2024-03-24 08:09:30 ET
Summary
- Dutch Bros has grown revenue at a CAGR of +42%, underpinned by store growth of +22%. The company’s trajectory remains strong and is underpinned by commercial development.
- Management is refining its offering and maintaining its focus on its key competitive advantages, namely convenience and choice, allowing for brand development.
- We see scope for revenue to more than double in the next 5 years, with lower store and revenue per store growth than achieved historically.
- BROS appears on track to exceed its mature peers’ margins while delivering outsized growth. The biggest risk to the company is funding its expansion.
- BROS’ valuation is attractive in our view, in part due to the equity cost to fund the company. This represents value in our view.
Introduction and thesis
Dutch Bros ( BROS ) is a rapidly growing coffee chain headquartered in Grants Pass, Oregon. Founded in 1992 by brothers Travis and Dane Boersma, the company operates a unique drive-thru model that focuses on providing high-quality coffee, beverages, and customer service. Dutch Bros is known for its loyal customer base, energetic staff, and commitment to community involvement....
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Dutch Bros: Upside Potential Remains High If Growth Remains