Could Dutch Bros Dethrone Starbucks? Why Investors Are Perking Up

Key Points

• Dutch Bros now has a presence in 18 states and plans to add five more by the end of the year.
• Despite being down 21% from its YTD high, the stock remains up more than 19% in 2025.
• With a median 12-month price target of $80, BROS has upside potential of 19% from its current price.

Americans love their coffee. In 2024, the coffee market in the United States was valued at $67.6 billion. By 2030, that figure is forecasted to hit $93.2 billion, representing annual growth of 5.2%. Americans drink so much coffee that, by total revenue, they account for more than 25% of the global market. 

Relative newcomer Dutch Bros NYSE: BROS, which went public in September 2021, is stirring up that scene as it continues its eastward expansion.

With the goal of opening 160 new locations by the end of 2025, the chain trails only Starbucks NASDAQ: SBUX and Dunkin’ Donuts in annual revenue for U.S.-based coffee retailers. 

With a pullback that has seen the stock slide 21% from its YTD high, Dutch Bros appears to offer a compelling opportunity for growth investors to buy the dip before its next breakout.

Dutch Bros Brews Bold Growth Ambitions 

Founded in Grand Pass, Oregon, Dutch Bros relocated its headquarters to Tempe, Arizona in 2025. The company currently operates in 18 states, but is looking to add a handful of locations in new markets by year’s end, including Atlanta, Baton Rouge, Charleston, Cincinnati, and Indianapolis. That eastward expansion follows the recent opening of 17 new stores in Florida, which represent the company’s first locations along the eastern seaboard. 

Dutch Bros now boasts 1,012 shops in total, and according to CEO Christine Barone, it should be operating in 22 states by year’s end. 

At most locations, the company offers only beverages, ranging from coffee and chai to energy drinks and smoothies. But in 2026, Dutch Bros plans to expand its menu offerings to include snacks like muffins and granola bars. As the company continues to hyperscale, its fundamentals support the argument being made by Wall Street analysts, the majority of whom assign BROS a Buy rating.

BROS’ Financials Continue to Roast Skeptics

Critical to the consumer discretionary company’s recent success has been the acquisition of Venki Krishnababu, a former executive with Lululemon Athletica NASDAQ: LULU, who has served as Dutch Bros’ chief technology and information officer since December 2024.

Krishnababu has played an integral role in the company’s mobile ordering and rewards programs—two business segments that have been credited with sizable impacts on Dutch Bros’ top-line success. Specifically, the company has averaged 39.17% year-over-year (YOY) revenue growth since 2020.

Dutch Bros is now the fastest-growing coffee retailer in the United States when measured by revenue growth. While last year’s total revenue of $1.28 billion was a record for the company, that figure pales in comparison to industry leader Starbucks’ $36.18 billion in total revenue last year. 

However, Starbucks only saw YOY revenue growth of 0.55%, underscoring how impressive Dutch Bros’ rapid expansion has been. That growth resulted in earnings per share (EPS) of 10 cents in Q1 2025, up from two cents in Q4 2024. The company has now beaten earnings for 11 consecutive quarters, while seeing annual EPS growth of 1,033.33% YOY from 2023 to 2024.

Free cash flow (FCF) growth metrics have rewarded shareholders. In 2022, as a result of implementing its hyperscaling strategy, Dutch Bros posted a negative FCF of $128 million. In 2023, the negative FCF of $88.54 million marked a 30.82% improvement. Last year, FCF was a positive $24.69 million, meaning that from 2022 to 2024, FCF increased by 119.28%. Over the same period, Starbucks saw FCF increase by just 29.68%.

Technicals Favor a Breakout During Earnings Season

BROS hit its all-time high on Feb. 18, exceeding Wall Street’s then-12-month price target 32 trading days into 2025. The stock has since corrected and is now down 21% from that high. But like many U.S. equities, Dutch Bros bottomed in early April. After hitting its YTD low, shares are up nearly 31%. 

The stock has been consolidating since May, trading sideways in a range between $60 and $73. However, zooming out on a one-year chart, it is evident that a symmetrical triangle pattern has emerged, with trend lines exhibiting lower highs and higher lows.

As the channel compresses, BROS could break out in either direction near the terminus of this pattern, which is likely to coincide with the next earnings season. That breakout could be to the upside if earnings are strong and momentum is bullish; conversely, if the company misses on Wall Street estimates, the stock could break the pattern to the downside. Dutch Bros is expected to next report on Aug. 6.