Prices for Cocomo, a blend of Blue Rebel and oat milk, are rising, but Oregon drive-thru chain Dutch Bros.
Grants Pass-based Dutch Brothers shocked investors in May by announcing that inflation was reducing customer demand and driving up costs of the company’s rapid-growth plans. The news sent the Dutch Bros stock price plummeting.
However, in second-quarter results released Wednesday, the Dutch Bros said sales were stable. That’s thanks to his 3% price increase last fall and spring price increases. Inflation appears to have softened slightly in the last quarter, according to the company.
Dutch Brothers said higher menu prices combined with operational changes helped boost profit margins last quarter.
In a written statement, CEO Jos Rich said, “We are considering further menu pricing later this year, if necessary. He said he expects it to push further.
Known for its Blue Level energy drinks and frosty coffee treats, Dutch Brothers has a loyal following in the West. Last September’s public offering was the largest in Oregon’s history, raising $550 million.
Dutch Brothers expects to open 65 new stores in the second quarter and nearly 670 by the end of the year. The chain has focused on growth in Texas, Oklahoma, California, and most recently Tennessee. He hopes to have 4,000 stores nationwide within 10 years.
In one worrying sign, Dutch Bros. says same-store sales are declining in Southern California. This is because the company’s sales have declined due to particularly high gasoline prices in California. The company said it wasn’t sure if higher gas prices meant people were driving less overall, or if they were just spending less at drive-throughs.
Overall, sales at stores that have been open for at least a year were down 3.3% last quarter. This is a sharp reversal from his 2021, when sales of those same stores increased by 9%. However, according to Dutch Bros, the decline slowed as the quarter progressed, reaching just 1% in July.
Dutch Brothers sales reached $186.4 million in the second quarter, up 44% from the same period in 2021. The company posted a loss of $1.8 million, compared with his $18 million loss in the second quarter of last year.
Spending on Dutch Brothers’ ambitious expansion plans has led to financial losses.
Dutch Brothers said it expects to record more than $715 million in sales for the full year, up 44% from 2021.
Over the past three months, Dutch Brothers shares have regained all that they lost from May’s disappointing results. The stock rose 4.5% to $46 in after-hours trading after Wednesday’s earnings report.
— Mike Rogoway | [email protected] | Twitter: @Logoway | |