Why the Company’s Pullback Might Represent a Good Buying Opportunity
On September 15, 2021, Dutch Bros (NYSE: BROS) made its debut on the public market at $23 per share. Just a few months later, in November 2021, the company’s stock had more than tripled to a record closing price of $76.25. At the time, investors were enamored with Dutch Bros’ rapid growth and the buying frenzy surrounding growth and meme stocks.
However, as we fast forward to the present day, it’s clear that the company’s growth has cooled off, and rising interest rates have squeezed its valuations. As a result, Dutch Bros’ stock now trades around 30% below its peak level at approximately $53 per share. In this article, we’ll explore what drove the company’s impressive expansion over the past four years and why the current pullback might represent an attractive buying opportunity for growth investors.
A Brief History of Dutch Bros
Dutch Bros opened its first drive-thru store in 1994 and began franchising its locations in 1999. Prior to going public, the company had already expanded from 254 shops in seven states at the end of 2015 to 471 stores in eleven states by June 2021.
By September 2024, Dutch Bros had more than doubled its store count to over 950 locations, comprising 645 company-operated stores and 305 franchised stores. Notably, company-owned stores accounted for around 91% of the company’s revenue in the first nine months of 2024.
Key Growth Metrics
The following table highlights some key growth metrics for Dutch Bros over the past four years:
| Metric | 2021 | 2022 | 2023 | 2024 |
| — | — | — | — | — |
| Total Revenue Growth (YOY) | 52.1% | 48.4% | 30.7% | 31.8% |
| Same-Shop Sales Growth (YOY) | 8.4% | 1% | 2.8% | 5.2% |
| Total Shop-Count Growth (YOY) | 22% | 24.7% | 23.8% | 19.6% |
| Adjusted EBITDA Margin | 16.5% | 12.3% | 16.6% | 19.3% |
| Net Profit Margin (GAAP) | -24.3% | -2.6% | 1% | 6.4% |
Dutch Bros’ Fortressing Strategy
The company’s impressive expansion was driven by its "fortressing strategy" of flooding areas with new stores instead of relying on expensive marketing campaigns. This cost-efficient approach has enabled Dutch Bros to grow in the U.S. market, even as larger coffee chains like Starbucks struggled.
For example, in fiscal 2024, Starbucks’ U.S. and North America comparable-store sales declined by 2%. In contrast, Dutch Bros continued to experience strong growth, driven by its ability to raise prices to counter inflation without negatively impacting top-line growth.
A Reasonably Valued Growth Stock
Despite the recent pull