Notice profits declined in 2022. At the time, BROS had high goods inflation and high labor costs to deal with.

Earnings Table

Last qtr, Dutch Bros delivered 56% profit growth and whipped expectations of 33% growth. Revenue increased 29%, year-on-year and beat estimates of 24%.

• Opened 30 new shops, 25 of which were company operated.
• About 72% of transactions came from Dutch Rewards members.
• Beverage, food, and packaging costs were 25.0% of company-operated shop revenue, up from 24.3% due to pricing.
• Successful launches included “Cereal SIPs LTO” and the “Spring Fever Drink Trio.​ This included the Hyperchrome Rebel with Blue Raz Poppin’ Boba, Brownie Batter Mocha, and Birthday Cake Latte or Freeze with Soft Top and sprinkles.

Annual Profit Estimates for 2025 remain consistent with last qtr, while 2026 and 2027 increased.

Qtrly Profit Estimates are for -5%, 6%, 57%, and 21% growth the next 4 qtrs. Analysts think BROS revenue will grow 24% next quarter.

Fair Value

This is too young of a company to price the stock on a P/E basis, so I will use price-to-sales. This qtr the stock sells for 7x 2024 revenue estimates. My Fair Value is 7x revenue. Here are my price estimates for 2025 & 2026:

Current qtr:
7 x $1.6 billion in revenue = $12 billion market cap
$12 billion / 164 million shares = $72

2025 Fair Value:
7 x $1.6 billion in revenue = $11 billion market cap
$11 billion / 164 million shares = $67
Upside/Downside: -6%

2026 Fair Value:
7 x $2.0 billion in revenue = $14 billion market cap
$14 billion / 164 million shares = $84
Upside/Downside: +17%

Bottom Line

Dutch Bros (BROS) garnered a lot of attention when it debuted as the shares opened at $33 in August 2021. Within two months the shares pushed past $80. Then the stock built a saucer pattern and broke out in November 2024 when it surged past $35 after earnings were released.

Dutch Bros is a nice young company with a bright future. This reminds me of Buffalo Wild Wings, and more recently Wingstop. 

BROS ranks 16th in the Growth Portfolio Power Rankings.

Power Rankings

16 of 33

Aggressive Growth Portfolio

N/A

Conservative Stock Portfolio

N/A