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Dutch Bros. Coffee

Financing

When chains go from sizzle to fizzle

Restaurant Rewind: Dutch Bros’ stock price dropped 37% in a day last week. It’s far from the only public restaurant chain to go from an investor darling to a source of Wall Street consternation in one trading day. This week’s edition looks at two other examples.

Financing

Dutch Bros gets a cold dose of public company reality

The Bottom Line: The drive-thru coffee chain’s sales were weak because of high gas prices and its more conservative pricing decisions. But it hurt the chain’s earnings and its reputation on Wall Street.

The drive-thru beverage chain’s stock price plunged 30% Wednesday after the company said sales declined in April due to rising gas prices and profits thinned because of higher dairy costs.

The honor, given by the editors of Restaurant Business, recognized the newly public chain’s strong corporate culture, successful loyalty program and thoughtful growth.

A session at this year's Restaurant Leadership Conference will focus on the factors to consider, with executives of Dutch Bros and First Watch sharing their firsthand experiences.

The coffee chain has expanded eastward, including its first location east of the Mississippi, thanks to lower-than-average turnover, which is almost “non-existent” at the regional operator level.

A quarter of the chain’s sales come from its "Blue Rebel" energy drinks and it does just as much business in the afternoon as it does in the morning. Its competition goes well beyond Dunkin' and Starbucks.

Giants like Starbucks and Domino’s are building more drive-thrus while regional drive-thru chains have exploded. And consumers are flocking to them.

The coffee chain, which enjoyed strong sales at the end of 2021, says it had less downtime last quarter. And the popularity of its loyalty program has taken off.

The company’s new rewards app has already proven popular among customers and it is looking for new capabilities to improve it further.

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