Dutch Bros. offers coffee giants a long-term challenge at Starbucks, Dunkin ‘

Dutch Bros. offers coffee giants a long-term challenge at Starbucks, Dunkin '

Shares of the company are up nearly 56% since its debut, demonstrating what one analyst said is “a product that people clearly love.” 

The Oregon-based company made its public debut back in September, and is getting a lot of buzz from both Main Street and Wall Street. 

Highlights

  • He added: “I come once I like it, I keep on coming back.” 

  • Ethan Chernofsky, CMO of data intelligence platform Placer.ai, told Yahoo Finance LIVE that “beyond seeing visits going up over time, we see that visits per location number going up, which really indicates that loyalty.”

“They’re really focused on getting the product out in a really positive way, drive-thru and a fast service model that enables them to grow really quickly in a really efficient manner,” he added. 

Monthly visits to Dutch Bros. locations in August and September were both up over a whopping 100% each month compared to 2019, according to a report from Placer.ai. Chernofsky believes Dutch Bros. disciplined approach is helping to drive its growth.

President and CEO Joth Ricci emphasized that approach in an interview with Yahoo Finance. As of right now, the coffee chain has 471 locations. 

“We’ve been a very disciplined growth company from the beginning,” Ricci noted. The company intends to make its way to the east coast in time with the intention to be “somewhere on the eastern seaboard in the next maybe three, four years.”

Story continues However, Dutch Bros is still “a long way away” from becoming a “a real, true competitor to Starbucks,” according to Chernofsky. 

With locations around the globe, the coffee giant’s name has become synonymous with upscale coffee drinking and aspirational lifestyle choices. “The nature of how many locations Starbucks has — the reach they have in the suburbs and in cities, their ability to go really cross channel in the coffee space,” with drive-thru, pickup, and sit down experiences across major cities and suburbs, the analyst noted.

The Starbucks effect A reporter’s pumpkin spice latte, purchased at a Starbucks in Baltimore. Researchers say the appeal of pumpkin spice-flavored items is less about the taste than the smell and its associations. (Christina Tkacik/Baltimore Sun/Tribune News Service via Getty Images)

However, BTIG lowered its fourth quarter 2021 estimates “given the surge in the Delta variant and resulting impact in China and Japan this summer.” However, it expects America’s margins to benefit with an increased the drive-thru delivery presence. Chernofsky said the seasonal items like the Pumpkin Spice Latte drive growth as well, noting a big boost in foot traffic upon their debut.

BofA recently reinstated coverage of Starbucks with a “Buy” rating, and a price objective of $135 dollars per a share, with analyst Sara Senatore citing Starbucks’ loyalty program as a major factor of growth for the Seattle-based chain. Separately, BTIG analyst Peter Saleh reiterated a “Buy” rating, along with a price target of $130. With Starbucks’ earnings on deck for next week and in the prime of Pumpkin Spice Latte season, there’s lots of optimism for the coffee chain.