Verdict Food Service

Daily Newsletter

10 August 2023

Daily Newsletter

Coffee chain Dutch Bros swings to profit in Q2

Total revenues in the three month period was $249.9m, an increase of 34.1% compared to last year.

US-based drive-through coffee company Dutch Bros has reported a net income of $9.7m for the second quarter of 2023, compared to a net loss of $1.75m in the same period a year ago.

For the quarter ended 30 June 2023, the company’s total revenues were $249.9m, an increase of 34.1% versus $186.4m a year ago.

Its system same-shop sales rose by 3.8% while the company-operated same-shop sales grew by 1.6% compared to the same quarter year ago.

During the period under review, the company-operated shop revenues were $221m, an increase of 37.7% compared to $160.5m a year earlier.

Dutch Bros' adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the quarter was $48.6m, a surge of 103% compared to $23.9m last year.

The drive-through coffee company opened 38 new shops during this quarter and increased its total shop count to 754 as of 30 June 2023.

In the second quarter, the company opened 38 new shops across eight US states, of which 35 were company-operated.

Dutch Bros CEO Joth Ricci said: “In Q2, we delivered 34% year over year revenue growth, driven by new shop openings and 3.8% systemwide same shop sales growth. Within the quarter, we continued to see meaningful company-operated shop margin expansion, driven by significant labour efficiency improvement.

“This speaks to the benefit of our company-operated model as we were able to effect changes across our shops and then directly benefit from those changes.

“In Q2, we continued to see general and administrative leverage, which taken together with our growing shop margins, demonstrates our commitment to profitable growth.”

Additionally, Dutch Bros has appointed its current president Christine Barone as its new CEO.

Barone, whose appointment is effective 1 January 2024, will replace Joth Ricci.

Generative AI remains an untapped potential across the consumer industry

GlobalData estimates the total AI market will be worth $909 billion in 2030, growing at a CAGR of 35.2% between 2022 and 2030. The consumer goods, foodservice, and packaging sectors are undergoing digital transformation, accelerated by the COVID-19 pandemic and changing consumer preferences. AI can help companies operating in these sectors by significantly reducing costs and production times. In Nestlé's 2022 full-year results, the company announced a renewed focus on digitalization to drive growth. Financial and reputational pressures associated with supply chain disruptions and sustainability concerns are also driving interest in the digitalization of supply chains. Data science and ML are strong investments across all areas. However, the sectors cannot stop at AI-powered data analytics applications. They must also explore computer vision (CV), smart robots, AI sensors that automate manufacturing and distribution logistics, and generative AI tools that increase efficiency across corporate departments and customer service operations and enable innovation in product design. For the most part, the consumer goods, foodservice, and packaging sectors will not play a significant role in creating and developing AI hardware or platforms. Instead, these sectors will help scale up the adoption of AI technologies, such as CV, conversational platforms, and smart robots. This adoption will be driven by the financial benefits and potential cost savings AI automation delivers across global supply chains.