Dutch Bros (BROS) continues to face competition concerns but the company believes its customization and customer service model remains a key differentiator, RBC Capital Markets said in a note Tuesday.

The analysts said the company's recent Analyst Day in Phoenix did not include new metrics that would meaningfully challenge investor concerns about rising competition.

Regarding McDonald's (MCD) new beverage push, management said it has not seen any impact so far, including during earlier tests in Colorado. The company also said its customer base and beverage-focused model differ from McDonald's, with customization and customer service remaining the main differentiators, according to the note.

Management also did not directly comment on fast-growing rival 7 Brew, the analysts said, adding that their industry checks suggest 7 Brew could add 400 to 500 stores this year, more than double Dutch Bros' annual pace, potentially allowing it to surpass Dutch Bros in total locations by 2027.

"Based in the western US, the company has a long runway for unit growth ahead given a large geographic white space and attractive unit economics, in our view, despite the potential for intensifying competition," the analysts added.

RBC has an outperform rating and $75 price target on Dutch Bros.

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