Since the start of the millennium, Starbucks stock is up an astounding 3,000%. In short, it's possible for coffee stocks to bring life-changing returns. And that's probably why investors are curious about Dutch Bros (BROS 1.48%) and Black Rifle Coffee Company (BRCC 2.07%). Both have been public for 15 months or less, meaning those who buy today are getting in early.

But are Dutch Bros and Black Rifle worthy of your investment dollars today? As we'll see, there's reason for caution with both.

1. Dutch Bros

Dutch Bros had 641 coffee shop locations at the end of the third quarter of 2022, 58% of which were company-owned. Moreover, the majority of new locations are company-owned as opposed to franchised. I look for three things in a company like this: a still-large growth opportunity, consistent same-store sales growth, and strong profitability early in its journey.

To my first coveted trait, Dutch Bros is expanding rapidly. Long term, the company envisions over 4,000 locations, and growing toward this goal will be a major theme in 2023 and beyond. It's on pace to open 130 total new locations this year and foresees opening at least 150 new locations next year.

Therefore, a large growth opportunity is there for Dutch Bros. However, recent same-store sales trends -- my second focus area -- highlight an area of concern. For existing locations, sales are expected to be flat in comparison to 2021. But sales were boosted by price increases. By contrast, traffic at Dutch Bros locations is down.

Dutch Bros is expanding, but it's mostly filling in existing markets with new locations. And this is contributing to sales declines at older locations. In Q3, management said this dynamic had a 2.4% drag on sales for company-owned locations. In other words, it looks like Dutch Bros is already hitting a ceiling with same-store sales by oversaturating certain markets.

On one hand, opening up new stores contributes to overall sales growth. After all, year-to-date revenue is up 50% year over year for Dutch Bros. However, a drop in sales per location does hurt store-level profitability -- my third focus area.

For perspective, consider that revenue from company-owned Dutch Bros locations was up 60% year over year in Q3. By comparison, gross profit from company-owned locations was only 50%. And the following chart shows the long-term trend of gross-profit growth trailing revenue growth.

BROS Revenue (TTM) Chart

BROS Revenue (TTM) data by YCharts

If new Dutch Bros locations in 2023 continue to pull sales from existing stores, the company's same-store sales and profitability could keep struggling, which is reason for caution.

2. Black Rifle

Black Rifle is in the coffee business, but it couldn't be more different from Dutch Bros. Whereas Dutch Bros generated 87% of Q3 revenue from company-owned stores, Black Rifle only has 21 stores total. Rather, Black Rifle generated 93% of its revenue in the third quarter of 2022 by selling coffee beans directly to consumers and from selling products at wholesale retail partners like grocery stores and convenience stores.

According to management, fewer than 20% of U.S. consumers are aware of Black Rifle. And yet, the company has amassed 278,000 subscribers to its monthly coffee shipments. And it's surprisingly done so without spending an exorbitant amount on sales and marketing. Year to date, it's spent $24.6 million on this line item, just 11.8% of revenue and down from the $25.3 million it spent during the comparable period of 2021.

Black Rifle's subscription business is strong. However, management has found out that while these customers tend to be loyal, they're still buying coffee at the grocery store out of convenience. Therefore, management worked hard to secure ideal shelf space in more than 4,000 Walmart locations, which rolled out in September.

The idea is that Black Rifle's subscriber base is already scattered throughout the country. And this can lead to word-of-mouth marketing as it expands in wholesale locations and by opening branded stores in the coming year and beyond.

If it's not obvious by now, allow me to say it explicitly: I like Black Rifle's business prospects more than Dutch Bros' for 2023, and it would be the stock I'd buy right now. However, I'm not a buyer of Black Rifle stock right now, either. Here's why.

Black Rifle went public via a special purpose acquisition company (SPAC) in 2022, and its share structure is consequently complicated. There are only 53 million Class A shares. However, there are over 159 million more shares represented in things like incentives and restricted stock units. These could potentially dilute shareholder value tremendously.

For this reason, while there are a lot of things I like about Black Rifle, I'm waiting at least two years from its public debut to see how this dynamic shakes out. It officially went public in February, which means I'll simply be watching from the sidelines throughout 2023.