What happened
Shares of Dutch Bros (BROS 3.49%) were down 9% as of 1:27 p.m. ET on Wednesday after the company reported results for the first quarter. The fast-growing restaurant chain delivered the revenue growth investors would expect, but Wall Street was looking for stronger performance in same-store sales and earnings.
The post-earnings drop wipes out most of the stock's year-to-date gains. The stock is trading 20% below its initial public offering price.
NYSE: BROS
Key Data Points
So what
First, a look at the key numbers. Revenue grew nearly 30% over the year-ago quarter, reaching $197 million. Dutch Bros opened a record number of stores in the quarter, with 45 new shops that padded the top-line growth.
However, system same-shop sales fell 2%. This is a somewhat unusual drop for Dutch Bros. This is only the third quarter that this metric has been negative since the first quarter of 2021. Since Dutch Bros has reported occasional misses in same-shop sales, this recent performance shouldn't be concerning, especially as the consumer spending environment is still choppy.
Another negative was the net loss of $9.4 million on the bottom line. However, management made considerable progress to improve profitability, as it cut the year-ago ago net loss of $16 million nearly in half.
"We responded decisively to the economic climate and focused on accelerating shop level profitability, particularly in labor productivity to deliver a strong company-operated shop margin," CEO Jonathan Ricci said during the earnings call.
Now what
Management reiterated its previous full-year outlook to open at least 150 new systemwide shops, with at least 130 of these shops to be company-operated.
The market is aware of the company's growth potential, but the stock still trades at a discount to other fast-growing restaurant chains on a price-to-sales basis. The company operates in just 14 states. It has a vast amount of runway to grow, so buying the dip might be worth it.
