Dutch Bros Inc. (BROS): history, ownership, mission, how it works & makes money

A Brief History of Dutch Bros Inc.

Company Overview

Dutch Bros Inc., founded in 1992, has rapidly expanded its presence across the United States, becoming one of the leading coffee chains known for its drive-thru service model. As of September 30, 2024, the company operates 950 company-operated and franchised shops across 18 states, marking a 19.6% increase year-over-year.

Financial Performance

For the three months ended September 30, 2024, Dutch Bros reported total revenues of $338.2 million, an increase from $264.5 million in the same period of the previous year. The revenue generated from company-operated shops amounted to $308.3 million, while franchising and other revenue contributed $29.9 million.

Earnings and Net Income

The net income for the third quarter of 2024 was reported at $21.7 million, translating to earnings per diluted share of $0.11, compared to a net income of $13.4 million or $0.07 per diluted share in the third quarter of 2023.

Cost Structure

Dutch Bros has seen a significant increase in its cost structure. The total cost of sales for the three months ended September 30, 2024, was $248.2 million, compared to $189.3 million in the prior year. Labor costs also increased significantly, amounting to $85.1 million, a rise of 38.4% year-over-year.

Profit Margins

The company-operated shop gross profit was $68.4 million, representing a gross margin of 22.2% for the quarter, down from 24.1% in the previous year. This decline in margin is attributed to increased labor and operational costs.

Occupancy and Other Costs

Occupancy and other costs for the quarter totaled $50.7 million, up 40.3% from the previous year. This increase is primarily due to expanded operations and higher maintenance costs.

Future Outlook

With the ongoing expansion efforts and the introduction of new product offerings, Dutch Bros aims to increase its market share while navigating the challenges posed by inflation and rising labor costs. The company plans to continue leveraging its loyalty program, Dutch Rewards, which accounted for 67.2% of total transactions during the third quarter of 2024.

Key Financial Metrics

A Who Owns Dutch Bros Inc. (BROS)

Ownership Structure

As of September 30, 2024, Dutch Bros Inc. has a dual-class share structure consisting of Class A, Class B, Class C, and Class D common stock. The ownership breakdown is as follows:

Major Shareholders

The major shareholders of Dutch Bros Inc. include institutional investors, mutual funds, and individual stakeholders. As of the latest available data, the top institutional holders include:

Executive Ownership

The executive team and board members also hold significant shares in the company. Key executives and their ownership stakes include:

Recent Changes in Ownership

In the most recent quarter, Dutch Bros Inc. reported the following changes in ownership:

• Net income attributable to Dutch Bros Inc. was $12,644 thousand for the three months ended September 30, 2024.
• Net income attributable to non-controlling interests was $9,068 thousand for the same period.
• Equity-based compensation expenses totaled $1,902 thousand, impacting overall ownership stakes slightly due to dilution effects.

Financial Performance Indicators

For the three months ending September 30, 2024, the company's financial performance highlights include:

Market Capitalization

The market capitalization of Dutch Bros Inc. as of September 30, 2024, is approximately $3.8 billion, reflecting its growth trajectory and investor interest in the coffee retail sector.

Conclusion of Ownership Insights

Ownership data and shareholder dynamics provide insights into the strategic direction of Dutch Bros Inc. and its appeal to both institutional and retail investors.

Dutch Bros Inc. (BROS) Mission Statement

Mission Statement Overview

Dutch Bros Inc. is dedicated to creating a positive impact in the communities it serves. The company aims to provide high-quality beverages while fostering a fun and energetic environment for both customers and employees. The mission emphasizes community involvement and customer satisfaction as core elements of the brand's identity.

Financial Performance

As of September 30, 2024, Dutch Bros Inc. reported significant growth in its financial metrics:

Expansion and Market Presence

As of September 30, 2024, Dutch Bros operated 950 company-operated and franchised shops across 18 states, marking a 19.6% increase from the previous year. The company continues to pursue expansion strategies to increase its market presence.

Operational Segments

Dutch Bros categorizes its operations into two segments: Company-operated shops and Franchising. The performance of these segments for the three months ended September 30, 2024, is detailed below:

Cost Analysis

The cost structure for Dutch Bros has shown variations in different expense categories:

Customer Engagement

The Dutch Rewards loyalty program continues to play a critical role in customer engagement, contributing to a higher percentage of total transactions. As of September 30, 2024, Dutch Rewards transactions accounted for 67.2% of total transactions, up from 63.1% the previous year.

Community and Social Responsibility

Dutch Bros emphasizes its commitment to community involvement, with initiatives aimed at supporting local charities and events. This focus on social responsibility aligns with the company's mission to create a positive impact.

Outlook

Looking ahead, Dutch Bros aims to continue expanding its footprint while maintaining a strong emphasis on quality and customer experience. The company is also focused on managing operational costs effectively amidst rising inflation and wage pressures.

How Dutch Bros Inc. (BROS) Works

Company Overview

Dutch Bros Inc. operates a chain of coffee shops across the United States, focusing on specialty coffee and beverages. As of September 30, 2024, the company has a total of 950 shops, which include both company-operated and franchised locations, marking an increase of approximately 19.6% from the previous year.

Financial Performance

For the three months ended September 30, 2024, Dutch Bros reported:

• Total revenue of $338.2 million, up from $264.5 million in the same period of 2023.
• Net income of $21.7 million, compared to $13.4 million in Q3 2023.
• Earnings per diluted share of $0.11, an increase from $0.07 in the prior year.

For the nine months ended September 30, 2024, the financials were as follows:

• Total revenue reached $938.2 million, up from $711.7 million in 2023.
• Net income of $60.1 million, compared to $13.7 million in the prior year.

Revenue Segmentation

Dutch Bros generates revenue from two primary segments: Company-operated shops and Franchising. The revenue breakdown for Q3 2024 is as follows:

Cost Structure

For the three months ended September 30, 2024, the costs and expenses were reported as follows:

• Cost of sales: $248.2 million
• Selling, general and administrative expenses: $57.5 million
• Labor costs: $85.1 million, representing 27.6% of company-operated shop revenues.

Growth Strategy

Dutch Bros aims to expand its footprint through both company-operated and franchised locations. The company opened 33 new company-operated shops in Q3 2024 and 5 new franchised shops. The total number of operating weeks for company-operated shops was 8,212, while franchised shops operated for 3,955 weeks.

Key Performance Indicators

Several key performance indicators illustrate the company's operational efficiency and customer engagement:

Cash Flow and Liquidity

As of September 30, 2024, Dutch Bros had cash and cash equivalents of $281.1 million, up from $133.5 million at the end of 2023. This increase highlights the company's strong cash flow generation capabilities.

Debt and Financing

The company reported total long-term debt (net of current portion) of $224.4 million as of September 30, 2024. Interest expense for Q3 2024 was $6.9 million, down from $9.3 million in Q3 2023, indicating improved interest management.

Market Conditions

Dutch Bros operates in a competitive market sensitive to macroeconomic conditions. The company has adjusted its pricing strategy in response to legislated minimum wage increases and inflationary pressures, which may impact consumer discretionary spending.

How Dutch Bros Inc. (BROS) Makes Money

Revenue Streams

Dutch Bros Inc. generates revenue primarily through two segments: company-operated shops and franchising. As of September 30, 2024, the revenue breakdown is as follows:

Company-operated Shops

The company-operated shops contributed significantly to revenue growth, with an increase of approximately 30.4% year-over-year for the three months ended September 30, 2024. This increase was attributed to:

• New company-operated shops not yet in the comparable shop base contributing $64.9 million.
• Increase in same shop sales contributing $7.0 million.

Franchising Segment

The franchising segment also showed growth with revenues of $29.9 million for the three months ended September 30, 2024, reflecting a 6.7% increase from the prior year. The performance was driven by:

• Products sold to franchisees, net of costs, contributing $2.1 million.
• New shop openings contributing $1.2 million.

Cost Structure

For the three months ended September 30, 2024, the cost structure is detailed below:

Gross Profit and Net Income

The gross profit for company-operated shops was $68,377,000 for the three months ended September 30, 2024, representing a gross margin of 22.2%. The net income attributable to Dutch Bros Inc. was $12,644,000 for the same period, with earnings per diluted share of $0.11.

Key Performance Indicators

Key performance indicators for Dutch Bros as of September 30, 2024, include:

Future Outlook

As of September 30, 2024, Dutch Bros plans to continue expanding its footprint, with expectations to open new company-operated shops and enhance franchise operations. The company also anticipates potential impacts from macroeconomic conditions, including inflation and minimum wage increases, which could affect operating costs and consumer spending.

Overall, Dutch Bros Inc. leverages its dual revenue streams and strategic expansion to foster growth and maintain profitability in a competitive market.

Updated on 16 Nov 2024

Resources:

1. Dutch Bros Inc. (BROS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Dutch Bros Inc. (BROS)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Dutch Bros Inc. (BROS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.