The Dutch Bros location in Los Angeles, just off the campus of the University of Southern California, has everything you’d expect from the fast-growing beverage chain.
That includes multiple windows, the chain’s new expanded food menu and some limited-time drinks like the Fruit Punch Iced Rebel Energy drink with a sour candy straw or the Brown Butter Chocolate Chip Iced Latte.
Well, just about everything. The location is missing the drive-thru.
The “walk-thru” location, as the company sometimes calls it, is designed to determine Dutch Bros’ viability in more urban markets where drive-thrus are untenable. So far, based on company comments and the crowd of customers at the location on a late morning this week, that experiment is showing some promise.
The shop, CEO Christine Barone said, has been the chain’s top-performing location since it opened in late November. The mix of mobile order customers is three times the system average. While company executives stress that it’s still early, they’re thrilled with the reaction so far.
“This is a potential additional channel that we’re really pleased has just kicked off in a really strong way,” Barone told analysts last month.
Dutch Bros currently operates well over 1,000 shops, just about all of them drive-thru-only shops. The company believes it has the ability to open 7,000 such shops in the U.S. at some point.
But the chain’s drive-thru focus makes some locations unrealistic, notably nontraditional and urban locations.
Walk-thru locations such as this one could open up more possibilities for Dutch Bros down the line.
“There are a lot of places that we couldn’t go with a drive-thru with a long car stack,” Barone said in an interview with Restaurant Business. “As I think about what we look like five years, 10 years, 20 years from now, the importance of understanding something like a walk-up shop is important. It can expand the potential and the places we can serve our customers.”
The location might not have been possible a couple of years ago. But the chain’s addition of mobile ordering gave it an ability to operate a shop like that. “Having that mobile order channel has allowed us to open this up,” Barone said.
The location does not have an interior for customers, much like a typical drive-thru-only shop. There are three windows, one for walk-up orders. Another where customers pick up their walk-up orders and a third where they pick up their mobile orders.
The windows face a courtyard that is guarded by a fence. Sandwich boards boast menu items, direct traffic and urge customers use the mobile app.
“A lot of the things that work in our drive-thru shops are working really well in the shop in L.A.,” Barone said.
Dutch Bros is currently in a race, deliberate or not, with fellow beverage chains 7 Brew and Scooters to pepper the U.S. with locations. The Phoenix-based chain has been aggressively adding new locations and plans 2,029 shops by 2029.
The company has doubled its shop count since 2022 and has 475 candidates to be regional operators, who are crucial to the chain’s growth. It has also been converting other brands, such as its recent acquisition of the 20-unit Clutch Coffee Bar, which is helping Dutch Bros enter the Carolinas.
Exactly how much walk-up locations such as this one will impact Dutch Bros’ long-term development prospects remains uncertain. It remains early, Barone said.
“We’ll continue to learn before we understand what this opportunity might look like for us,” she said.
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