It took Dutch Bros 33 years to reach 1,000 locations.
The brand now bets it can do the same pace in just four years.
The third-largest U.S. coffee chain announced Thursday that it plans to reach 2,029 shops in 2029. To do that, Dutch Bros would have to average more than 200 shop openings between 2025 and 2029, far above what it’s ever done.
“This is not going to be a walk in the park, but given the investments we made into people, processes, and insights—and the strong results we’ve seen in new shops—we’re optimistic as we work towards this goal,” said CFO Josh Guenser during the brand’s Investor Day.
Dutch Bros also increased its total addressable market to more than 7,000 U.S. locations, up from 4,000 at the time of its IPO in 2021. The company’s 18 existing states alone could support approximately 3,500 shops.
The chain opened 151 new locations in 2024 and the plan is to open at least that many this year as well. That includes five new states—Louisiana, Georgia, South Carolina, Indiana, and Ohio. As of mid-Q1 2025, Dutch Bros has already opened 27 new shops. Three more are expected to open before the quarter ends. Same-store sales increased 4.6 percent through March 24.
Encouraged by shop performance in emerging markets like Florida, Tennessee, and Kentucky, Dutch Bros believes its concept is highly portable. AUVs in these newer regions are on par with legacy markets in the Pacific Northwest (both around $1.7 million).
Leading the charge is chief development officer Brian Cahoe, who has 25 years of experience and previously worked at KFC U.S. The brand, which primarily grows through company-owned stores, is also backed by a pipeline of operators ready to lead shops. All regional operators, who run three to seven locations on average, started their careers as hourly employees. As of January, there were more than 450 operator candidates, with an average tenure of seven years; this is enough to support 1,500 new locations. The pipeline continues to grow even as Dutch Bros opens more shops (i.e. 200 operator candidates in November 2021).
As candidates advance, the company exposes them to higher leadership training beyond the skills needed at the shop level.
“Our shop growth is predicated on our people,” said Sumi Ghosh, president of operations. “What that means is that we won’t open new shops unless—and until—we have great people to operate them … As we’re expanding into new markets, we’re sending highly experienced people to represent our brand.”
Guenser said growth hinges on identifying, building, and successfully operating new locations, underpinned by robust systems and data-driven decision-making. Over the past two years, Dutch Bros overhauled its real estate and development processes, with a particular focus on market planning and entry strategies.
The chain took a deep dive into its processes and developed a more disciplined approach to market selection. It’s now prioritizing a tiered market entry strategy involving openings in suburban areas before expanding into rural markets and giving shops time to mature before infilling nearby locations. Additionally, Dutch Bros upgraded its internal real estate model to better assess new site potential by incorporating performance data from newly opened stores and alternative data like cell phone location analytics. This enables the company to more precisely map trade areas, gauge brand awareness, and evaluate competitive dynamics.
To fuel its expansion while maintaining capital efficiency, Dutch Bros shifted its lease mix toward more build-to-suit agreements—where development partners fund upfront construction in exchange for higher rent. In 2024, only 15 percent of leases followed this model, but the company plans to raise that to 40 percent in 2025, with a longer-term goal of reaching 60 percent. Guenser said this will help bring down the average capital expenditure per unit from a peak of $1.7 million in 2024 to $1.5 million this year, and eventually to $1.25 million.
“We revamped our real estate process to incorporate these key changes and enhance our overall sophistication as we make these important capital allocation decisions,” Guenser said.
The company is also seeing strong cash-on-cash returns on its investments. The class of 2022 delivered 40 percent returns in year two, and the 2023 class posted 35 percent returns in year one, despite a heavier reliance on capital-intensive ground leases. By transitioning to more build-to-suit deals, Dutch Bros aims to push those returns to around 45 percent.
Dutch Bros’ same-store sales lifted 5.3 percent in 2024 and adjusted EBITDA increased 44 percent. Systemwide AUV rebounded to $2 million after a dip in 2023, thanks to improved market planning and more media spend to boost awareness. The company’s new stores are outperforming prior cohorts. Locations opened in 2024 delivered first-year sales 20 percent higher than 2023’s class. Dutch Bros is now targeting a second-year AUV of $1.8 million.
The company’s long-term growth algorithm is annual revenue growth of 20 percent, annual adjusted EBITDA growth of 20 percent, and company-operated shop contribution margin of 30 percent.
“Led by field operations teams deeply rooted in our culture and hungry to grow, and supported by a leadership team with complementary skills and firsthand knowledge of scale, we are well positioned to deliver sustainable, long-term value while staying true to our mission of making a massive difference, one cup at a time,” said CEO Christine Barone.
