Dutch Bros Coffee arrived on the New York Stock Exchange this past Wednesday, fulfilling plans that began formulating nearly three years ago.

In October 2018, the West Coast coffee chain took on a minority investment from TSG Consumer Partners, with the hopes of leveraging the firm’s expertise to reach 800 stores over the next five years. When TSG came on board, Dutch Bros CEO Joth Ricci says two realities were inevitable—the group was either going to buy the company or sell its stake.

The nearly 500-unit brand spent time evaluating the timing of the exit, and as discussions developed toward the end of last year, both sides felt building a long-term exit strategy through the IPO process was the best plan.

“There hasn’t been this type of business IPO in quite a while and so just felt like a good time to be out there,” Ricci says.

As it turns out, the Oregon-based Dutch Bros couldn’t have written a better script. The chain first projected a share price of $18 to $20, but the brand exceeded expectations by pricing its IPO at $23 per share, raising $484 million. At that level, the chain was valued at $3.8 billion. Dutch Bros opened on the stock market at $32 per share—41 percent above the IPO price—and reached a high of $54 per share last week. Dutch Bros closed Friday at $43.55 per share, or a $7.19 billion valuation.

“We’re just blown away by the response,” Ricci says. “I mean, we’ve had a great time sharing the story with investors and with analysts and with the banks over the course of this year, and when you think about it, most of the people who we’re talking to live in the Eastern half of the U.S. and really had never visited a Dutch Bros.  We were doing a lot of educating, a lot of talking about our concept, and who we are and who we aren’t. And I think [Wednesday] is a really great indication of just how well they understood the story, how excited they are about it, and how much I think they believe in what we’re doing.”

READ MORE: Dutch Bros Coffee Eyes $3.3 Billion Valuation in IPO

The story Ricci refers to dates back to 1992 when brothers Travis and Dan Boersma started selling espresso out of a pushcart in Grant Pass, Oregon. In the past five and a half years, the brand has grown from roughly 250 stores to nearly 500. Dutch Bros debuted 71 stores during the pandemic-ridden 2020, and is projected to open 100 by the end of 2021. Another 100 to 115 are planned for 2022. The brand is based in 11 states, spanning from the West Coast to Oklahoma and Texas. The chain’s biggest market is Oregon, followed by California, Arizona, and Washington.

While same-store sales dipped 12 percent in March 2020, Dutch Bros leveraged its drive-thru format to quickly bounce back and finish the year with a 2 percent increase—the company’s 14th consecutive year of comp growth. Revenue increased 37.4 percent to $327.4 million in 2020, while AUV lifted 2.7 percent to $1.68 million. Adjusted EBITDA came in at $69.8 million, up from $48.7 million in 2019.

The menu features a lineup of hot and cold espresso-based beverages, cold brew coffee products, tea, lemonade, smoothies, the proprietary Dutch Bros. Blue Rebel energy drinks, and curates items from a secret menu. The Blue Rebel drink represents the largest mix at 24 percent, followed by blended/smoothie (18 percent), hot coffee and iced coffee (16 percent), other (9 percent), and cold brew (4 percent). Most sales are captured between noon and 4 p.m. (29 percent), with the rest of dayparts ranking as 9 a.m. to noon (22 percent), before 9 a.m. (17 percent), 4 p.m. to 7 p.m. (16 percent), and 7 p.m. to close (15 percent).

The latest shop prototype is between 865 and 950 square feet and has generated 40 percent higher sales volumes than many of the older legacy stores. Nearly all locations have either a single or double drive-thru, with some incorporating multiple lanes and escape outlets to improve efficiency and prevent congestion. Additionally, many units have walk-up ordering windows and open-air patios. To improve throughput even further, Dutch Bros invested more into its mobile app by launching the Dutch Rewards program, which allows customers to earn points as opposed to the previous stamp card that rewarded number of visits. In the first five months, roughly 2.3 million have become members.

Ricci believes the chain has white space for 4,000 units, which should take Dutch Bros into the next 10 to 15 years. The plan is to fill existing markets like California and capture new ones like Kansas City and Nashville.

The company’s expansion opportunities are centered around its inner circles. Starting in 2008, Dutch Bros only awarded franchises to those already in the system. In 2017, the chain decided to stop franchising and moved to a company-operated strategy with all operators recruited from within the system. Franchise partners continue to open new shops in their high-demand areas, but most growth will come from corporate units. The current pipeline comprises more than 200 operators prepared to build out new markets.

“We are a people system that we plug real estate into,” Ricci says. “We are not a real estate system that plugs people into it. The forecast of our leaders and the potential of our leaders is really what’s driving our real estate development, and we have a responsibility to those people who have been with us and make that commitment to Dutch Bros. And our goal will be to continue to open up new opportunities for those people as we continue to expand.”

“And not just expand East, but also we have a tremendous amount of infill to do just within our existing markets,” he continues. “A lot of modeling we’ve done, we’re probably 30 percent developed in California and have some big opportunities there, as well. We will always match our expansion plans off of our people, and making sure that we have people ready and excited to go in and represent the company as we build into new markets or infill into existing markets.”

Dutch Bros has Class A, B, C, and D stock, with Class A having one vote per share, Class B and C having three votes per share, and Class D having 10 votes per share.Travis Boersma holds all Class B shares and TSG holds all Class C shares. A host of other investors hold Class D shares. In total, Boersma controls 74 percent of stock while TSG garners roughly 22 percent. The company intends to use net proceeds from the initial public offering to purchase additional shares, pay off $198.8 million in outstanding borrowings, and donate 1 percent to charitable causes over the next 10 years.

The brand is the second restaurant to enter the stock market this year, following Krispy Kreme, which began its second stint as a publicly traded company in July. The doughnut chain priced its IPO at $17 per share, raising $500 million and valuing the company at $2.7 billion. Sweetgreen and Portillo’s have also announced plans to go public.

Dutch Bros sees opportunity to gain market share in a $36 billion coffee category, but Ricci says there is no goal to go head-to-head with industry leader Starbucks, which has more than 15,000 U.S. locations.

But as the CEO points out, Dutch Bros has performed well alongside Starbucks, a fellow Northwest brand, for nearly 30 years. His guess is there’s a Starbucks virtually everywhere the company exists, yet the brand has still thrived and found room for growth.

The move to the public sphere won’t change the strategy—Dutch Bros is focused on itself, not the competition, Ricci notes.

“We’re just playing in the game of beverage and focused on our relationships and our customization, and if we do that really well, we like our chances,” he says.