Last week I added to my position in Dutch Bros (BROS). I’ve been reading more about the company, and I’ve been liking what I’ve been reading! Same store sales trends look good, same store transaction trends look good, and new unit growth looks good.
Really, the only major argument I see against BROS (other than the normal “what ifs”) is valuation. I guess it comes down to whether one thinks the growth is sustainable. BROS has about 1,000 units now and plans on having about double that by 2029 with a total addressable market of 7,000 units. Well, in 1996, Starbucks had 1,000 units. Ten years later, it had 13,000 units. During the same period, Starbuck’s stock rose 1,700%.
If Starbucks could do 13,000 units in 10 years, I think it is more probable than not that Dutch Bros can successfully pump out a lot of units over the next 10 years, especially while Starbucks is floundering as it is. Who knows, maybe Starbucks will make a bid for Dutch Bros!
My position in BROS is still relatively small, but like the company, it is growing.
With Love,
P. Gustav Mueller, author of The Present