Tuesday 27 September 2022

Dutch Bros. exceeds $1 billion in systemwide sales on a trailing 12-month basis, reaches 600 shop mark

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GRANTS PASS, Ore., USA – Dutch Bros Inc. one of the fastest-growing brands in the food service and restaurant industry in the United States by location count, yesterday reported financial results for the second quarter ended June 30, 2022. Joth Ricci, Chief Executive Officer and President of Dutch Bros Inc., stated, “We surpassed two major brand milestones during the second quarter: opening our 600th shop and exceeding $1 billion in systemwide sales2 on a trailing twelve-month basis1.

These milestones demonstrate the strength of our people-first culture and our new shop development pipeline. We have opened 65 shops in the first half of 2022 and are on track for at least 130 shop openings for the full year.

Our newest shops are exhibiting predictable and consistent sales and upward margin progression, while our 2020 and 2021 classes are generating annualized volumes that are 10% higher than our system average. As we pursue strategic growth from west to east, Dutch Bros’ portability and brand acceptance have been outstanding.

He added, “Like many of our peers, the macro-economic environment is impacting various aspects of our business, and our company-operated shop margins continue to be pressured by record inflation in the second quarter. That said, our team accelerated efforts to increase productivity in the middle of our P&L, and we took a 3% price increase in the second quarter. These actions contributed to 630bps of sequential improvement in company-operated shop margins from 18.3% to 24.6% when compared to the first quarter of 2022. We are evaluating further menu pricing action as needed in the back half of the year.”

He concluded, “We celebrated our annual Drink One for Dane fundraiser on May 20, and it was the second-largest day by transaction-count in our history. In 2022 we raised $2.3 million, and since 2018, we have raised over $8.3 million. We are upholding our mission to contribute to communities, making a massive difference, one cup at a time.”

Dutch Bros Inc.: Second Quarter 2022 Highlights:

  • Opened 31 new shops across 9 states. The shops opened in Q2 ended the quarter with an annualized AUV of $2.1 million, exceeding our expectations.
  • Total revenues grew 44.2% to $186.4 million as compared to $129.2 million in the same period of 2021.
  • Company-operated shop revenues increased 55.9% to $160.5 million as compared to $103.0 million in the same period of 2021.
  • System same shop sales 3 declined (3.3)% but grew 6.9% vs. 2019. Included in this result is a positive benefit of aggregate pricing of approximately 5.3% taken since November 2021 and headwinds from sales transfer from existing to new units of approximately 1.4%. Company-operated same shop sales declined (4.3)% but grew 4.3% vs. 2019. July system same-store sales stabilized, declining only (0.9)% with incremental traffic improvement.
  • Company-operated shop gross profit was $31.2 million as compared to $29.5 million4 in the same period of 2021.
  • Company-operated shop contribution5, a non-GAAP financial measure, grew 20.0% to $39.5 million as compared to $32.9 million4 in the same period of 2021. In the second quarter, company-operated shop margins improved 630bps from 18.3% to 24.6% when compared to the first quarter of 2022.
  • Net loss was $(1.8) million as compared to net income of $11.9 million4 in the same period of 2021. For the second quarter of 2022, we recognized $10.4 million of non-cash equity-based compensation.
  • Adjusted EBITDA 5, a non-GAAP financial measure, was $23.9 million as compared to $30.7 million4 in the same period of 2021, which is reflective of inflationary pressures.
  • Adjusted net income 5, a non-GAAP financial measure, was $8.7 million as compared to $22.7 million4 in the same period of 2021.
  • Net loss per share of Class A and Class D common stock – diluted was $(0.02) and Adjusted net income per fully exchanged share of common stock5, a non-GAAP financial measure, was $0.05.

Outlook

Dutch Bros is affirming its full-year 2022 outlook:

  • Total system shop openings are expected to be at least 130, of which at least 110 shops will be company-operated.
  • Total revenues are now projected to be at least $715 million.
  • Same shop sales 3 growth is estimated to be approximately flat.
  • Adjusted EBITDA 6 is estimated to be at least $90 million.
  • Capital expenditures are estimated to be in the range of $175 million to $200 million, which includes approximately $15 million to $20 million for our new roasting facility that we project will open in late 2023 / early 2024.

1 Trailing-twelve months are the results for the past twelve consecutive months ended on June 30, 2022.
2 Definition of systemwide sales is provided in the section “Select Financial Metrics”.
3 Same shop sales is defined in the section “Select Financial Metrics”.
4 The Company’s historical results have been revised to reflect an immaterial error correction related to employee sick leave accrual. For additional information, see sections “Condensed Consolidated Statements of Operations”, “Company-operated Shop Results”, and “Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals”
5 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures”.
6 We have not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because we do not provide guidance for the various reconciling items. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.

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