Jennifer Saibil, The Motley Fool

Sat, May 17, 2025, 1:14 AM5 min read

• Dutch Bros recently raised its store opening goal from 4,000 to 7,000.

• It has a multipronged growth strategy that involves product innovation, paid ad spend, and its rewards program.

• Dutch Bros isn't likely to be highly impacted by tariffs.

• 10 stocks we like better than Dutch Bros ›

After the stunning announcement earlier this week that the U.S. and China are bringing their tariffs back down, the S&P 500 is nearly back to where it started out the year. There's no way to know if it will keep climbing and hit new highs anytime soon or unravel again, but it's a big burst of confidence in the economy.

In the meantime, coffee shop chain Dutch Bros (NYSE: BROS) continues to outperform the market. The growth stock has incredible opportunities as it opens new stores and builds up its presence. However, it's plunged 18% over the past few months. Let's see why the market is spooked and whether or not this is a buying opportunity.

Dutch Bros recently celebrated its 1,000th new store opening (this one in Florida), and it concurrently announced plans to open another 1,000 stores by 2029. It doubled its store count from around 500 when it went public in 2021 to where it is today, but it's still a bold statement to imagine doing that again over the next four years. It's planning to open at least 160 stores in 2025, so this ambitious plan implies that the rate is going to accelerate significantly over the next few years.

Customers love the coffee, increasing confidence that it can reach this goal. It provided a further, long-term goal of reaching 7,000 stores. That was raised from its previous goal to reach 4,000 stores, and as it expands successfully, there's certainly a chance that even this goal could be surpassed.

Some recent metrics highlight why investors are so enthusiastic. In the 2025 first quarter, revenue increased 29% year over year, driven by 30 new stores and a 4.7% increase in comparable sales. Some of that was due to pricing, but transactions were also up 1.3%, a good sign of consumer engagement despite higher prices.

CEO Christine Barone attributes the success to three factors: innovation, marketing, and the company's rewards program.

Dutch Bros is known for its unique, customized beverages, and specifically for its cold drinks. It's had great success with recent launches like boba and protein coffee, and it recently rolled out a limited-time offer of popular cereal flavors to add to customized drinks. It's also piloting a new food menu in some locations. Food only accounts for 2% of sales right now, but management believes that offering a targeted food menu of specific items can lead to higher beverage sales. This could be a significant addition in capturing share of the all-important morning rush without adding unnecessary complexity for its "broistas." It launched eight new products, including four hot ones, in a pilot test of eight stores. Based on that initial success, it has expanded the program to 32 stores.