The US drive-thru coffee operator is on track to exceed its 2023 growth target – but like-for-like sale growth drags amid rapid expansion strategy
Dutch Bros Coffee reached 716 stores during the first quarter of 2023 | Photo credit: Dutch Bros Coffee
Dutch Bros has continued to build on steady sales and outlet growth momentum achieved over the last 12 months.
The Oregon-based drive-thru coffee chain posted 30% year-on-year revenue growth to $197.3m for the quarter ended 31 March 2023.
Dutch Bros opened new 45 stores during the period, 42 of which were company-operated, to reach 716 stores.
The operator’s 438 company-operated stores generated the lion’s share of sales, with the coffee chain’s 278 franchised locations contributing $24.1m revenues.
However, the coffee chain still posted a first quarter net loss of $9.4m, albeit lower than the $16.3m loss for the same period in 2023.
System-wide like-for-like sales also fell 2%, which Dutch Bros attributed to its ‘fortressing strategy’, which involves rapid expansion within a given locality to boost revenues and consumer brand awareness but can lead to a cannibalisation of sales at existing stores.
“We doubled down in our pursuit of more profitable growth and delivered strong company-operated shop margins. I’m proud of how our teams responded quickly and decisively to the economic climate, demonstrated by their focused effort on accelerating profitability as we grow our shop footprint,” said Dutch Bros CEO, Joth Ricci.
“Our new shops are highly efficient, mature quickly, and continue to demonstrate predictable and attractive margin profiles. The class of shops opened in 2019, 2020, and 2021 have already achieved our 30% contribution margin target, and the class of 2022 is maturing in line with our margin expectations. We are hitting these targets as we continue entering new trade zones across the country. This performance gives us confidence in Dutch Bros growth strategy – both in the near-term and beyond,” Ricci added.
Looking to the year ahead, Dutch Bros forecasts it will open 150 net new stores, of which at least 130 will be company operated, a target that if reach will easily exceed the drive-thru coffee operator’s goal of reaching 800 stores
by the end of 2023.
Total full-year revenues are expected to be between $950m and $1bn.