Dutch Bros. Coffee
TypePublic
NYSEBROS
Industry
FoundedFebruary 12, 1992; 30 years ago (1992-02-12) in Grants Pass, Oregon[1]
Founders
  • Dane Boersma
  • Travis Boersma
Headquarters,
U.S.
Number of locations
538 in 12 states[2]
Area served
Western United States
Key people
  • Travis Boersma (chairman)
  • Joth Ricci (CEO)
Products
  • Whole bean coffee beverages
  • Made-to-order beverages
  • Bottled beverages
  • Merchandise
  • Smoothies
  • Energy drinks
RevenueIncrease US$497.9 million (2021)[2]
Decrease US$−113.3 million (2021)[2]
Decrease US$−12.9 million (2021)[2]
Total assetsIncrease US$553.7 million (2021)[2]
Total equityIncrease US$93.5 million (2021)[2]
Number of employees
Increase 19,000 (2021)[2]
Websitewww.dutchbros.com

Dutch Bros. Coffee is a publicly held drive-through coffee chain in the United States.[3] Founded by Dane and Travis Boersma, it is headquartered in Grants Pass, Oregon, with company-owned and franchise locations primarily located in the western United States.[4][5][6]

History

Original site of Dutch Bros Coffee in Grants Pass, Oregon
Original site of Dutch Bros Coffee in Grants Pass, Oregon

Early history

Dutch Bros was founded on February 12, 1992 by Dane and Travis Boersma, brothers of Dutch descent, in Grants Pass, Oregon.[1][7][8] Their family’s third-generation dairy farm had been struggling due to changes in environmental regulations, and the brothers were looking to start a new business.[9][10] Travis Boersma suggested a coffee cart where they could sell espresso.[10][8] Dane Boersma was able to help finance the idea with money he had set aside while running a Dairy Queen franchise.[10] They spent an initial $12,000 on an espresso machine and a single pushcart, which they set up in downtown Grants Pass.[8][11] The name Dutch Bros was chosen in honor of their immigrant grandparents.[8]

They soon added four more carts, and by 1994 had established their first drive-through location.[12][13] In 1996, the company began roasting its own coffee, sourcing beans from El Salvador, Colombia, and Brazil.[14][8]

Expansion

In 1994, Dane and Travis Boersma struck a deal with a customer, Marty McKenna, which allowed him to open his own Dutch Bros in Medford, about 30 miles away from Grants Pass.[8][15] McKenna’s first stand performed so well that he soon opened up a second one across town.[15] In 1997, the Boersmas brought McKenna on as partner, hoping he would continue to expand the Medford operations.[8][15] Two years later, they bought out McKenna’s stake in the company.[8]

In 1999, Dutch Bros started formally franchising.[16] The company opened its 50th franchised drive-thru location in 2004.[8] That same year, shortly after moving into a new headquarters in Grants Pass, a nearby dumpster fire spread to the building, destroying Dutch Bros roasting equipment, five vehicles, and thousands of pounds of coffee beans.[17][8] Following this incident, the company continued to expand, and by the end of 2004, operated 61 coffee shops spanning from Northern California to Oregon’s Willamette Valley.[18]

By 2009, Dutch Bros was running approximately 135 coffee stands in seven states and generating $50 million in gross annual revenue.[16] Travis Boersma was featured on the American version of the television show Undercover Boss in 2013.[19][20] Revenues continued to grow into the mid-2010s. The company made $238 million in systemwide sales in 2015, $350 million in 2016, and $415.3 million in 2017, by which point there were over 283 Dutch Bros locations.[8][21][22]

In January of 2017, Dutch Bros purchased a vacant shopping center in downtown Grants Pass where their original push cart was located.[11][21] The company converted 20,000 square feet of the shopping center’s interior into futsal courts for local youth soccer teams and workout space for its employees.[23][21] In March of that same year, the company bought the Washington Federal bank building across the street from the shopping center, with the intention to move its headquarters and 150 employees into the bank building the following fall.[24][21]

Capital increase and IPO

In October of 2018, Dutch Bros received an undisclosed amount from private equity firm TSG Consumer Partners for a minority stake in the company and announced plans to expand to 800 stores over the next five years.[22][7]

Dutch Bros reported revenues of $238 million in 2019, $327.4 million in 2020, and $228 million over the first six months of 2021, heading into the company formally filing for its IPO in August of 2021.[25][7] The company stated in its filing that it hoped to raise $100 million, which it would use toward paying down $192 million in long-term debt.[7] Dutch Bros held its IPO and began trading on the New York Stock Exchange with the ticker symbol "BROS" on September 15, 2021.[26] The IPO raised $484 million, selling about 21 million shares for $23 each.[26][13] Travis Boersma retained about 74 percent of shareholder voting power after the listing, due to his ownership of Class B stock.[26]

Business model

Dutch Bros operates as a chain.[8] The vast majority of its stores are drive-thru stands.[27][28] Each store sells hot and cold drinks, including non-coffee options, and a selection of baked goods.[29][30]

The company started franchising in 1999.[16] In 2008, Dutch Bros transitioned to an internal franchising model that required potential franchisees to have worked for the company for a minimum of three years.[8] This resulted in a 97 percent continuity rate among franchises; between 2010 and 2015, only three percent of all Dutch Bros franchise locations closed.[8] In 2017, Dutch Bros stopped franchising and started opening only company-owned stores.[12][31] As of June 2021, 264 Dutch Bros stores were being run by franchisees and another 207 were fully company-owned.[29] The company has a history of buying out franchisees who fall short of the company's customer service standards.[8]

Operations

Dutch Bros is headquartered in Grants Pass, Oregon.[32] It is majority-owned by Travis Boersma, who holds the title of executive chairman, and Joth Ricci is its President and CEO.[26][25] The company operates approximately 500 stores across 12 states and employs about 16,500 people.[32][33][34] In September 2021, Dutch Bros became a publicly traded company, selling 21 million shares for a total of $484 million.[26]

Charitable efforts

Dutch Bros co-founder Dane Boersma died on October 15, 2009, after battling amyotrophic lateral sclerosis for more than five years.[35] The Boersma family and Dutch Bros launched an annual fundraiser titled "Drink One for Dane" in 2005 as a way to increase awareness of the disease, raise support for those impacted, and fund research to find treatments and cures.[36][37] Proceeds from the campaign are donated to the Muscular Dystrophy Association.[37][38] As of 2021, Dutch Bros has raised more than $10.3 million in support of MDA's ALS programs.[38]

The company donates 1 percent of its gross sales to the communities it operates in.[39][35] It also holds annual fundraisers where it donates a portion of every beverage sold to children's and other charitable organizations.[40][41][42][43]

See also

References

  1. ^ a b "Dutch Bros Coffee to open its first cafe in Tacoma". Washington Newz. 22 January 2019. Retrieved 1 May 2022.
  2. ^ a b c d e f g "Form 10-K Dutch Bros Inc. for the fiscal year ended December 31, 2021". SEC.gov. March 11, 2022.
  3. ^ Maynard, Micheline. "Coffee Lovers, Keep An Eye on Dutch Bros. They Just Got a Big Investor", Forbes, October 2, 2018
  4. ^ "Dutch Bros. is coming to Aberdeen". KXRO. 30 November 2018. Retrieved 21 December 2018.
  5. ^ "Dutch Bros. moving headquarters to downtown Grants Pass". KGW. 28 March 2017. Retrieved 21 December 2018.
  6. ^ Margolis, Joshua, and Christine Snively. "Dutch Bros. Coffee: A Compelling Future." Harvard Business School Case 415-010, April 2015.
  7. ^ a b c d Rogoway, Mike (August 21, 2021). "Dutch Bros seeks to raise $100 million in IPO, hopes to have 4,000 coffee stands someday". The Oregonian. Retrieved October 4, 2021.
  8. ^ a b c d e f g h i j k l m n o Adams, Susan (June 15, 2016). "The Coffee Cult: How Dutch Bros. Is Turning Its 'Bro-istas' Into Wealthy Franchisees". Forbes. Retrieved October 4, 2021.
  9. ^ Tims, Dana (September 28, 2017). "Top Workplaces 2017: Dutch Bros. Coffee finds strength in its relationships". The Oregonian. Retrieved October 5, 2021.
  10. ^ a b c Culverwell, Wendy (August 15, 2014). "How Dutch Bros. grew from a pushcart in Grants Pass to a $150M coffee mainstay". Portland Business Journal. American City Business Journals. Retrieved October 5, 2021.
  11. ^ a b "Dutch Bros. purchases original location". KOBI (TV). California Oregon Broadcasting, Inc. January 19, 2017. Retrieved October 5, 2021.
  12. ^ a b Tognini, Giacomo (September 15, 2021). "Dutch Bros Coffee IPO Brews Oregon's Newest Billionaire". Forbes. Retrieved October 5, 2021.
  13. ^ a b "TSG-backed Dutch Bros valued at over $5 billion in NYSE debut". Reuters. September 15, 2021. Retrieved October 5, 2021.
  14. ^ Angel, Devanie (February 16, 2006). "Dutch treat". Chico News & Review. Retrieved October 5, 2021.
  15. ^ a b c Preszler, David (May 17, 1999). "Dutch Bros. opens 10th". Mail Tribune. Retrieved October 5, 2021.
  16. ^ a b c Furniss, Jennifer (February 28, 2009). "Tactics: Dutch Bros. rejects the corporate grind". Oregon Business. Retrieved October 5, 2021.
  17. ^ "Still No Cause For Oregon Coffee Warehouse Fire". Firehouse. August 13, 2004. Retrieved October 5, 2021.
  18. ^ "Coffee shops perking up Oregon town". Seattle Times. December 24, 2004. Retrieved October 5, 2021.
  19. ^ "Season 5 Episode 8: Dutch Bros. Coffee". CBS. Retrieved 21 December 2018.
  20. ^ "Nampa Dutch Bros. will be featured on 'Undercover Boss' tonight". Idaho Press. Retrieved 21 December 2018.
  21. ^ a b c d Adams, Susan (May 9, 2017). "Dutch Bros., A Forbes Small Giant, Is Moving Its Headquarters And Investing In Its Hometown". Forbes. Retrieved October 5, 2021.
  22. ^ a b Spencer, Malia (October 1, 2018). "Dutch Bros lands private equity investment, plans massive expansion". Portland Business Journal. Retrieved October 5, 2021.
  23. ^ Kolliner, Kimberly (January 19, 2017). "Dutch Bros makes a multi-million dollar purchase for the community". KTVL. Sinclair Broadcasting. Retrieved October 5, 2021.
  24. ^ Whiting, Lisa (March 27, 2017). "New home for Dutch Bros". Mail Tribune. Retrieved October 5, 2021.
  25. ^ a b Bjorke, Christopher (August 20, 2021). "Dutch Bros files for IPO, seeks to raise $100M". Phoenix Business Journal. Retrieved October 5, 2021.
  26. ^ a b c d e Patton, Leslie; Hytha, Michael (September 15, 2021). "Dutch Bros Shares Get 59% Debut Boost After $484 Million IPO". Bloomberg. Retrieved October 5, 2021.
  27. ^ Tanyeri, Dana (February 1, 2017). "Growth Chains: Woe is Who? - Dutch Bros Coffee". Foodservice Equipment & Supplies. Retrieved November 11, 2021.
  28. ^ Oches, Sam (July 27, 2021). "Dutch Bros. gets a jolt from drive-thru". Nation's Restaurant News. Retrieved November 11, 2021.
  29. ^ a b Beltran, Luisa (August 23, 2021). "Dutch Bros Coffee Goes Public". Barron’s. Retrieved August 23, 2021.
  30. ^ Pitz, Ray (August 8, 2013). "A sweet combination". Sherwood Gazette. Retrieved November 11, 2021.
  31. ^ Wilson, Marianne (September 15, 2021). "Dutch Bros. goes public with big expansion plans". Chain Store Age. Retrieved November 11, 2021.
  32. ^ a b "Form S-1/A Dutch Bros Inc". SEC.gov. September 13, 2021. Retrieved October 14, 2021.
  33. ^ "Dutch Bros Coffee to Go Public". Barron's. Retrieved 17 September 2021.
  34. ^ Hamer, Cristal (December 10, 2021). "Dutch Bros Coffee opens Hollister location". KSBW. Retrieved December 10, 2021.
  35. ^ a b Hsuan, Amy (October 15, 2009). "Dutch Bros. Coffee co-founder dies". The Oregonian. Retrieved October 8, 2021.
  36. ^ Ramirez, Daniel (May 12, 2021). "Dutch Bros Holding Its 15th Annual Drink One For Dane Fundraiser". KDRV. Retrieved October 8, 2021.
  37. ^ a b Knox, Sklar (April 30, 2021). "Coffee for a Cure: Dutch Bros aims to raise $1.6 million this year for the Muscular Dystrophy Association". The News-Review. Retrieved October 8, 2021.
  38. ^ a b Parfitt, Jamie (May 27, 2021). "Dutch Bros Annual 'Drink One For Dane' Campaign Raises $1.9 Million for ALS Care". KDRV. Retrieved October 8, 2021.
  39. ^ Benda, David (October 5, 2007). "EspressoExpress". Record Searchlight. Retrieved October 5, 2021.
  40. ^ Parfitt, Jamie (February 12, 2019). "Dutch Bros Pledges Donations To Local Food Banks On Valentine's Day". KDRV. Retrieved October 5, 2021.
  41. ^ Frank, BrieAnna (March 27, 2020). "'Simply the right thing to do': Valley continues acts of kindness as coronavirus spreads". KITI. Retrieved October 5, 2021.
  42. ^ Paras, Julian (September 10, 2021). "Dutch Bros 'Bucks For Kids' Day donations will go to local school districts". KPVI. Retrieved October 5, 2021.
  43. ^ Hadden, Chelsie (October 10, 2016). "Dutch Bros Tri-Cities raises over $10,700 for Boys & Girls Club". YakTriNews. Retrieved October 5, 2021.