Oregon-based Dutch Bros has made headlines locally for their traffic jams highlighting the sudden rush of popularity of the drive-thru coffee start-up now with the 5 locations open or pending around Visalia.The company’s fast growth in the Western US has coincided with the firm going public on the US stock market. But once your stock is being traded, financial reports can lead to rocketing highs or bursting bubbles, depending on results.As of May 12,the company revised its full year outlook.
Suddenly Dutch Bros caffeine high appeared to sober up in an espresso moment this past week after the latest financial report was released with its stock value dropping from near $60 a share in April, $40 May 11 to $27.8 at press time May 13.
Here is what the Wall Street Journal said about the news: “Dutch Bros Inc.’s shares plunged to new lows Thursday after the company warned of slowing sales growth as inflation keeps younger customers away from their afternoon coffee breaks.
The drive-through coffee chain on Wednesday said that it expects same-store sales, a key industry metric that reflects sales at locations open at least 15 months, would be flat for the year, down from an earlier view of rising in the mid-single-digit percent range.”
Visalia has been a big launching market for the company making news on Mooney Blvd in late 2020 when its first drive-thru spilled waiting cars out on Mooney- clogging the boulevard. Future stores in town were designed with double drive-thru lanes after that.
Now they have soared to all quadrants of the city with a new one under construction at Caldwell and Highway 99, the first retailer to break ground at the Sequoia Gateway project.Dutch Bros growth has been amazing from startup in 1992 to 538 locations across 12 states as of December 31, 2021.
The company was founded by Dane and Travis Boersma who quit their family dairy near Grants Pass to start the coffee company. Brother Dane passed away but Travis Boersma took Dutch Bros public on the New York Stock Exchange in September 2021.It’s been a high flyer since.
But now the cult following appears to be slowing. Dutch Bros latest report says that April same shop sales were down (3.7)% in 2022 compared to a positive 22.6% in 2021.
“We were not immune to the record inflation that surpassed our expectations and pressured margins in our company-operated shops” said Chief Executive Joth Ricci said in a statement.
One commentator suggested “With today’s gas prices, people are thinking twice about firing up the Ford Expedition and burning $10 in gas in order to idle in line while waiting to get a $5 drink.”
Appealing to a younger crowd, the company is known for its quirky culture with its baristas called “broistas.” Dutch Bros offers unique beverages with names like the “Hot Annihilator.”
As far as market saturation in Visalia, Dutch Bros is still behind Starbucks in the Visalia metro area with something like 11 locations. Starbucks too, has lost stock value from $120 a share January 1 to $74 this week. Both companies face higher coffee prices worldwide nearly doubling in the past year on reduced supply and now reduced demand from customers pinched by inflation.
Despite the slowdown, the company plans to expand eastward starting with a location in Nashville.
Photo Dutch Bros Facebook.