Dutch Bros: Could This Fast-Growing Coffee Chain Be a Long-Term Winner?
Key Points
Dutch Bros stands out for its beverages and for giving back to the communities it serves.
The stock's valuation may give investors pause.
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Dutch Bros (NYSE: BROS) has gained increased investor attention in recent years. A unique concept and a rapid expansion across the U.S. stoked fast revenue growth and increased recognition, particularly at a time when its largest rival, Starbucks, is looking for ways to reinvigorate its brand.
Nonetheless, Dutch Bros is still a fraction of Starbucks' size, and consumers have numerous choices when it comes to coffee and beverages. Amid those conditions, can the coffee stock perk up investor returns, or should they look for caffeine highs elsewhere?
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The state of Dutch Bros
Dutch Bros has stood out in the crowded coffee marketplace. It operates drive-thru coffeeshops, attempting to reach out to customers by adding a personal touch between customers and employees, who it calls "broistas." It also empowers shops to host local events for organizations with its focus on giving back to the communities its serves.
Additionally, it has developed a customer following with breve drinks, which are based on espresso and half-and-half. It also offers teas, smoothies, lemonades, energy drinks, and other beverages.
The company has also taken this concept across the country rapidly. As of the end of the third quarter of 2025, it operated 1,081 shops in 24 states, well above the 471 locations it had when it announced its IPO in 2021.
Financial growth
Amid that growth, Dutch Bros reported about $1.2 billion in revenue in the first nine months of 2025, a 27% yearly increase. This included 5.2% same-shop sales growth over the same period, an indication of its rising popularity.
During that time, the company kept cost and expense growth in check. As a result, it earned $58 million in net income in the first three quarters of 2025, rising 85% from year-ago levels.
That growth helped the stock early in 2025, but over the last year, it is up by just 12%. Valuation may partially explain that slowdown, as Dutch Bros shares trade at a 126 P/E ratio, far above the S&P 500 average of 31.
Nonetheless, Dutch Bros intends to grow to 2,029 shops by 2029. Such growth is bullish for Dutch Bros, but it remains to be seen whether investors are willing to overlook the high valuation to buy into this growth story.
Is Dutch Bros a long-term winner?
Given its rapid growth, Dutch Bros stock should be a long-term winner.
Admittedly, the high valuation and competitive nature of Dutch Bros' business may give investors pause. Even though its rapid growth arguably commands a premium, it also makes the stock's near-term direction uncertain. Knowing that, investors should accumulate shares slowly if they choose to invest.
Still, the fact that the store footprint is set to almost double in three years should bode well for Dutch Bros stock and its financials. That means investors should expect the rapid revenue growth to continue for the foreseeable future, a factor that should take the stock higher over time.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.
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