Drive-thru coffee shop Dutch Bros (BROS) once again trounced Wall Street expectations, posting first-quarter earnings that handily beat analyst estimates on the top and bottom line.
In a market where rival Starbucks (SBUX) and McDonald's (MCD) are disappointing investors, Dutch Bros continues to shine with higher sales and profits.
The third-largest coffee chain said revenue surged 29% to $355.2 million as comparable sales rose 4.7% from the year-ago period. The was also able to grow the number of transactions by 1.3%, indicating coffee drinkers continued to buy more and weren't just paying more. Company-operated stores saw a 6.9% jump in comps.
Adjusted earnings of $24.8 million, or $0.14 per share, were up 50%. Both metrics easily outpaced Wall Street estimates of $0.10 per share on $343.5 million in sales.
Where other companies were hunkering down and conserving resources, BROS continued to expand, opening 30 new stores in Q1 across 11 states. Because the drive-thru coffee shop currently only operates in 18 states, there is plenty of room for more expansion.
Dutch Bros has 1,012 stores operating now, but plans to open another 1,000 stores by 2029, suggesting a torrid pace of growth.
Customers love the brand. BROS said its loyalty program was responsible for 72% of transactions. It has also introduced digital enhancements, such as call-ahead ordering, which was responsible for 11% of sales.
Ensuring speedy service, such as installing twin drive-thru lanes, is setting itself apart from rivals like Starbucks, which has pared down its menu in order to increase order time. Dutch Bros, though, is adding more food to its menu. While still new and just 2% of sales, it represents another potential boost to its top and bottom lines.
The coffee shop is firing on all cylinders and shows no sign of letting up. BROS stock surged to an all-time high after its Q4 report, and while shares are up in premarket trading Thursday, they are less than 0.5% higher. BROS stock is up 117% over the past year.
While Dutch Bros could face tariff hurdles, less than 10% of its costs, including coffee, is sourced internationally. It makes BROS the best coffee stock to buy and an all-around excellent growth stock for your portfolio.
