Dutch Bros Inc. (NYSE:BROS) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong financial performance with a 29% revenue increase and positive same shop sales growth. The company shows confidence in Q2 momentum and new store productivity. Despite potential risks like tariffs and labor costs, management addresses these concerns and maintains a positive outlook. The 2025 guidance reflects substantial growth expectations, and the mobile order functionality is driving incrementality. With a market cap of around $4 billion, the stock is likely to react positively, though not dramatically, thus predicting a 2% to 8% increase over the next two weeks.
Key Financial Performance
Revenue $355 million, an increase of 29% or $80 million over the first quarter of last year.
Adjusted EBITDA $63 million, an increase of 20% or $10 million over the first quarter of last year.
Company-operated same shop sales growth 6.9%, with 3.7% being transaction growth.
System same shop sales growth 4.7%.
Company-operated shop contribution $96 million, an increase of 30% or $22 million year-over-year.
Company-operated shop contribution margin 29.4%.
Beverage, food and packaging costs 25% of company operated shop revenue, which is 70 basis points favorable year-over-year driven primarily by pricing.
Labor costs 27.4% of company-operated shop revenue, which is 100 basis points unfavorable year-over-year, driven primarily by wage investments made last April in California.
Occupancy and other costs 16.5% of company-operated shop revenue, which is 20 basis points favorable year-over-year, driven primarily by leverage from sales growth.
Preopening expenses 1.7% of company-operated shop revenue, which is 30 basis points unfavorable year-over-year, driven primarily by new shop training and travel.
Franchising and other revenue $29 million, up $1.7 million or 6.4% year-over-year.
Franchise and other contribution $20 million, up $1.2 million or 6.4% year-over-year.
Adjusted SG&A Approximately $54 million or 15.1% of total revenue, roughly in line with expectations.
Interest expense net $7.1 million, an increase of $722,000 year-over-year, primarily driven by higher interest expense on long-term debt and finance leases for new shops.
Adjusted EPS $0.14, up from $0.09 in Q1 of last year.
Cash and cash equivalents $316 million.
Drawn term notes $281 million.
Net cash position Approximately $36 million.
Average CapEx per shop Approximately $1.67 million, a decline of approximately 10% from Q4.
Total liquidity Over $658 million, comprised of $316 million in cash and cash equivalents, $342 million in undrawn revolver.
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Operating Highlights
New Product Launches: In Q1, Dutch Bros rolled out the Sweet Cereal Sips LTO and the Spring Fever Dream Trio, enhancing their product offerings.
Merchandising Initiatives: Introduced fun merchandise like a rubber duck to enhance customer experience.
Market Expansion: Opened shop number 1,000 in Orlando, Florida, with plans to reach 2,029 shops by 2029.
New Shop Openings: Opened 30 new shops in Q1, with plans to maintain this pace and accelerate in the second half of 2025.
Operational Efficiency: Implemented Order Ahead program, which accounted for 11% of transaction mix, improving customer experience and throughput.
Training and Development: Current pipeline includes 450 operator candidates with an average tenure of over seven years.
Strategic Shifts: Enhanced real estate strategy and market entry pace to build brand awareness and demand.
Advertising Strategy: Increased paid advertising efforts in new and mature markets to drive brand awareness.
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Risk or Challenges
Competitive Pressures: Dutch Bros faces competitive pressures in the beverage market, necessitating continuous innovation and effective marketing strategies to maintain and grow market share.
Regulatory Issues: The company is subject to regulatory scrutiny, particularly regarding tariffs on imported goods, which could impact cost structures and pricing strategies.
Supply Chain Challenges: Potential supply chain challenges are highlighted, particularly concerning coffee sourcing from international markets, which may be affected by tariffs.
Economic Factors: The broader consumer environment presents uncertainties that could affect traffic trends and overall sales performance.
Labor Costs: Labor costs have increased, driven by wage investments, which may impact profit margins if not managed effectively.
Preopening Expenses: Increased preopening expenses due to new shop training and travel could affect short-term profitability.
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Guidance & Outlook
Shop Growth: Dutch Bros aims to open 1,000 new shops, targeting a total of 2,029 shops by 2029.
Transaction-Driving Initiatives: The company is focusing on three foundational initiatives: category-wide innovation, increased paid advertising, and growth in the Dutch Rewards program.
Order Ahead Initiative: Order Ahead accounted for approximately 11% of transaction mix, with strong adoption and positive results in new markets.
Food Test Pilot: The company is expanding its food test pilot from 8 to 32 shops, with plans for broader rollout anticipated throughout 2026.
Revenue Guidance: Total revenues are expected between $1.555 billion and $1.575 billion for 2025.
Same-Shop Sales Growth: System same-shop sales growth is projected in the range of 2% to 4%.
Adjusted EBITDA Guidance: Adjusted EBITDA is expected to be between $265 million and $275 million.
Capital Expenditures: Estimated capital expenditures are between $240 million and $260 million, primarily for new shop construction.
Shop Openings: The company expects to open at least 160 new shops in 2025.
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Shareholder Return Plan
Share Buyback Program: None
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Key Q&A
Q:Can you clarify how you're thinking about the second quarter, especially regarding momentum?
A:We’re feeling really good about the momentum into Q2, which is coming in line with our expectations. We are rolling off about 150 basis points of price coming into Q2, and we feel good about the traffic trend continuing.
Q:Are you making adjustments for the negative impact on traffic in Q1 from the leap day?
A:Yes, we are making an adjustment for the leap day and are looking at the normalized run rate trend continuing into Q2.
Q:What is your assumption about new store productivity persisting through this year?
A:We had a great Q1 with new shop productivity and are pleased with the openings, indicating strong brand reception.
Q:Was the food and beverage cost line in Q1 more favorable than expected?
A:This is right in line with what we expected, with most pressure coming from coffee prices.
Q:Can you provide more color on mobile order and its incrementality?
A:We are seeing incrementality from mobile order, with increased frequency and rewards sign-ups.
Q:Has the intensity of promotions and offers changed?
A:No notable change in the contribution from discounts compared to last year.
Q:What is your understanding of labor costs going forward?
A:We expect labor costs to be flattish going forward, with investments in shop leadership offsetting sales leverage.
Q:What is your vision for the food opportunity and its margin profile?
A:We are being thoughtful about the food program to capture beverage opportunities, and while food margins are lower, they complement beverage margins well.
Q:How do you see the impact of new Texas shops entering the comparable store base?
A:We see strong performance from newer markets, with expectations of outsized performance from those entering the comp base.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific impact of the uncertain consumer environment on their guidance, stating they are mindful of it but not seeing it reflected in their current customer behavior.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Chief Development
Development Officer
Order Ahead
Order throughput
Paddy
approach
barrier
broista
broistas
coast
communication
construction
customer experience
estate capability
estate development
food test
fun
goal shop
inning
investment estate
journey
latte
objective
passion
pilot initiative
point improvement
protein coffee
quality service
roadmap
shop goal
speed quality
stage
success Order
throughput food
training
transaction plan
vision
visit
BROS Transcript
Dutch Bros Inc. (BROS) Q3 2025 Earnings Call Transcript
Positive11-5
The earnings call summary and Q&A reveal strong financial performance, with raised revenue and EBITDA guidance. New initiatives like the food pilot and CPG line are positively received, and market expansion shows promising results. Despite slight margin pressure from higher food costs, the company's strategic growth plans, including shop openings and order-ahead initiatives, suggest a positive outlook. Analysts' questions were addressed with optimism, and the market cap indicates moderate sensitivity to these developments, leading to a positive stock price prediction.
Dutch Bros Inc. (BROS) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call highlights strong financial performance with a 6.1% same-shop sales growth and a 37% increase in Adjusted EBITDA. The loyalty program and order ahead transactions show positive trends. The Q&A reveals continued strong store productivity and strategic investments in mobile ordering and marketing. Despite some vague management responses, the overall sentiment is positive, supported by efficient capital expenditure and promising guidance for future growth. Given the market cap, the stock price is likely to see a positive movement in the range of 2% to 8%.
Dutch Bros Inc. (NYSE:BROS) Q1 2025 Earnings Call Transcript
Positive5-8
The earnings call indicates strong financial performance with a 29% revenue increase and positive same shop sales growth. The company shows confidence in Q2 momentum and new store productivity. Despite potential risks like tariffs and labor costs, management addresses these concerns and maintains a positive outlook. The 2025 guidance reflects substantial growth expectations, and the mobile order functionality is driving incrementality. With a market cap of around $4 billion, the stock is likely to react positively, though not dramatically, thus predicting a 2% to 8% increase over the next two weeks.
Dutch Bros Inc. (BROS) Q1 2025 Earnings Call Transcript
Positive5-7
The earnings call reveals strong revenue growth, new shop openings, and positive adjusted EBITDA, despite some margin pressures. The Q&A highlights confidence in momentum and traffic trends, with mobile orders boosting sales. Guidance for 2025 shows continued growth, although competitive pressures and regulatory issues are noted. The lack of a share repurchase program is a minor drawback. Considering the company's market cap, the stock is likely to see a positive reaction, with a predicted increase of 2% to 8% over the next two weeks.
BROS Report
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
