The Next Starbucks?

Welcome to all of our new subscribers! We’re excited to share our second weekly stock pick. If you have been following along, last week, we highlighted Robinhood $HOOD ( ▼ 6.54% ) at $62—and it surged to an all-time high of $95 on Monday. This week, we’re turning our attention to Dutch Bros $BROS ( ▼ 2.42% ) and why we believe it has strong potential as a long-term growth stock.

Dutch Bros (NYSE: BROS) is a rapidly growing drive-thru coffee chain founded in 1992 in Grants Pass, Oregon. Known for its energetic culture, loyal customer base, and innovative drink menu, the company has expanded aggressively across the western U.S. and is now pushing east. With a focus on company-operated stores, a youthful brand identity, and a proven ability to scale, Dutch Bros is positioning itself as a serious competitor to legacy coffee giants. Its unique business model and strong unit economics make it a compelling long-term growth story for investors.

Company Growth

In the third quarter of 2023, Dutch Bros, a rapidly expanding coffee chain, operated a total of 831 shops spread across 16 states in the United States. This marked a significant milestone in the company's growth trajectory. By the first quarter of 2025, Dutch Bros had impressively expanded its footprint to reach 1,000 locations, nearly doubling its store count from what it was in September 2021. This remarkable growth was further highlighted by the addition of 30 new shops in the first quarter of 2025 alone, with ambitious plans to open at least 160 more locations throughout the year. Looking ahead, Dutch Bros has set its sights on achieving a target of 2,029 shops by the year 2029, with an even more ambitious long-term goal of surpassing 7,000 locations across the United States.

With this aggressive store expansion strategy comes a corresponding year-over-year growth in the company's financial performance. In 2023, Dutch Bros achieved an impressive annual revenue of approximately $965.8 million, representing a substantial 31% increase from the previous year, 2022. By 2025, the company projects its total revenue to fall within the range of $1.555 billion to $1.575 billion, underscoring its robust growth trajectory. Notably, Dutch Bros first turned profitable in 2023, marking a significant turning point in its financial journey, and has continued to build on this success ever since. The company's adjusted EBITDA also experienced significant growth, rising from $53 million in the third quarter of 2023, which was a remarkable 91% increase year-over-year, to $62.9 million in the first quarter of 2025. This sustained profitability, coupled with such rapid expansion, demonstrates the substantial impact that Dutch Bros is making in the market as it continues to open new stores and capture a larger share of the coffee industry.

Building a Loyal Base

Building a loyal customer base is hard, but the best way to do this is by increasing the use of a loyalty program, which incentivizes customers to come back for great deals and give them a sense of comfortability. Two years after Dutch Bros launched their loyalty program, they are now seeing almost 75% of orders being done through their mobile app through the loyalty program. This allows drive throughs to keep up with the annual demand of 4.7% growth per year for existing stores over the last two years.

What this means for Investors

If Dutch Bros maintains its current growth trajectory, we continue to see it as a compelling long-term growth stock. With a market capitalization of about $11.7 billion, the company is still in the early phases of its expansion journey. To put this in perspective, Starbucks ($SBUX) boasts a market cap of roughly $108 billion—almost ten times larger. While it’s unlikely that Dutch Bros will surpass Starbucks in the near future, its strong momentum, aggressive expansion plans, and improving profitability indicate to us that the company is laying the groundwork for lasting success in the coffee industry.

We’re bullish on $BROS because the company has significant room to scale. Its energetic brand, loyal customer base, and efficient drive-thru model give it an edge in suburban and emerging markets. Dutch Bros also continues to diversify its menu beyond coffee—offering energy drinks, teas, and seasonal creations—all while maintaining solid margins and a strong culture. In the short term we see it as a highly volatile stock with a beta of over 2.72. However over time, we believe it could carve out a Starbucks-like presence of its own, especially if it hits its goal of 4,000+ locations. In short, $BROS ( ▼ 2.42% ) is not just another coffee chain—it’s a fast-moving, culture-driven brand with serious long-term upside.

Keep an eye out for this stock and you never know when a Dutch Bros may open up near you!

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Disclaimer: This is not financial advice. This content is for informational and educational purposes only and does not constitute financial, investment, or trading advice. All opinions expressed are those of the author and do not reflect the views of any affiliated institutions. Always do your own research or consult with a licensed financial advisor before making investment decisions