Dutch Bros Stock Is Steaming Hot. Could It Be the Next Starbucks?

Key Points

• Dutch Bros is a fast-growing, regional favorite coffee purveyor that's taking the country by storm.

• The company boasts a loyal customer base, happy employees, and strong financial results.

• The stock is pricey, but the opportunity is vast.

• 10 stocks we like better than Dutch Bros ›

There's little question that early investors in Starbucks (NASDAQ: SBUX) have been abundantly rewarded. Since the company's initial public offering (IPO) in mid-1992, the stock has returned an incredible 26,390% (as of this writing). Starbucks was a pioneer in the coffee chain industry, offering a consistent java experience while creating a "third place" for customers, away from work and home. Despite recent challenges, the company has been wildly successful, and some investors are understandably on the lookout for the "next" Starbucks.

With that in mind, Dutch Bros (NYSE: BROS) has thrown its hat in the ring. While investors may not yet be familiar with this regional coffee chain, it boasts many of the same qualities that helped make Starbucks a household name. Dutch Bros' consistent growth, repeat customers, and fun-loving employees have helped the company become the third-largest coffee chain in the U.S. and put it on the fast track to success.

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Image source: Getty Images.

Loyal -- and thirsty -- fans

While Starbucks focused on the atmosphere of its namesake coffee shops, Dutch Bros has taken a different approach. The company's focus is on the drive-through and an elevated customer experience. High-energy "broistas" greet each guest with a smile and ask about their day, part of Dutch Bros' "people-first" culture. The company offers a wide variety of customizable cold and hot beverages, including coffee, tea, signature energy drinks, and a rotating list of seasonal specials. Dutch Bros also has a secret menu with fan-favorite drinks.

The company's motto helps spell out the allure: "Dutch Bros is a fun-loving, mind-blowing company making a massive difference, one cup at a time." The company strives to embody its core values of quality, speed, and service in every transaction.

This strategy is paying off. Dutch Bros has attracted a large following of die-hard fans and repeat customers who frequent its 1,043 locations in 19 states. The Dutch Rewards program, available exclusively through the app, accounted for 72% of transactions in the second quarter, a number that has been steadily rising.

Happy employees make for happy customers

Since its inception, Dutch Bros embraces a customer-first approach, giving it a competitive edge over the competition. The company is recognized for its positive and fun work environment, which has a direct impact on the experience, resulting in more satisfied employees. This, in turn, leads to loyal customers, positive word of mouth, and increased sales.

Dutch Bros boasts an extremely low employee turnover rate of just 35%, far below the industry average of 50%. In fact, in 2024, the company improved its store-level employee turnover rate by 5%. By retaining qualified workers, the company also helps preserve its unique and positive culture.

Dutch Bros has a history of industry accolades. It was one of the top quick service restaurant (QSR) brands in 2024, taking up the No. 2 spot, according to Earnest Analytics. In 2022, Dutch Bros was awarded the Pacesetter Award by Restaurant Business Magazine, cited for its "strong corporate culture, successful loyalty program, and thoughtful growth." The company was also ranked the No. 4 Best Employers for New Grads in 2024 by Forbes Magazine.

If that weren't enough, Dutch Bros was recognized by USA Today in its annual 10 Best Readers' Choice awards, voted No. 4 Best Drive-Thru Coffee and No. 5 Best Coffee Chain.

Show me the money

Dutch Bros is noted for having among the best unit-level economics in the industry, with average unit volume (AUV) of just over $2 million. That puts Dutch Bros in elite company, ranked No. 18 among all quick service restaurants and the top-performing coffee chain in 2024, according to QSR Magazine. For context, Starbucks clocked in at No. 23 with AUV of $1.8 million.

The company's financial results, released just this week, help paint a compelling picture. In Q2, Dutch Bros generated revenue that grew 28% year over year to $416 million, resulting in earnings per share (EPS) that soared 66% to $0.20. The results were fueled by strong same-store sales (comps) that grew 6.1% and 7.8% for company-owned shops.

For context, during the same period, Starbucks reported dismal results. In the company's fiscal 2025 Q3 (ended June 29), revenue of $9.5 billion increased 4%, while EPS plunged 47%. Global sales declined 2%, driven by a 2% decline in comps.

Dutch Bros continues to take a measured approach to growth, adding 31 new locations across 13 states during the quarter, bringing the total to 1,043 across 19 states to close out Q3. Starbucks currently operates 32,000 stores in 80 countries, which helps illustrate the magnitude of the opportunity for Dutch Bros. If the company continues along its current trajectory, even if it grows to just a fraction of the size of the Starbucks empire, it will likely be a highly successful investment.

You get what you pay for

Dutch Bros stock has been a wild ride for investors. Within weeks after its IPO in late 2021, the stock soared as much as 108% before shedding as much as 70% of its value. However, since hitting its bottom in late 2023, the stock has gained 153% (as of this writing), and the future looks bright.

I'd be remiss if I didn't discuss the elephant in the room -- Dutch Bros' pricey valuation. The stock currently sells for 70 times next year's earnings and 3.7 times next year's sales, so it's definitely fetching a premium. That said, Dutch Bros is outperforming the more seasoned competition and has a long runway for growth ahead, which helps to explain the high multiples.

Make no mistake, plenty of things will have to go right for Dutch Bros to become the next Starbucks, but given its loyal customer base, happy broistas, and robust results, the company is off to an impressive start.

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Danny Vena has positions in Dutch Bros and Starbucks. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.