While Dutch Bros Coffee is in the midst of a leadership transition from current CEO Joth Ricci to incoming CEO Christine Barone — who is taking over as head of the company at the end of the year — the growing coffee chain is slowly and steadily working on brand recognition, as per the company’s Q3 earnings reported on Nov. 7. As the Oregon-based company opened its 800th store last month, Dutch Bros is well on its way to its long-term goal of quintupling its current store portfolio to reach 4,000 locations over the next 10-15 years.
The road to 4,000 stores begins with ramping up brand recognition, largely through investment in rewards, menu innovations, and deals that encourage Dutch Bros customers to share with friends, like the Fill a Tray promotion that has been a quarterly deal for three quarters, where customers can get four drinks for $15 — with the goal being to introduce new people to the brand.
“A lot of our customers are finding our rewards program first, and then as we enter into a new market, we already have rewards members in that market,” Barone told Nation’s Restaurant News. “We truly do believe that the best way to be introduced to a new brand is from someone that loves it themselves. So, I think we just have a lot of shareable moments within the brand. We have Fill a Tray, and then we have sticker days where we hand out stickers that people can share and get to be a part of the brand.”
The future store development pipeline for Dutch Bros will be largely centered on internal growth through the company’s base of 325 operators, with connections and stores ready to go in new markets, though the company declined to share more of the new markets it wants to try. Barone said that once they enter new markets, Dutch Bros plans to use a fortressing strategy to penetrate markets more completely, build up brand recognition, and boost revenue — the effects of which will likely be seen by 2025.
“We've had a rapid infill spate of pace as we've grown,” Barone said. “As we’ve gone into the center of the country and into Texas, it's been really important to have a base there as we continue to expand East and open in new markets like North Carolina and Florida. We're also going to open a second roasting facility just outside of Dallas in 2024.”
Dutch Bros executives emphasized during Tuesday’s earnings call that the company’s rewards program is still in its infancy stages — having just launched in 2021 — and has a lot of room to grow. This year, Dutch Bros made some notable changes to its rewards program, including taking the base discount and splitting it into two layers, including more personalized offers, which can help introduce new and returning customers to different areas of the menu.
“We're really at the beginning of our journey on that -- we've had great success this quarter in using the rewards program to help drive frequency and transactions,” Barone said. “We're sending a lot of mass offers now and our plan is to continue to personalize those offers.”
Dutch Bros reported same-store sales growth of 4% for the third quarter ended Sept. 30, largely driven by the company’s fortressing growth strategy. The company reported record revenues of $265 million, a 33% increase from the same quarter the year prior, of $198.6 million. Net income was $13.4 million or $0.07 per share, as compared with $1.6 million or $0.03 per share the same quarter the year prior. The company opened 39 new shops in the third quarter, for a total of 794 net units as of the end of September.