Dutch Bros Inc. Q1 FY2025 earnings call

• On February 7, Dutch Bros opened its 1,000th shop in Orlando, FL, with plans to open 2,029 total shops by 2029. • Q1 results showed strong momentum with total revenue growth, driven by new shop growth, productivity, system same-shop sales, and transaction growth. • Dutch Bros' culture, dedicated team, and training programs contribute to an exceptional customer experience. • In 2024, the real estate development team was enhanced, and in 2025, the company plans to open at least 160 system shops. • Three foundational transaction-driving initiatives: innovation (e.g., launch of Sweet Cereal Sips LTO), strategic use of paid advertising, and Dutch Rewards (approximately 72% of system transactions in Q1 attributed to the loyalty program). • Order Ahead accounted for approximately 11% of transaction mix in Q1, showing strong adoption, especially in the morning daypart. • Throughput initiatives are underway to address bottlenecks and improve productivity, and the food test pilot was expanded to 32 shops with plans for broader rollout in 2026.

Total revenue in Q1 increased 29% compared to the same period last year, reaching $355 million. System same-shop sales growth was 4.7%. Company-operated same-shop sales grew 6.9%, with transaction growth of 3.7%. Adjusted EBITDA was $63 million, a 20% increase year-over-year. Company-operated revenue for Q1 was $326 million, up 32% from the first quarter of the previous year. Franchising and other revenue was $29 million, a 6.4% year-over-year increase. Company-operated shop contribution was $96 million, up 30% year-over-year, with a contribution margin of 29.4% in the quarter.

• 2025 total revenues, system same-shop sales growth, and adjusted EBITDA are trending towards the upper half of the previously communicated ranges. • Expect to open at least 160 system shops in 2025, representing 16% systems shop growth. • Adjusted SG&A is expected to have approximately 90 basis points of leverage for the full year 2025. • Beverage, food, and packaging costs are expected to be approximately 27% of company-operated shop revenue in Q2, with COGS expected to have approximately 110 basis points of net margin pressure for the full year, including the estimated impact of tariffs.

• Uncertainty in the broader consumer environment could impact sales performance. • Fluctuations in coffee prices and import tariffs may affect COGS margins. • Challenges in maintaining consistent transaction growth and operational efficiency across all shops amidst various operational initiatives.

Q: David Tarantino asked about Q2 momentum and traffic trends.

A: Josh Guenser responded that Q2 is in line with expectations, with the traffic trend continuing and an adjustment made for the leap day.

Q: Brian Harbour inquired about new store productivity and food beverage costs.

A: Christine Barone noted strong new store productivity in Q1, and Josh Guenser stated that food beverage costs are in line with expectations, with coffee price tariffs being absorbed within the guidance range.

Q: Dennis Geiger asked about mobile order incrementality.

A: Christine Barone mentioned that mobile order is driving increased frequency and loyalty sign-ups, and is benefiting the morning daypart.