What happened
Shares of Dutch Bros (BROS 0.07%) charged sharply higher this week, surging as much as 15.7%. As of 3 p.m. ET Thursday, the stock was up 6.9%.
The catalyst that sent the coffee chain higher was an appearance by its CEO on Jim Cramer's Mad Money to discuss the company's ambitious expansion plans.
So what
President and CEO Joth Ricci discussed plans to expand Dutch Bros to more than 4,000 locations nationwide, up from 538 currently. While larger competitors are focusing on international expansion, Ricci believes there is plenty of opportunity for growth right here in the U.S.
Image source: Getty Images.
Part of its accelerating expansion plans involves spending more capital upfront during the building process in return for lower rent agreements. Following this blueprint, Dutch Bros was more nimble and able to facilitate 20 new store openings in December alone, while also increasing its goal for 2022. The company is now forecasting 125 new shop openings this year, with half of those in new markets, up from 98 in 2021. This will result in capital expenditures of between $175 million and $200 million, up from $46 million and $121 million, respectively, in 2020 and 2021.
Dutch Bros has continued to focus on the company's culture, which it describes as "a fun loving, mind-blowing company making a massive difference one cup at a time," making it one of the fastest growing brands in the food service and restaurant industry in the country. Dutch Bros has made it a point to generate "careful" growth so as not to lose that distinctive culture.
Now what
Dutch Bros has been increasing its foot traffic over the past couple of years at a much higher rate than its largest competitors, Starbucks (SBUX 1.58%) and privately held Dunkin' Brands, though those results were generated from a much smaller store base. For context, Dutch Bros has a store base of 538 locations, which pales in comparison to Starbucks, which boasts more than 15,000.
It's clear that Dutch Bros strategy is working. Fourth-quarter revenue of $140 million surged 58% year over year, driven by same-store sales that grew 10.1%. The company isn't yet profitable, preferring to focus on its growth.
Given what we've seen thus far and its ambitious expansion plans, Dutch Bros has all the makings of a successful disruptive upstart.
