Dutch Bros plans to build 1K shops within 5 years

Dutch Bros Coffee anticipates a 20% yearly revenue increase while setting its goal at 2029 for 2029 store locations.

Dive Brief:

• Dutch Bros updated its addressable market projection to exceed 7,000 potential restaurants during its investor day press release on Thursday while setting a goal to open 2,029 shops by 2029.
• The coffee chain achieved its 1,000th store opening in February while expanding its shop count to 27 during the first quarter through March 24. Three additional shops will start operations before March 31.
• The company achieved a 4.6% increase in same-store sales between March 24 and the corresponding period from 2024.

Dive Insight:

The Dutch Bros’ growth plan will advance through greater mobile sales and potential entry into food products as well as launching consumer packaged goods.

The coffee chain anticipates annual revenue expansion at 20% while new shop expansion will occur between low-single digits to mid-teens. The company aims to boost its company-operated shop contribution margins to 30% while planning to sustain this level to fund extended shop-level investments according to company statements.

The projected revenue growth combined with expanding store numbers during the decade will enable Dutch Bros to become a stronger force in the U.S. QSR coffee market.

CEO and president Christine Barone stated in a statement that our company stands ready to deliver lasting value because we have field operations teams who understand our culture and want growth while benefiting from leadership with specific scale knowledge. The chain selected Brian Cahoe as its new chief development officer this year to direct new store expansion and create a development plan for the company. With 25 years of QSR experience Cahoe recently held the position of chief development officer at KFC U.S.

Mobile order and pay sales at the company continue to increase significantly according to William Blair analyst Sharon Zackfia who views this development positively.

Zackfia indicated in her Restaurant Dive report that the brand holds potential for growth because of its proven strategy to improve customer reach through mobile order and pay services that will launch late 2024 while expanding food options for 2026 deployment which should strengthen Dutch’s morning sales period because it currently represents one-third of total sales but peers achieve half of their business during this period.

Mobile order and pay transactions account for 10% of all transactions according to Zackfia while they only reached 8% during the last quarter. The mobile ordering service has boosted Dutch’s walk-up window traffic because customers now prefer this method for obtaining their deliveries. Walk-up window usage currently stands at 15% while historical usage levels were at 10%. The food menu remains under testing with eight offerings that include a wrap, two breakfast sandwiches, a waffle and different bakery products according to Zackfia.

Zackfia stated that the program aims to increase morning sales and customer frequency while keeping operations straightforward since Dutch Bros will not reach food mix levels comparable to peers due to its limited menu options.

The chain plans to boost its brand exposure through retail products as part of its fast-paced expansion operations according to the published statement. Through its collaboration with Trilliant Food & Nutrition Dutch Bros plans to introduce coffee products and related items for retail sale. Trilliant operates as one of the main producers of single-serve and ready-to-drink coffee products through its 50,000 retail outlet network.