Amidst heavy competition among coffeehouses, Dutch Bros (BROS 1.18%) has increasingly stood out. The Oregon-based coffee chain has spearheaded a rapid expansion, opening its 1,000th location in February and setting a goal of operating 2,029 coffee shops by 2029.
The company's stock, which plummeted soon after its 2021 initial public offering (IPO), spiked to a high of almost $87 per share early this year. Even though it has steadily declined since then, that rally renewed interest in the stock. Also, given the historical growth of Starbucks (SBUX +2.15%), investors might be wondering whether Dutch Bros stock can follow in its footsteps and possibly set them up for life.
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The Dutch Bros growth trajectory
To succeed in the coffee business, Dutch Bros must compete with Starbucks, privately held chains such as Dunkin' and Scooter's, and numerous independent coffee shops that dot the American landscape.
Dutch Bros focuses on producing high-quality beverages served at drive-thru locations. It has stood out for its breve coffee drinks, which are based on espresso and half-and-half. The company also emphasizes philanthropy, sustainability, and inclusion, which endears it to many of its customers.
In contrast, Starbucks employs a somewhat different business model, spending to maintain indoor areas that give customers more of a coffeehouse-like experience.
In 2021, Dutch Bros launched an IPO on its model, with approximately 500 shops at the time it went public. As of the end of the third quarter this year, it had grown to 1,081 shops in 24 states. Although it has more than doubled its footprint since its IPO, it remains far below Starbucks' store count of 41,000 locations globally.
Starbucks, it should be noted, had 135 stores when it went public in 1992. With that stock, a $5,000 investment on the IPO day would be valued at over $1.6 million today when including dividend payments.
What's more, Dutch Bros has yet to announce any international expansion plans. Although it may eventually exceed its goal of having 4,000 shops, outlined soon after its IPO, it's unlikely to experience the proportional growth of its larger competitor, or to reach a size of 41,000 like Starbucks. That may disappoint investors hoping Dutch Bros will set them up for life, at least on a modest investment.
Dutch Bros' financial growth potential
The financials seem to show the challenge more starkly. At the time of its IPO, Starbucks' market cap was around $250 million, making it barely a small-cap stock. Even with its current size, its market cap today is just over $93 billion.
In comparison, Dutch Bros' growth has given it a market cap of around $6.8 billion. Thus, if you invested $5,000 today and Dutch Bros grew to Starbucks' current market cap, your position would be worth almost $69,000. While reaping such a return would be impressive, it would hardly qualify as "set up for life." To achieve that feat, you might have to invest $100,000, a level beyond the means of most small investors.
Still, keep in mind that such a return would likely exceed that of the S&P 500. In the first nine months of 2025, Dutch Bros' net income was over $58 million, far above the $32 million in the year-ago period.
Moreover, while the stock's performance is flat this year, it has risen by over 125% from its September 2023 low. That has taken its price-to-earnings (P/E) ratio to an elevated level of 113.
NYSE: BROS
Key Data Points
Its high earnings multiple is not surprising considering that Dutch Bros didn't turn profitable until 2023. Still, comparing its price-to-sales (P/S) ratio of 4.4 to Starbucks' P/S of 2.5, Dutch Bros appears to trade at a premium valuation.
Can Dutch Bros stock set you up for life?
Given the positioning of Dutch Bros, you should not expect to be set for life with this stock without making a considerable investment.
Indeed, the company is in the middle of a rapid regional to national expansion. This is likely to take the stock higher over time as the additional locations drive more revenue and earnings. Unfortunately, it has already turned into a mid-cap stock, and given the history of Starbucks, Dutch Bros does not appear to offer a growth path that can set you up for life.
Ultimately, Dutch Bros stock looks like an excellent choice to deliver market-beating returns. However, if you're a small investor, you'll likely have to find other winning stocks to sustain yourself from your investments.
