Dutch Bros. Coffee is a publicly held

drive-through A drive-through or drive-thru (a sensational spelling of the word ''through''), is a type of take-out service provided by a business that allows customers to purchase products without leaving their cars. The format was pioneered in the United ...

coffee Coffee is a drink prepared from roasted coffee beans. Darkly colored, bitter, and slightly acidic, coffee has a stimulant, stimulating effect on humans, primarily due to its caffeine content. It is the most popular hot drink in the world. S ...

chain A chain is a serial assembly of connected pieces, called links, typically made of metal, with an overall character similar to that of a rope in that it is flexible and curved in compression but linear, rigid, and load-bearing in tension. A c ...

in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

.Maynard, Micheline
"Coffee Lovers, Keep An Eye on Dutch Bros. They Just Got a Big Investor"
''

Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...

'', October 2, 2018 Founded by Dane and Travis Boersma, it is headquartered in

Grants Pass, Oregon Grants Pass is the county seat of Josephine County, Oregon, United States. The city is located on Interstate 5, northwest of Medford, along the Rogue River. The population was 39,189 at the 2020 census. History Early Hudson's Bay Company hunt ...

, with company-owned and

franchise Franchise may refer to: Business and law * Franchising, a business method that involves licensing of trademarks and methods of doing business to franchisees * Franchise, a privilege to operate a type of business such as a cable television p ...

locations primarily located in the

western United States The Western United States (also called the American West, the Far West, and the West) is the region comprising the westernmost states of the United States. As American settlement in the U.S. expanded westward, the meaning of the term ''the Wes ...

although the company has begun to expand as far east as

Nashville Nashville is the capital city of the U.S. state of Tennessee and the seat of Davidson County. With a population of 689,447 at the 2020 U.S. census, Nashville is the most populous city in the state, 21st most-populous city in the U.S., and the ...

in the early 2020s.Margolis, Joshua, and Christine Snively. "Dutch Bros. Coffee: A Compelling Future." Harvard Business School Case 415-010, April 2015.

History

Early history

Dutch Bros was founded on February 12, 1992, by Dane and Travis Boersma, brothers of

Dutch Dutch commonly refers to: * Something of, from, or related to the Netherlands * Dutch people () * Dutch language () Dutch may also refer to: Places * Dutch, West Virginia, a community in the United States * Pennsylvania Dutch Country People E ...

descent, in

. Their family's third-generation

dairy farm Dairy farming is a class of agriculture for long-term production of milk, which is processed (either on the farm or at a dairy plant, either of which may be called a dairy) for eventual sale of a dairy product. Dairy farming has a history that ...

had been struggling due to changes in environmental regulations, and the brothers were looking to start a new business. Travis Boersma suggested a coffee cart where they could sell espresso. Dane Boersma was able to help finance the idea with money he had set aside while running a

Dairy Queen Dairy Queen (DQ) is an American chain of soft serve ice cream and fast food restaurants owned by International Dairy Queen, Inc. (a subsidiary of Berkshire Hathaway since 1998) which also owns Orange Julius, and formerly owned Karmelkorn and G ...

franchise. They spent an initial $12,000 on an espresso machine and a single pushcart, which they set up in downtown Grants Pass. The name Dutch Bros was chosen in honor of their immigrant grandparents. They soon added four more carts, and by 1994 had established their first drive-through location. In 1996, the company began roasting its own coffee, sourcing beans from El Salvador, Colombia, and Brazil.

Expansion

In 1994, Dane and Travis Boersma struck a deal with a customer, Marty McKenna, which allowed him to open his own Dutch Bros in Medford, about 30 miles away from Grants Pass. McKenna's first stand performed so well that he soon opened up a second one across town. In 1997, the Boersmas brought McKenna on as partner, hoping he would continue to expand the Medford operations. Two years later, they bought out McKenna's stake in the company. In 1999, Dutch Bros started formally

franchising Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchisor licenses some or all of its know-how, procedures, intellectual property, use of its busine ...

. The company opened its 50th franchised drive-thru location in 2004. That same year, shortly after moving into a new headquarters in Grants Pass, a nearby dumpster fire spread to the building, destroying Dutch Bros roasting equipment, five vehicles, and thousands of pounds of coffee beans. Following this incident, the company continued to expand, and by the end of 2004, operated 61 coffee shops spanning from

Northern California Northern California (colloquially known as NorCal) is a geographic and cultural region that generally comprises the northern portion of the U.S. state of California. Spanning the state's northernmost 48 counties, its main population centers incl ...

to Oregon's

Willamette Valley The Willamette Valley ( ) is a long valley in Oregon, in the Pacific Northwest region of the United States. The Willamette River flows the entire length of the valley and is surrounded by mountains on three sides: the Cascade Range to the east, ...

. By 2009, Dutch Bros was running approximately 135 coffee stands in seven states and generating $50 million in gross annual revenue. Travis Boersma was featured on the American version of the television show ''Undercover Boss'' in 2013. Revenues continued to grow into the mid-2010s. The company made $238 million in systemwide sales in 2015, $350 million in 2016, and $415.3 million in 2017, by which point there were over 283 Dutch Bros locations. In January 2017, Dutch Bros purchased a vacant shopping center in downtown Grants Pass where their original push cart was located. The company converted 20,000 square feet of the shopping center's interior into

futsal Futsal is a football-based game played on a hardcourt, hard court smaller than a football pitch, and mainly indoors. It has similarities to five-a-side football and Indoor soccer, indoor football. Futsal is played between two teams of five players ...

courts for local youth soccer teams and workout space for its employees. In March of that same year, the company bought the Washington Federal bank building across the street from the shopping center, with the intention to move its headquarters and 150 employees into the bank building the following fall.

Capital increase and IPO

In October 2018, Dutch Bros received an undisclosed amount from private equity firm

TSG Consumer Partners TSG Consumer Partners is an American private equity company based in San Francisco, California. The firm was founded in 1987, and was among the first private equity firms to invest exclusively in consumer companies.

for a minority stake in the company and announced plans to expand to 800 stores over the next five years. Dutch Bros reported revenues of $238 million in 2019, $327.4 million in 2020, and $228 million over the first six months of 2021, heading into the company formally filing for its

IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...

in August 2021. The company stated in its filing that it hoped to raise $100 million, which it would use toward paying down $192 million in long-term debt. Dutch Bros held its IPO and began trading on the New York Stock Exchange with the ticker symbol "BROS" on September 15, 2021. The IPO raised $484 million, selling about 21 million shares for $23 each. Travis Boersma retained about 74 percent of shareholder voting power after the listing, due to his ownership of Class B stock.

Business model

Dutch Bros operates as a

. The vast majority of its stores are

drive-thru A drive-through or drive-thru (a sensational spelling of the word ''through''), is a type of take-out service provided by a business that allows customers to purchase products without leaving their cars. The format was pioneered in the United ...

stands. Each store sells hot and cold drinks, including non-coffee options, and a selection of baked goods. The company started

in 1999. In 2008, Dutch Bros transitioned to an internal franchising model that required potential franchisees to have worked for the company for a minimum of three years. This resulted in a 97 percent continuity rate among franchises; between 2010 and 2015, only three percent of all Dutch Bros franchise locations closed. In 2017, Dutch Bros stopped franchising and started opening only company-owned stores. As of June 2021, 264 Dutch Bros stores were being run by franchisees and another 207 were fully company-owned. The company has a history of buying out franchisees who fall short of the company's customer service standards.

Operations

Dutch Bros is headquartered in Grants Pass, Oregon. It is majority-owned by Travis Boersma, who holds the title of executive chairman, and Joth Ricci is its president and CEO. The company operates approximately 500 stores across 12 states and employs about 16,500 people. In September 2021, Dutch Bros became a publicly traded company, selling 21 million shares for a total of $484 million.

References

External links

* {{Oregon Companies, state=show Coffeehouses and cafés in the United States Food and drink companies based in Oregon Companies based in Grants Pass, Oregon American companies established in 1992 Restaurants established in 1992 Companies listed on the New York Stock Exchange 1992 establishments in Oregon 2021 initial public offerings