Dutch Bros reported third quarter results on 11/4.
Third Quarter 2026 Highlights
- Opened 48 new shops, 42 of which were company-operated.
- Total revenues grew 29.8% to $549.8 million as compared to $423.6 million in the same period of 2025.
- Company-operated same shop sales increased 5.4% and company-operated same shop customer visits increased 1.0% relative to the same period of 2025. Systemwide same shop sales increased 4.4% and systemwide same shop customer visits increased 0.4% relative to the same period in 2025.
- Net income was $37.2 million as compared to $27.3 million in the same period of 2025.
- Adjusted EBITDA grew 29.6% to $101.1 million as compared to $78.0 million in the same period of 2025.
- Completed the reacquisition of franchise rights and assets of the Phoenix East Valley franchise consisting of 32 locations on July 27, 2026.
2026 Guidance
- Total revenues are now projected to be at least $2.1 billion.
- Same shop sales growth is now estimated to be at least 5%.
- Adjusted EBITDA is now estimated to be approximately $380 million.
- Capital expenditures are now estimated to be between $370 million and $390 million.
- 2027 Guidance: Total system shop openings are estimated to be approximately 250.
Compared to 2026 Guidance issued in the previous quarter:
- Total revenues are now projected to be between approximately $2.1 billion and $2.13 billion.
- Same shop sales growth is now estimated to be in the range of 5% to 6%.
- Adjusted EBITDA is now estimated to be between $385 million and $390 million.
- Capital expenditures are now estimated to be between $350 million and $370 million.
- Total system shop openings are estimated to be at least 185.
Looks pretty good, right? And yet, the stock tanked. Let’s take this line by line. Analysts did not like total revenue projection specified at the low end of the range given in the previous quarter. Analysts did not like the slowing rate of same shop sales (SSS) growth, particularly the rate of shop visit growth. Yes, the rate of growth has slowed, BUT we must keep in mind this is the 13th consecutive quarter of SSS growth and the 8th consecutive quarter of same shop visitor growth! Also, analysts did not like the 2026 SSS growth projection being changed from 5 – 6% to “at least 5%.” Please. Analysts did not like CapEx being increased from $350 million and $370 million to $370 million and $390 million. Well, it takes CapEx to grow a company. Importantly, in the conference call, the CFO reiterated that Capex per shop remained consistent at $1.4 million.
What else? There is growing concern about competitors, particularly 7 Brew, which is a fast-growing Dutch Bros copycat. The CEO provided some insight, stating “every single market that we enter, we are near other competitors. In particular, if we look at some of the emerging brands, like a 7 Brew, we do now have four states where we both have 20-plus shops. As we look at that closely and look at the different radii that we go to, like from a quarter mile to a half mile to a mile out, it actually makes no difference on our AUV.” AUVs, by the way, are at $2,226,000, record levels.
Also, analysts expressed concern about shop cannibalization. The CEO addressed this concern, stating, “as we go into markets where we’re densifying, we are trying to get more convenient for our customers. We’re trying to be closer to where they live and work. Every single year, we’ve got sales transfer or cannibalization as we open more shops, but we’re continuing to take share as we do that. Our modeling now, I think, is very good at understanding how much cannibalization we’ll have as we go into a market, and we feel very comfortable opening new shops that are more convenient for our customers, and if they switch from one shop to another. Again, that is something that is just part of the model as we grow, as you’re opening shops, where the customers are sticking with us, but sometimes they choose a more convenient shop.”
As to cannibalization, here’s my two cents. I recall meandering the streets of downtown Boston in the early aughts. I saw Starbucks on seemingly every corner. I remember thinking–this is too much. I was right, but I was early. Starbucks had about a two-decade run before that density became a problem. Today, only one standalone Starbucks remains in downtown Boston.
Dutch Bros is just getting started. Increasing shop density is the right move. I’ll give an example from my recent visit to the only Dutch Bros in Gilroy, California, which had been open for over a year at the time of my visit. I ordered ahead, thinking the app would say my drink would be ready in about 10 minutes. Nope. The app warned me that my drink would not be ready for 45 minutes! WTF? I drove over to the shop to find people and cars EVERYWHERE. There was one line of people picking up drinks. There was another line of people ordering drinks. There were people standing and sitting under the awning, people milling around in the parking lot, people hanging out in parked cars. And as to cars, there was a line of cars in the street, snaking into and around the parking lot and then splitting into a double-line around the shop to get to the drive-through window! Okay, explain to me how opening another Dutch Bros somewhere near this location is a bad idea!
Dutch Bros has found a healthy balance between planting flags in new markets and densifying in existing markets. Dutch Bros is now in 28 states, up from 11 when it went public in September 2021. It had nearly 500 shops then, and now it has nearly 1300. And yet, with that growth, SSS have been solid, to say the least. Furthermore, whenever Dutch Bros opens in a new market, the crowds come out. In addition to listening to management commentary on new shops, I track local reaction to new shops in real time by reading local papers, watching local news, reading online reviews, and monitoring social media. In Q3, for example, Dutch Bros planted its flag in Iowa in Des Moines and more recently in Virginia in Virginia Beach. Intel shows both openings were smashing successes with the usual crazy lines!
A few other items I want to mention. In the quarter, contribution margin increased to 28.1% from 27.8% in Q3 2025. Also, SG&A dropped from 15.4% to 14.4%. Both important metrics are moving in the right direction. SG&A percentage has been trending downward for a few years, now. That’s exactly what we want to see: less and less SG&A percentagewise in support of increasing number of shops and the increasing revenue they bring in.
Lastly, back to 7 Brew, it was successful in challenging Dutch Bros’ deal to scoop up myriad locations from the Salad and Go bankruptcy. The Court allowed both Dutch Bros and 7 Brew to submit higher bids. Dutch Bros, which already had offered a premium bid, declined to offer more. Thus, in a bulk auction, 7 Brew, purchased the rights to 63 sites for $123 million: 36 in Arizona, 19 in Texas, 3 in Nevada and 5 in Oklahoma. That is approximately $1,952,000 per site versus the $1,615,000 that Dutch Bros offered. I respect Dutch Bros management’s financial discipline–they were willing to stretch it but not break it. Factoring in approximately $300,000 – $400,000 in conversion costs, 7 Brew is paying a lot for those sites—about 170% of what Dutch Bros pays on average to develop a new site. At any rate, Dutch Bros still was able to purchase rights to other Salad and Go locations that were not sold in the auction.
What am I doing? I’ve been buying Dutch Bros every chance I get. I’ve bought it in the 40s and the 30s recently, and I will continue to buy more. The company is on track to deliver 185 new shops by the end of the year, and the plan for next year is 250 more as the company marches toward the goal of 2029 shops in 2029. Very doable.
Onward!
Dutch Bros Inc. Reports Third Quarter 2026 Financial Results | Wed, 11/04/2026 – 16:05
Dutch Bros Inc. (BROS) Q3 FY2026 earnings call transcript
Dutch Bros Inc. Reports Second Quarter 2026 Financial Results | Wed, 08/05/2026 – 08:00
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