QSR May 2023

EMERGING BRANDS

expect it to ever become more than that. The chain tested breakfast burri tos a few years ago, but they didn’t hold up to company standards. “I think Trav said it best, he said, ‘So what’s special about opening up plas tic wrap around the burrito that was heated in a TurboChef?” Ricci says. “‘How does that make the experience any better?’” It’s not a baseless prediction, Ricci says. That came from scientific mod eling, and the company only kept to promised geographies. The brand uses a smiley face growth strategy where it seeks expansion along the mouth of the smile. Meaning from the Pacific North west, California, and the Southwest to the Southeast and Mid-Atlantic. Ten nessee was the first state on the East Coast to welcome Dutch Bros. It will be followed by Kentucky and Alabama in 2023 and Florida sometime in 2024. “I believe the beverage concept is a very scalable concept,” Ricci says. “And just about everywhere you go through out the country, it is very different from food, where food becomes more region ally based and more regional in how people consume it. Beverage has a much broader base of consumption across big categories.” WHAT LIES AHEAD In the next 10–15 years, Dutch Bros wants to break 4,000 locations.

QUICK TAKE

More than 80 % of the menu is cold beverages. • • • Net sales distributed pretty evenly throughout the day: 10 A.M.-3 P.M. 37 % BEFORE 10 A.M.

27 % 3 P.M.-8 P.M. 27 % & AFTER 8 P.M. 9 %

gram, it’s really about understanding our guest more and our customers more and what do they want from us,” Barone says. “And so part of that program I think is just learning more about the habits and what people like and helping them understand, well, if you’re someone who really likes to try a lot of different drinks, here’s something you might want to try next and how can we help you do that.” More than 80 percent of the menu is cold beverages. Dutch Bros’ proprietary energy drink, Blue Rebel, is 27 percent of net sales and helps anchor afternoon and evening dayparts. In the rolling 12 months through Q3, net sales distributed pretty evenly throughout the day: 10 A . M . -3 P . M ., 37 percent; before 10 a.m., 27 percent; 3 P . M .-8 P . M . , 27 percent; and after 8 P . M . , 9 percent. This year, the brand is testing tap systems that will dispense cold brew and Blue Rebel, which should increase throughput and significantly reduce waste throughout the company’s dis tribution system. Dutch Bros is a beverage-led concept in every sense of the word. There are a handful of food items, and Ricci doesn’t

It wasn’t always like this. Amid the IPO process, Ricci spent a great deal of time explaining to people what Dutch Bros is and where Grants Pass is located on the map. Not many had heard of it. But during a media tour he conducted after the compa ny’s Q3 2022 earnings call, every interview ended with, “When are you coming to New Jersey?” “Can I get the rights to Long Island?” “How fast will it take to get there?” Ricci says it’s a testament to what the brand has earned. But Dutch Bros isn’t heading into the Great Lakes or the Northeast. It’ll most likely go as far north as Southern Virginia, accord ing to today’s roadmap. More attention doesn’t mean a change in plans. The culture is stronger than that. “I would say that a lot of other people who we work with every day now are just like, ‘Hey bring this to New York, it would be great,’” Ricci says. “But we’ll stay disciplined to what we want to do.”

Ben Coley is the editor of QSR . He can be reached at bcoley@wtwhmedia.com .

DUTCH BROS

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MAY 2023 | QSR | www.qsrmagazine.com