Dutch Bros Inc. reported first-quarter results that surpassed expectations, yet its stock fell sharply by over 9% on Thursday. While the earnings performance was strong, investors are growing concerned about potential pressures from weakening consumer spending in the fast-casual sector, which could impact the rapidly expanding coffee chain.

Financial reports show that Dutch Bros achieved total revenue of $464.4 million in the first quarter, a 30.8% increase compared to the same period last year, exceeding analyst estimates of $449.4 million. Adjusted earnings per share came in at $0.16, above the market expectation of $0.15. Net profit reached $23.7 million, up from $22.5 million a year earlier. System-wide same-store sales grew by 8.3%, with transaction volume increasing by 5.1%, marking the highest growth rate since the first quarter of 2024.

Notably, company-operated stores saw same-store sales rise by 10.6%, with transaction volume up 6.9% and average ticket size increasing by 3.7%, reflecting a healthy growth structure. Adjusted EBITDA grew by 26.2% to $79.4 million.

Despite these positive figures, the company’s stock price declined significantly after the earnings release. Analysts pointed out that GAAP earnings per share remained flat year-over-year at $0.13. At the same time, operating costs continued to rise, and the adjusted EBITDA margin narrowed to 17.1% from 19.1% two years ago, indicating that rising costs for inputs such as coffee are squeezing profitability.

Another factor unsettling the market is valuation. Based on analyst projections, the stock still trades at approximately 120 times free cash flow, making it appear expensive even with strong earnings growth, especially in the current consumer environment.

Management raised its full-year 2026 guidance, forecasting total revenue between $2.05 billion and $2.08 billion, same-store sales growth of 4% to 6%, and plans to open at least 185 new stores. The company reaffirmed its long-term goal of reaching 2,029 stores by 2029. Currently, the total store count stands at 1,177. Chief Financial Officer Joshua Guenser stated that the company has never been more confident in achieving its 2029 target. However, amid broader signs of consumer softness in the fast-casual industry, investors remain cautious about whether Dutch Bros can sustain high growth under its current premium valuation.