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Financing

Dutch Bros files for a $100M IPO

The drive-thru coffee chain has been growing steadily with strong store-level profits and 14 straight years of same-store sales growth.
Photograph: Shutterstock

Dutch Bros Coffee filed documents for its initial public offering on Friday, hoping that Wall Street will be lured by consistent sales growth, strong store-level profits and a development culture fueled by its employees, known as “broistas.”

The company said it plans to raise $100 million in its IPO, which would be the industry’s second this year. Dutch would trade on the New York Stock Exchange under the ticker symbol “BROS.”

Dutch Bros, founded in Grants Pass, Ore., in 1992, portrayed a company with growing revenues and profits and sales growth. Same-store sales have increased for 14 straight years and its restaurant-level contribution margin from the chain’s more than 200 company locations last year was 29%.

The chain currently operates 471 shops in 11 states, more than half of which are owned by franchisees. Yet the company in 2017 opted to focus mostly on company-operated locations, adding units as soon as employees are ready to step into leadership. Dutch Bros only hires and promotes from within.

“We make sure the culture and the way we do things are protected,” Company President Joth Ricci told the RB podcast “A Deeper Dive” earlier this year. Dutch Bros hires 50 new “broistas” for each shop from an average pool of 200 people. New hires spend 12 days training, shadowing an experienced employee.

Read more about Dutch Bros here.

Dutch Bros average unit volumes increased 3% last year to $1.7 million. The company has a $7.50 average check and its locations “are busy from early morning through the end of the day.”

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, increased 43% last year to $70 million. Revenues increased 37% last year to $327 million.

The company says it has an opportunity to take share in what it says is a $36 billion coffee category, as well as the $239 billion quick-service restaurant business. “Customers are increasingly seeking new and differentiated beverages and the ability to customize these beverages with a multitude of flavor options,” the company said in its filing.

Dutch Bros generates sales throughout the day, with 17% of its sales before 9 a.m., 22% between 9 a.m. and noon, 29% between noon and 4 p.m., 16% between 4 p.m. and 7 p.m. and 15% after 7 p.m.

The company also sells a broad mix of beverages—only 16% of its sales come from hot coffee and another 16% is from iced coffee. Nearly a quarter of its sales, 24%, comes from its Blue Rebel energy drink—a unique offering in the restaurant business.

Dutch Bros is potentially one of several restaurant chains aiming to go public this year, following the July IPO of Krispy Kreme. Sweetgreen and Portillo’s have also privately filed IPO documents but several others are considering their own offerings.

BofA Securities, J.P. Morgan and Jefferies are leading the offering along with Barclays, Piper Sandler, Baird and William Blair. Co-managers include Cowen, Stifel, AmeriVet Securities, Penserra Securities, R. Seelaus & Co., and Tribal Capital Markets.

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