Despite supply chain issues with building materials, equipment, and product, Dutch Bros has opened 63 stores year-to-date, including new markets in Texas and Oklahoma. Ninety-two locations are expected to open for the full year, 80 of which will be company-operated. Another 100 to 115 are projected to debut in 2022.
Starting in 2008, Dutch Bros only awarded franchises to those already in the system. In 2017, the brand stopped franchising and moved to a company-run strategy in which all operators are recruited from within the system. More than 900 are in the Dutch Bros Leadership Pathway Program and more than 200 are in the regional operator pipeline, which can support the next 750 to 1,000 company-run stores.
Of Dutch Bros’ 503 locations, 241 are corporate and 262 are franchises. Long-term, Dutch Bros believes it can reach 4,000 units over the next 10 to 15 years.
“The strength of the relationship with our employees has resulted in our ability to attract great candidates and then outstanding retention, which we believe is a real differentiator for the Dutch Bros compared to an industry that is contending with significant staffing headlands,” Ricci said.
Company-run same-store sales lifted 4.7 percent year-over-year, even with two notable headwinds. One was “abnormally low” discount promotion costs in 2020. The other was new corporate units being built near existing high-volume locations. Instead of calling this cannibalization, Dutch Bros prefers to call it “strategic sales transfer.”
Franchise comps performed better in Q3, but Jemley attributed this to geography.
“Some of the markets they're in just have a bit more growth than some of the markets the company is anchored in,” Jemley said. “They're great operators, but they're not better operators than our company folks. It's really just the dispersion by geography.”
November 10 marked Dutch Bros’ first earnings report since raising $484 million in its IPO at a share price of $23. That’s after initially projecting a range of $18 to $20. The brand opened on the stock market at $32 per share—41 percent above the IPO price.
In Q3, total revenues grew 49.8 percent to $129.8 million compared to 2020. Company-operated gross profit increased 18 percent to $22.8 million, versus $19.3 million last year. Adjusted EBITDA decreased 2.6 percent to $20.6 million, primarily due to last year’s promotional discounts.