Dutch Bros: Percolating Higher on Hypergrowth, More Upside to Go

Key Points

• Dutch Bros is experiencing hypergrowth, evidenced by another double-digit quarter of revenue growth, surging 35% YoY in Q4 2024 and issuing upside guidance for 2025.
• Dutch Bros opened its 1,000^th drive-thru coffee shop and plans to open at least 160 more in 2025.
• The average Dutch Bros operates a 950-square-foot store generating $2 million annually.

While Starbucks Co. NASDAQ: SBUX captured headlines in 2024 under former Chipotle Mexican Grill Inc.’s NYSE: CMG superstar CEO Brian Niccol’s turnaround efforts, Dutch Bros Inc. NYSE: BROS has been quietly outperforming, delivering double the returns. Dutch Bros stock is up 56% year-to-date (YTD), far surpassing Starbucks’ 24% YTD gain, as of Feb. 14, 2025, and it just reported another quarter of hypergrowth with revenues surging 35% year-over-year (YoY). With a business model centered on speed, value, and convenience, Dutch Bros is perfectly aligned with the evolving needs of today’s consumers who favor convenience and efficiency over the premium, complex café experience.

Drive-Thru’s Generating $2 Million in Under 900 Square Feet

Dutch Bros operates 1,000 drive-thru coffee shops averaging just 950 square feet. What’s most impressive is their system-wide average unit volume (AUV) is $2 million annually. The average shift has just four to five employees. Most drinks range in price from $3.50 to $6.50 as the retail/wholesale sector company serves coffees, smoothies, and their brand of Rebel drinks. The company is starting to increase its food options in 2025 beyond just the limited energy bars and muffin tops. Food will be the growth driver.

Earnings and Revenues Are Percolating Higher

Dutch Bros didn’t disappoint in its Q4 2024 earnings report. The company reported EPS of 7 cents, more than doubling consensus estimates of 2 cents by 5 cents. Company-operated same-store sales rose 9.5% YoY, and transactions grew 5.2% YoY. System-wide shops had 6.9% and 2.3% YoY growth in sales and transactions, respectively. The company opened 32 new shops in Q4, of which 25 are company-operated, across 11 states. Company-operated shops had 38.2% YoY revenue growth as margin rose 280 bps YoY to 21.4%. Dutch Bros also turned a net income of $6.4 million compared to a net loss of $3.8 million in the year-ago period.

For the full year 2024, Dutch Bros opened 151 new shops across 18 states, of which 128 were company-operated. Total revenues rose 32.6% YoY to $1.28 billion. Net income was $66.5 million, compared to $10 million in 2023.

Dutch Bros Raises Guidance for 2025

The strong momentum is carrying over into 2025 as Dutch Bros issued upside guidance. The company sees full-year 2025 revenues of $1.555 to $1.575 billion versus $1.53 billion consensus analyst estimates.

Adjusted EBITDA is expected to be between $265 million to $275 million. The same shop growth is expected to be in the 2% to 4% range, and they plan to open at least another 160 stores in 2025.

Dutch Bros CEO Christine Barone commented, “Our efforts to develop our foundational transaction drivers - innovation, paid media, and our Dutch Rewards loyalty program - are working. We believe these efforts are contributing to the current momentum and that there is a considerable runway for further growth. Additionally, we see a clear path forward with multi-year transaction driving initiatives that layer on top of this foundation with the opportunity to unlock throughput and ramp mobile order in 2025.”

BROS Stock Forms a Daily Bull Flag Breakout

A bull flag pattern is comprised of two parts. First, the underlying stock forms the flagpole, which is a steep run-up in the stock price, usually at a 45-degree or higher angle. The flagpole completes when the stock forms its peak. The flag is formed on the parallel descending trendlines comprised of lower highs and lower lows. The bull flag triggers when the stock surges through its upper descending trendline and past the peak of the flagpole.

The solid Q4 earnings caused BROS stock to surge 29% the following morning as it peaked at an all-time high of $86.42 before pulling back. The daily bull flag triggered the gap surging through the upper trendline resistance at $64.98, which is also a lower gap fill level. The anchored VWAP support is slowly rising at $63.23. The daily RSI is in overbought territory above the 70-band at 79.91. Fibonacci (Fib) pullback support levels are at $73.87, $68.92, $61.96, and $57.01.

BROS stock’s average consensus price target is 8.91% lower at $74.83, and its highest analyst price target sits at $100.00. It has 13 analysts' Buy ratings and one Hold rating. The stock has a 6.47% short interest.

BROS stock is trading above its consensus price target, so it's prudent not to chase the stock but patiently await pullbacks. Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, writing covered calls at upside Fib levels executes a wheel strategy for income.