Dutch Bros Inc. BROS

Key data

The business

Dutch Bros sells drive-through beverages, mostly cold, mostly sweet, mostly to people in their twenties, mostly in the western United States. There is no dining room. Two lanes, an order taker on a tablet in the lane, and staff trained to be conspicuously friendly. Company-operated shops book the full ticket, so Dutch Bros collects all of the revenue and carries all of the cost, unlike a franchisor.

Growth comes from store count. The company opened 48 shops in the June quarter, 44 of them company-operated, and revenue rose 32.5% to $550.9 million while company-operated same shop sales rose 8.3%. Operating margin has gone from negative 0.4% in 2022 to 9.8% in 2025. What changed is that profitability arrived on schedule and management raised full year revenue guidance to between $2.1 billion and $2.13 billion.

Business read. A store-count compounder that funds next year's revenue by spending this year's cash flow.

Things you might not know

Total company net income was $117.3 million in fiscal 2025 while net income attributable to Dutch Bros Inc. was $79.8 million. The $37.4 million difference belongs to holders of LLC units under the up-C structure, so the 125.8 million diluted share count understates the fully exchanged economics.

In the June quarter, company-operated same shop sales grew 8.3% and company-operated transactions grew 3.4%, the thirteenth consecutive quarter of positive same shop sales. Traffic, not only price, is still contributing, which matters because a beverage habit that thins out shows up in transactions first.

The fiscal 2025 annual bonus was set half on total revenue against a $1,565.0 million target and half on adjusted EBITDA against a $270.0 million target. Both cleared maximum and paid 200%, so cash pay is levered to scale rather than to returns on the capital spent.

Fundamentals

March is the seasonal low, so the sequential comparisons flatter the June quarter. Revenue grew 18.6% sequentially and 32.5% year over year, adjusted EBITDA about 44% and 27.8%, and net income more than doubled from March. Same shop sales decelerated from 10.6% to 8.3%, while openings ran 48 against 31 a year ago.

Valuation

Peers: Starbucks, Chipotle, Cava, Wingstop, Shake Shack.

Dutch Bros sits above the peer median on all three valuation measures and slightly below the median on both margins. The spread inside the group is wide: Wingstop, an asset-light franchisor, carries the highest operating margin at 28.8% and the lowest earnings multiple at 27.4x, while Cava, the other unit-growth story, trades at 131.5x on a 5.7% operating margin.

Management

Compensation

The linchpins

Win big if

New shops in new markets earn what the western base earns, which is the assumption inside 69.3 times earnings. The first observable proof is the November 4 print, where consensus is $0.23 on $548.2 million, below the June quarter on both lines. Revenue above $560 million with company-operated same shop sales still positive clears that bar. The confirming signal is transactions, which grew 3.4% in June. If transaction growth holds while the company opens at least 185 shops this year, the unit economics are traveling east intact and the store count math the multiple assumes stays live.

Surprised down if

Same shop sales turn negative or growth comes entirely from ticket, which separates unit count from underlying demand and removes the reason to pay 69.3 times earnings. The first observable proof is a November 4 print below $548.2 million with company-operated transactions under zero after 3.4% in June. The confirming signal is free cash flow conversion staying near 26% while revenue growth slips below 20%, the combination that turns a store growth story into a capital intensive one with no cash coming back.

Last word

At 90.7 times free cash flow the buyer funds drive-throughs rather than collecting cash, which is exactly what the model says.