From September 2021 until now, Oregon-based coffee QSR Dutch Bros has nearly doubled in size to 912 locations, reported QSR Magazine. Over the first quarter of 2024, the chain opened 81 locations, marking 12 straight quarters of 30 or more unit openings.
QSR Magazine noted that the brand expects to reach the lower end of its projected 2024 store opening goal of 150 to 165 stores, meaning that by the end of the year, Dutch Bros will likely be just short of 1,000 locations nationwide.
A large part of its expansion has been in Texas—Dutch Bros has opened nearly 200 locations in the state since its debut there a little over three years ago.
Dutch Bros chose to switch up its growth strategy by focusing on higher average unit volume (AUV) shops. “This involves a higher percentage of new market openings and slower infill rates. It also led to the removal of locations in the pipeline that don’t meet the chain’s updated investment criteria, resulting in stronger new shop performance,” QSR Magazine wrote.
“As we enter big new markets like Florida, we are using all of that data to really refine our approach so that we can bring up the average AUV of a unit,” CEO Christine Barone said. “That’s the goal of that process.”
“Dutch Bros is using an improved marketing plan to drive better revenue in new shops—releasing menu innovation, ramping up paid advertising, investing in the rewards program, and developing mobile ordering. Thanks to these initiatives, same-store sales rose 4.1 percent in Q2, despite the increasingly promotional competition and a tough Q2 2023 lap,” QSR magazine reported.
Earlier in 2024, the brand launched boba and protein milk. Both products were so successful that the chain added them to the permanent menu.
The company also reported success with its rewards program. The program, which is responsible for 67% of the brand’s transactions, helps with guest engagement and targeted promotions. The success of the program also bodes well for mobile ordering. Dutch Bros is currently expanding its mobile ordering testing to around 200 shops at the end of July. The coffee chain is optimistic that mobile ordering will be available in all its stores by the end of the year.
Earlier this year, Barone shared: “What we’ve historically seen as we go into new markets, is that customizable energy drinks are very popular with new guests, because they are new products to market,” Barone said. “When we first went into the Phoenix market, we had low AUVs—people didn't even know who we were. Now when we go into new markets like Florida, we already have fans in the market. National awareness of the brand can be driven by physical locations, and it can be driven by excited people on social media doing free marketing for you.”