2023 was a stellar year for the regional coffee chain Dutch Bros. With systemwide sales of almost $1 billion and an increase of 5% in same-store sales in 2023, Dutch Bros is now ranked as the fourth-largest fast-food chain in the “snack” category by QSR magazine. Putting them closely behind global giants Starbucks, Dunkin’, and Dairy Queen.
Third quarter revenue grew by 33% to $264.5 million and fourth quarter revenue was up by 25.9% to $254.1 million for the period ending Dec. 31. Total revenue for the year was $965.8 million. Company-operated stores generated nearly 72% of that revenue. Christine Barone, named President of Dutch Bros in January 2024, predicts total revenues will reach $1.2 billion this year.
During a recent earnings call, Barone reported the company “had an exceptional 2023 and entered 2024 with great momentum. We continued to drive steady new shop growth, and Q4 marked our 10th consecutive quarter of 30+ new shop openings. In 2023, we opened 159 shops, of which 146 were company-owned or operated. Our system AUV reached its highest on record since the IPO, and we delivered a 2.8% increase in system same-shop sales growth. These results led to a terrific 2023, where we achieved 31% in annual revenue growth. Early last year, we began a series of traffic-driving initiatives outlined on our Q1 call in May. We saw the impact of these efforts culminate with a 5% increase in system same-shop sales in Q4, driven by a sequential improvement in customer traffic.”
Dutch Bros operates 831 stores in 16 states across the US but mainly in the West. No stores are operating in coffee-rich markets, including Chicago and New York. The chain’s footprint is relatively small compared to competitors Starbucks and Dunkin’, which operate 16,000 and 9,500 stores in the country's central region. However, according to Placer.ai, foot traffic for Dutch Bros has shown a 10% increase since last year. This puts them way above the coffee shop average for the year, which decreased by 2.7%.
That means a typical Dutch Bros location generates more sales over time. There are clear signs the company is becoming more popular every day. Capitalizing on this upward momentum, Dutch Bros plans on reaching 4,000 stores in the next ten to 15 years. To reach that goal, they’re opening a new support center for operations in Arizona, with 70 locations already. The new center will house 40% of the company’s operations by 2025.
A survey completed by food industry data analyst Technomic has also announced that Dutch Bros was just ranked second in the favorite companies for consumers category due to their high-quality customer service, convenience, and value. Thousands of consumers were surveyed and asked to rank their favorite restaurant brands, factoring in hospitality, value, and ambiance. Coming in just below the fine dining concept Ruth Chris’s Steak House, Dutch Bros was the only coffee chain to make the list.
Dutch Bros credits its popularity to the exceptional personalized service their “broistas” provide, creating meaningful connections to the local communities and offering fast and convenient drive-thru service. Their rewards program also plays a large part in their success, as around 65% of transactions during the fourth quarter of 2023 came from rewards program members.
Dutch Bros began as a simple pushcart in Grant’s Pass, Oregon in 1992. Operated by Dane and Travis Boersma, they pioneered the drive-thru coffee format, a model recently adopted by McDonald’s new coffee and specialty beverage spin-off, CosMc’s.