MW Dutch Bros' earnings results show not everything is terrible for coffee chains

By Bill Peters

Company expects sales gains this year, says its vulnerability to tariffs is 'limited'

Shares of Dutch Bros Inc. were up after hours on Wednesday after the drive-through coffee chain expressed greater optimism over its sales this year, citing "continued momentum," even as its older and much bigger rival, Starbucks Corp., tries to turn itself around.

That upbeat take came amid a big expansion drive for Dutch Bros (BROS), and some signs that shoppers' coffee preferences were leaning toward "decadent" rather than classic offerings.

The chain - whose menu emphasizes cold caffeinated drinks with lots of flavor selections - said revenue and gains in same-store sales this year were trending toward the higher end of its forecast range. Dutch Bros expects total sales of $1.555 billion to $1.575 billion for 2025, with same-store sales growth of 2% to 4%.

Shares rose 0.8% after hours, although they were initially higher after the closing bell. As of the close of Wednesday's trading, the stock has risen 86.4% over the past 12 months.

Chief Financial Officer Josh Guenser said he was optimistic about Dutch Bros' ability to "navigate evolving macroeconomic conditions." The company offered that assessment as higher costs of living and the trade war keep customers cautious.

However, during Dutch Bros' earnings call, Guenser said the company's vulnerability to tariffs was "limited," adding that less than 10% of its costs related to selling products came from international sources. Much of that came from coffee brought in from Brazil, Colombia and El Salvador, nations whose imports currently face a 10% tariff.

"Based on what we know now, we believe we can navigate this cost pressure in 2025 within our existing guidance, as we have now substantially locked in coffee prices for the remainder of 2025," he said.

During the first quarter, Dutch Bros' sales jumped 29.1% to $355.2 million, above FactSet estimates for $344.3 million. Same-store sales were up 4.7%, with same-store transactions up 1.3%. Adjusted earnings of 14 cents a share also topped estimates. Dutch Bros opened 30 new stores during the quarter.

During Starbucks' most recent quarter, same-store sales and transactions both slipped. Starbucks has been trying to overhaul its stores, service and menu in an effort to win back lost consumers, after a more expansive food selection and drink customizations gummed up service times and some customers got turned off by cafes that were more focused on throughput.

Visits to Dutch Bros were up 13.4% year over year during the first quarter, according to Placer.ai, a firm that analyzes retail foot traffic. By contrast, the firm found, visits to Starbucks slipped over that time.

"Contrasting the growth of smaller coffee chains with Starbucks and Dunkin's," the firm said, "minor traffic dips may suggest that consumers prefer to spend their limited discretionary funds on unique or decadent treats instead of on classic drinks and pastries."

-Bill Peters

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May 07, 2025 18:21 ET (22:21 GMT)

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