Today, I added to my BROS position. Am I becoming as addicted to Dutch Bros’ stock as much as customers are addicted to its drinks, service, and vibe? My position is still relatively small, but growing it compels me to keep digging deeper. Today, I focused on competitors that are a little more with it than Starbucks.
The two biggest, comparable drive-thru competitors for Dutch Bros appear to be Scooter’s Coffee and and Seven Brew. Both are expanding via a franchise model. Scooter’s, founded in 1998, is headquartered in Omaha, Nebraska. It has nearly 900 locations in 31 states. Seven Brew, launched in 2017, comes in with nearly 500 locations in 32 states with a headquarters in Fayetteville, Arkansas. Seven Brew is backed by Blackstone.
Dutch Bros, founded in 1992, officially moved its headquarters from Grants Pass, Oregon to Tempe, Arizona this summer. Dutch Bros has just over 1,000 locations in 18 states. Dutch Bros is phasing out its franchise model in favor of a company-owned model.
Hmmm….. I guess unit economics of about $2 million annual revenue from tiny drive-thru shops and relatively low barriers to entry are an invitation to competition! Game on.
With Love,
P. Gustav Mueller, author of The Present