Christine Barone apparently won her tryout to become Dutch Bros new CEO.
The drive-thru beverage chain on Tuesday said that Barone would step into the top job on Jan. 1, after a transition period. She will take over for Joth Ricci, who helped turn the chain into one of the fastest growing concepts in the U.S. and guided it through a 2021 IPO.
“Trav and I over the last year or two have been thinking about long-term succession planning and achieving our 4,000-shop goal,” Ricci said, referring to Dutch Bros cofounder and Chairman Travis Boersma. “When we hired Christine, we both agreed at the time that, at the right time, she would be the great next person to do that.”
“The timing is right,” he added. “We have good momentum. She has inserted herself quickly into the culture, made some great changes and got the attention of the team.”
Dutch Bros announced the change on the day it said that its revenues grew 34% to $249.9 million in the second quarter, including 3.8% same-store sales, a 580-basis point improvement over the first quarter, driven largely by traffic. Margins at company shops improved 570 basis points to 30.3% in the quarter, driven in part by labor improvements.
The company at the end of March made changes to its loyalty program that enabled the company to offer more discounts to Rewards members. The company also added new products like its Mangonada Rebel beverage and Barone said the brand was “thoughtful about promotions throughout the period.”
Barone added that as the company grows it would think of marketing “in a slightly different way.” But she said that the brand has an “incredibly strong foundation.”
“When we look at changes, we first look at everything that’s right,” she said. “I’m super impressed with the people systems. To open every single new shop with an experienced operator is amazing.”
Barone was brought in as president of Dutch Bros in November, leading to immediate speculation that she would eventually become CEO. Her experience certainly seemed to make her a candidate for the job: She was a Starbucks executive before going on to become CEO of True Food Kitchen. She has also known Ricci for years.
That move came amid a difficult period for the chain, which had struggled with sluggish sales and unexpectedly weak profitability. In May last year, for instance, the brand said high dairy costs hit the company harder than expected, hurting profits even as high gas prices hurt sales. The results wiped out some of the enthusiasm from the chain’s successful 2021 IPO and led to some investor lawsuits.
The company was also struggling with weak sales, particularly in larger markets such as Sacramento where the brand was building more stores in a bid to improve service times. Going into this quarter, same-store sales were down three of four quarters. Dutch Bros stock price has declined 34% over the past year.
Ricci said his focus the balance of the year will be to work with Barone to get ready for the next year. He noted that he is “not leaving to go someplace else.”
He said that the company hoped that Barone would become the next CEO, but said there were no guarantees. “We wanted it to work out like this,” he said. “There was no guarantee of anything.” But as they saw Barone integrate herself into the company, she became a clear candidate.
“This is not her first rodeo in the job,” he said. “I don’t think we could have found someone with a better background, not just from a business standpoint but culturally.”
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