When the S&P 500 tumbled into bear-market territory halfway through the year, it wasn't surprising that many stocks were trading down. The market has been especially unkind to former highfliers like drive-thru coffee shop Dutch Bros (BROS 4.75%).

Dutch Bros stock is down 54% from the highs it hit following its initial public offering last September on fears that a recession will cause growth to slow. When consumers tighten their belts, coffee shop coffee is an easy discretionary purchase to cut out to save money.

Five people smile and hold up Dutch Bros coffee cups.

Image source: Dutch Bros.

While the drive-thru coffee slinger is still forecasting it will open more stores this year (130) than previously planned, it also reduced its growth rate guidance from the mid-teens to 10% to 15% growth. It's not a material impact yet, but it's clear there is a toll being taken, especially after it had to raise prices.

Still, it would be a mistake to think Dutch Bros is not an outstanding growth stock. It only has a small sliver of the market so far, but its long-term potential remains significant.

Driving growth higher

Recently geolocation data specialist Placer.ai found that of all the major coffee shops nationwide, there was only one that was recording growth: Dutch Bros.

Certainly, a part of that was because of its pace of new store openings, and same-store visits were down ever so slightly in June. Still, the data shows Dutch Bros customers are willing to drive farther to buy its coffee, whereas rivals Starbucks and Dunkin' Brands are having difficulty just treading water with store visits.

Dutch Bros isn't immune from inflationary pressures, and surging gas prices were the biggest threat it faced last quarter. CEO John Ricci told analysts on the earnings conference call: "I will tell you that in mid-March when gas prices jumped the way they did, we saw an immediate flip on our daily sales. It was almost to the day."

Yet, with a presence of only 600 stores in just a dozen states, there is still plenty of country for Dutch Bros to drive through and grow. It sees a market for 4,000 locations in the next 10 to 15 years, and by not even being overly aggressive with its growth plans, its existing store count could readily double in the next few years.

Wake up to this opportunity

Americans love their coffee, with the National Coffee Association saying 66% of adults drink the beverage and consume 517 million cups daily. Mornings are naturally the time when we have our cup of joe (84% have it with breakfast) but over a quarter of us drink it when we're away from home, up 8% compared to 2021.

That's no surprise since people are increasingly returning to work, but it's also a good sign for Dutch Bros as it grows out its store footprint in the years ahead. The coffee stock's business model has proved to be a winner so far, and investors should expect to be rewarded many times over for the next decade and beyond.