Dutch Bros. Throws Coffee Giants Long-Term Challenge For Starbucks, Dunkin ‘

Starbucks (SBUX) and Dunkin ‘may want to keep an eye out for the Dutch Bros. coffee chain. (BROS).

The Oregon-based company made its public debut in September and is garnering a lot of interest from both Main Street and Wall Street.

The company’s shares have risen nearly 56% since its inception, demonstrating what one analyst said was “a product that people clearly love.”

Ethan Chernofsky, marketing director for data intelligence platform Placer.ai, told Yahoo Finance LIVE that “beyond seeing visits increase over time, we see visits by number location increase, which really indicates this loyalty ”.

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

The monthly visits to the sites of Dutch Bros. in August and September both increased by more than 100% each month compared to 2019, according to a Placer.ai report. Chernofsky believes that the disciplined approach of Dutch Bros. helps stimulate its growth.

“They are really focused on releasing the product in a really positive way, a drive-thru and a fast service model that allows them to grow very quickly and in a very efficient way,” he added.

President and CEO Joth Ricci highlighted this approach in an interview with Yahoo Finance. At present, the coffee chain has 471 branches.

“We have been a very disciplined growth company from the start,” noted Ricci. The company intends to get to the east coast in time with the intention of being “somewhere on the east coast in the next three or four years maybe.”

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

With locations around the world, the coffee giant’s name has become synonymous with premium coffee drinking and ambitious lifestyle choices.

“The nature of the number of Starbucks locations – the reach they have in the suburbs and in the cities, their ability to really cross the canals in the coffee space,” with drive-thru, take-in experiences. charge and headquarters in major cities and suburbs, noted the analyst.

The Starbucks effect

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

With Starbucks earnings on deck for next week and in the height of the Pumpkin Spice Latte season, there is a lot of optimism for the coffee chain.

BofA recently restored coverage to Starbucks with a “Buy” rating and a price target of $ 135 per share, with analyst Sara Senatore citing Starbucks’ loyalty program as a major growth driver for the Seattle-based chain. Separately, BTIG analyst Peter Saleh reiterated a “Buy” rating, along with a price target of $ 130.

However, BTIG lowered its estimates for the fourth quarter of 2021 “given the increase in the Delta variant and the resulting impact in China and Japan this summer.” However, he expects US margins to benefit from an increased drive-through delivery presence.

Chernofsky said seasonal items like Pumpkin Spice Latte also stimulate growth, noting a big increase in pedestrian traffic in their early days.

“It just shows how powerful Starbucks is in the coffee business, but also in the larger zeitgeist in that when they launch something people are enthusiastic and willing to try it.”

Starbucks shares have risen 7.1% year-to-date.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at [email protected].

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