Shares of Dutch Bros (BROS 0.18%) are down 14% in 2026 (as of April 13). The company is dealing with rising coffee costs. And it's embarking on a huge growth spurt, driving higher occupancy costs.
Management believes the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin will face 60 basis points of pressure for the current full year, partly from these two factors. And for the just-ended first quarter, mainly due to elevated coffee costs, there will be a 200-basis-point headwind.
But is this growth stock still a buy in 2026?
Image source: Getty Images.
The coffeehouse chain is focused on growth
At the end of 2025, Dutch Bros had 1,136 coffee shops in 25 states nationwide, a figure that has ballooned over time. The goal is to open at least 181 net new locations in 2026. And since Dutch Bros' leases are transitioning to build-to-suit agreements, this raises occupancy costs.
However, the growth story isn't a red flag. In fact, this is exactly why certain investors are looking at this stock. It's a key part of the Dutch Bros investment thesis. And the hope is that all of this expansion will lead to much stronger financials in the future. Executives think there is room for 7,000 shops in the U.S. one day.
According to consensus sell-side analyst estimates, Dutch Bros is projected to increase revenue at a compound annual rate of 25% over the next three years. Its adjusted earnings per share are expected to rise at a yearly clip of 27%. Expanding the physical footprint is the most important catalyst that can drive this type of growth.
Some things aren't in the company's control
While management's growth strategy, which focuses on relentless new store openings, is totally within the company's control, there's an external factor negatively impacting profitability. This is the trend of rising coffee costs. The price of a pound of mild arabica coffee has been extremely volatile since late 2024. It's down 22% in the past 12 months, but about double where it was five years ago.
According to Dutch Bros CFO Joshua Guenser, coffee only represents about 10% of the company's cost of goods sold. He also acknowledged that coffee prices being volatile is nothing new. And on the Q4 2025 earnings call, he said that the team thinks coffee costs will normalize. This should give investors confidence that recent spikes will prove to be a temporary concern.
NYSE: BROS
Key Data Points
Time to buy Dutch Bros
Smart investors should monitor Dutch Bros' expansion plans, ensuring that store-level performance remains healthy and that overall company profitability continues to improve in the long run. What's more, it's worth paying attention to any commentary the leadership team provides about coffee costs.
Despite near-term margin pressure, I believe investors should consider buying the stock, especially since it trades 38% below its record. The potential upside over the next five years and beyond is meaningful if management executes well.
