Dutch Bros recently opened its 1,000th location about as far from its Grants Pass, Oregon, headquarters as you can get while still remaining in the continental U.S.—in Orlando, Florida.
The drive-thru beverage chain is going big in the state. It recently opened a location in Gainsville, just as the University of Florida men’s basketball team—based in the city—won the NCAA championship. And then this weekend the chain’s opening of a location in Tampa will lure some particularly special guests.
“My parents are already getting ready to be lined up,” CEO Christine Barone, a Tampa native, said in an interview.
For a chain like Dutch Bros, opening locations that far from its home market is a risk, even if the CEO of the chain is from the state. Consumers in those markets may be unfamiliar, which can hurt sales and discourage more investment. Many a restaurant brand has struggled that far away from home at this stage of their life cycle.
Yet the beverage chain has thrived in new markets thus far. “If we look at new shop productivity, we had a really great Q1,” Barone told investors this week. “We had some of the top openings of all time in this quarter.”
Dutch Bros has done this with a combination of advertising and the way the chain opens shops.
The company increased its advertising spending as it entered new markets, which has helped customers understand what the chain is all about.
“How do we build our customer base and make sure that new customers know we’re a beverage shop, and what we offer,” Barone said. “We’ve got energy drinks, we’ve got coffee drinks, we’ve got teas and lemonade and all those great things to try.”
Dutch Bros is also deliberative about its new shop openings. It doesn’t just pepper the market with new restaurants all at the same time.
“We might go into a new market, let that one build its customer base for a couple of months, and then put in the second one, and so forth,” Barone said.
For Dutch Bros, the new-market openings are key because the chain has some hefty expectations for growth in the coming years.
It has set a goal of having 2,029 shops open in 2029, a largely internal goal that would nevertheless double its size in just four years.
That won’t just require efforts to build sales in new markets. Dutch Bros also promotes store operators from within, which helps translate the chain’s culture from one store to the next, and from one market to the next.
That means the company must continually develop potential operators to expand.
That doesn’t appear to be a problem thus far. The pipeline of potential operators has tripled since the chain’s 2021 IPO, to 450. The average tenure among that group is seven years.
“We are in a very, very lucky place,” Barone said. “I think one of the most important parts of our brand, and the reasons why we’re successful, is because we are opening every new market with someone who has been with us for a long period of time. They love the brand.”
Dutch Bros set its 2,029-unit goal as a “rallying cry” to get its internal teams ready for that kind of expansion.
“That’s an important piece of laying out our long-term goals,” Barone said. “We are getting every department and every team that needs to support our new openings ready, because it’s really the whole company that supports the new opening.
“Our marketing teams play a role sending out new things to new shops. Our facilities teams are getting ready to cover those teams and have them ready. There’s not really a department that isn’t supporting new shop openings.”
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