Dutch Bros Inc. (BROS) Earnings

Management highlights

Dutch Bros operates with a people-led culture. Q1 results exceeded expectations due to broistas' passion, all-day beverage platform, innovation, and transaction drivers including food rollout. Raised full-year guidance. Q1 shop openings were ahead of schedule. AUVs at record levels. Investment in people drives engagement and retention. Clutch coffee bar conversions are performing well. New food rollout across 485 system shops, with food attachment rates in low teens. Introduced nostalgic throwback drinks and Mist Energy Refreshers. Dutch Rewards ended Q1 at 74% of transactions. Unaided awareness doubled in past year and a half. CPG products in select retail outlets are pacing ahead of expectations. Enhanced labor deployment and beverage production to improve throughput.

Guidance

Raised full-year guidance. Total revenues projected to be between $2.05 billion and $2.08 billion, 25% to 27% growth y-o-y. System same-shop sales growth expected to be in range of 4% to 6%. Adjusted EBITDA estimated to be in range of $370 million to $380 million. Total system shop openings estimated to be at least 185 shops. Capital expenditures remain within $270 million to $290 million range.

Segment performance

Total revenues increased 31% in Q1. Company-operated revenue was $429 million, up 31% or $103 million y-o-y. Company-operated same-shop sales growth was 10.6%, driven by 6.9% transaction growth. Company-operated shop contribution was $121 million, up 26% y-o-y. Beverage, food, and packaging costs were 26.2% of company-operated shop revenue, 120 basis points higher y-o-y. Labor costs were 26.2% of company-operated shop revenue, 120 basis points favorable y-o-y. Occupancy and other costs were 17.8% of company-operated shop revenue, 130 basis points higher y-o-y. Adjusted EBITDA was $79 million, up 26% y-o-y. System same-shop sales growth in Q1 was 8.3%, driven by 5.1% transaction growth. Expect full-year system same-shop sales growth of 4% to 6%. Expect to open at least 185 system shops in 2026. Q1 had 41 system shop openings, including 7 clutch coffee bar conversions. Clutch converted shops are outperforming system-wide AUVs and generating more than three times pre-conversion volumes. Conversion costs for clutch sites are in line with original expectations, at approx $1.4 million per shop.

Analyst Q&A

• Q: On broader category, competition and gas prices impact.

  A: Jeff, competition in energy market, Mist is complementary to Rebel, customers use both. Success in innovation leads others to recognize, customers may try customization. Q1 and April performance well, positioned well.

• Q: Texas 20% comp, thoughts.

  A: Sharon, Texas is largest comp state by shops. Spent time building brand awareness, densifying markets. Performance shows marketing levers and densification work.

• Q: New energy drink catalyst, taking share.

  A: Brian, Mist launched after testing, different from others. Complementary to Rebel, extends category. Taking share in coffee and energy markets.

• Q: Q2 same-shop sales guide, LTO and merch velocity.

  A: Dennis, LTO and merch velocity due to brand strength and learning. Q2 performance reflects underlying brand strength.

• Q: Development shakedown, stepping on gas.

  A: Andrew, development pipeline is rapid, operator pipeline ready, ready to continue growing.

• Q: Food operational shakedown, comp lifts.

  A: Andy, food rollout smooth, learned from mobile order. Tracking to 4% comp lift for shops with food.

• Q: Competition in markets, attractive markets.

  A: Chris, thoughtful market planning, brand strength allows strong entry. Clutch example shows brand strength.

• Q: Starbucks energy launch impact.

  A: Drew, no impact seen, Dutch Bros is category leader in energy.

• Q: Throughput initiatives, comp growth.

  A: Jacob, throughput initiatives enable transaction growth.

• Q: Mist and Rebel expanding market, clutch volumes.

  A: Sarah, Mist and Rebel expand category. Clutch volumes show brand strength.

• Q: Texas comp shop base percent, sand shore sales.

  A: Jeff, Texas is largest comp base. Higher AUVs near legacy competitors.

• Q: Dutch Bros square footage, conversion boxes.

  A: John, 900 square feet works well, conversion opportunities have drive-through space.

• Q: Occupancy and R&M pressures.

  A: John, O&O had build-to-suit and R&M impacts. Build-to-suit puts 50 basis points, R&M investments.

• Q: Order Ahead, channel.

  A: Chris, Order Ahead tracking order ready on arrival, positive momentum.

• Q: CPG contribution, EBITDA.

  A: Nick, CPG early, pleased with velocity.

• Q: Price vs mix, regional performance.

  A: Logan, about 1.5% price in Q1. Newer markets contribute more to comp growth.

• Q: Texas AUVs, competitors.

  A: Gregory, Texas has focused on brand awareness, density allows being choice.

• Q: Long-term contribution margin goal.

  A: Brian, margin target 30%, headwind from high coffee costs.

• Q: Food menu expansion, ninth SKU.

  A: Matt, food is platform, ninth SKU for afternoon business, thoughtful on SKUs.

• Q: Dutch Rewards impact, evolution.

  A: Christine, Dutch Rewards at 74% transactions, early in personalized segmentation, plans to evolve with data and streaks.