Dutch Bros Inc. Q2 FY2025 earnings call

• People-First Culture: Dutch Bros has a longstanding people-first culture, with senior leaders immersed in the business to drive people-centric decisions. Field surveys show high job satisfaction. • New Shop Openings: Opened 31 new shops in Q2, entering Indiana as the 19th state. Plans to open at least 160 system shops in 2025, with new shop productivity elevated. • Transaction-Driving Initiatives: - Innovation: Launched new flavors like Lavender, Dulce de leche, and others, responding to customer demand. - Paid Advertising: Aided and unaided brand awareness improved, with plans to leverage CPG launch in 2026 for further awareness. - Dutch Rewards: 72% of system transactions attributed to the loyalty program, a 5-point increase year-over-year. • Food Pilot: Expanded food pilot to 64 company-operated shops, seeing early positive results in the morning daypart with ticket and transaction lift.

In the second quarter, Dutch Bros reported revenue of $416 million, a 28% year-over-year increase. System same-shop sales growth was 6.1%, driven by 3.7% transaction growth. Company-operated same-shop sales growth was 7.8%. Adjusted EBITDA for the quarter was $89 million, a 37% increase. System-wide average unit volumes (AUVs) were $2.05 million. Company-operated revenue was $381 million, up 29% year-over-year, with company-operated same-shop sales growth at 7.8% (5.9% from transaction growth). Company-operated shop contribution was $118 million, a 30% increase, with a contribution margin of 31.1%. Beverage, food, and packaging costs were 25.3% of company-operated shop revenue.

• Total revenues: Raised full-year guidance to between $1.59 billion and $1.6 billion. • System same-shop sales growth: Raised to approximately 4.5%. • Adjusted EBITDA: Raised to between $285 million and $290 million. • Shop openings: Expect to open at least 160 system shops in 2025.

• Coffee Cost Tariffs: Monitoring tariffs as coffee accounts for 10% of COGS, with 50% sourced from Brazil. • Market Competition: Competitors attempting to catch up, requiring ongoing innovation and strategic focus to maintain advantage.

Q: About CPG strategy in 2026, A: Christine Barone stated CPG will roll out in markets where Dutch Bros has shops, with early rollout starting in Q1 2026.

Q: On speed and throughput, A: Christine Barone mentioned labor deployment, implementation of speed dashboards, and staffing to match demand during peak periods.

Q: On new store productivity, A: Christine Barone said new shop productivity remains elevated, with strong performance across various markets.

Q: On innovation and competitive advantage, A: Christine Barone discussed testing, customer panels, and balancing art and science in introducing new products.

Q: On mobile order mix, A: Christine Barone said mobile order accounts for 11.5% of transactions, with new markets having higher mix and walk-up window channel at 15%.

Q: On food test rollout, A: Christine Barone explained the gradual rollout to ensure proper training and team readiness.

Q: On Q3 comps and marketing, A: Joshua Guenser said Q3 is off to a good start with underlying momentum, and marketing will be at a normalized run rate; Christine Barone noted marketing balance to avoid predictability.

Q: On mobile order impact, A: Christine Barone said mobile order drives frequency lift and demand in the morning daypart.

Q: On marketing percentage and efficiency, A: Joshua Guenser said marketing spend is efficient, and Christine Barone highlighted Dutch Rewards' role in maximizing marketing efficiency.

Q: On awareness study, A: Christine Barone mentioned aided and unaided awareness improved, particularly in new markets.

Q: On food test goals, A: Christine Barone reported all goals (Broista satisfaction, throughput, complexity, assortment) are being met with high satisfaction.

Q: On ramping up growth, A: Christine Barone stated all areas are aligned for continued acceleration, with strong market planning and capital efficiency.

Q: On value positioning, A: Christine Barone said Dutch Bros is well-positioned on value with customization and positive customer experience.