Dutch Bros revenues rise as drive-thru store openings maintain pace

Dutch Bros recorded a wider loss of $16.3m due to “an escalating cost” environment | Photo credit: Nicolas Nieves-Quiroz

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Dutch Bros saw increased sales and outlet expansion during the first quarter of 2022 but has warned that rising inflation looks set to be a headwind to profitability in the short term. 

Reporting its first quarter results for 2022, the US drive-thru coffee chain said revenues increased 54% to $152m, with company-operated store revenues rising 67.1% to $130.2m.

Dutch Bros, which revealed plans in January for 125 new US stores this year, also opened 34 new stores during the period, prompting leadership to increase the annual target of store openings to 130. 
 
The majority of new sites, which Dutch Bros state will continue to offer ‘exceptional drive-thru experiences’, will be in the east of the country, with South Carolina targeted as key growth location. Dutch Bros stated that at least 110 of the intended 130 new outlets will be company-operated.
 
The Oregon-based drive-thru chain has opened 107 company-operated shops over the past 12 months and is targeting a minimum of 30 further stores in Q2 2022.
 
Nevertheless, despite revenues rising and progress made on outlet expansion, Dutch Bros recorded a wider loss of $16.3m compared to $4.8m during the same period in 2021, with “an escalating cost” environment cited as a key headwind for the company.
 
“We were not immune to the record inflation that surpassed our expectations and pressured margins in our company-operated shops,” said Joth Ricci, CEO of Dutch Bros.
 
For full year 2022, Dutch Bros projects that total revenues will remain in the range of $700m to $715m, whilst capital expenditures are still estimated to be approximately $200m, roughly 10% of which will be for a new roasting facility, currently projected to open in 2023.
 
“As a people-led growth story, we are particularly encouraged by our staffing levels and the performance of our newest shops, spread across many markets, including some that generated record initial sales. Our ability to increase revenues while successfully developing new shops reinforces our commitment to offering exceptional drive-thru experiences and confidence in our long-term strategy and growth targets,” Ricci added.
 
As of 31 March 2022, Dutch Bros is operating in 572 locations across 12 states in the US. In September 2021, Dutch Bros revealed significant growth ambitions for the US market as it pitched investors for an IPO that raised approximately $557m.
 
Drive-thru is a popular coffee shop format in the US and gained further traction during the pandemic when social distancing became an important operational concern.
 
As part of Starbucks’ first quarter results, the largest coffee chain in the US said that it would be accelerating store growth via high-returning drive-thrus. With more than 6,400 sites, Dunkin’ is by far the largest drive-thru operator in the US, ahead of Starbucks’ circa-4,000 3,900 locations.