Starbucks Struggles as Dutch Bros Soars in Sales Growth

Starbucks faces setbacks with four quarters of negative same-store sales growth. Meanwhile, Dutch Bros flourishes, boasting 6.9% same-store sales growth in Q4 and expansion plans for at least 160 new shops in 2025. Investors may want to watch these trends closely.

Date: 03-03-2025

AI Rating: 4

Starbucks Performance
Starbucks has demonstrated a troubling trend with four consecutive quarters of negative comparable-store sales growth, indicating a significant decline in its revenue from existing locations. The recent transition in leadership, with the ousting of its CEO, underscores the urgency of addressing these performance issues. The competitive landscape is becoming increasingly challenging, particularly with a brand like Dutch Bros capitalizing on Starbucks' struggles.

Dutch Bros Performance
In stark contrast, Dutch Bros is on a prominent growth trajectory. The company reported a remarkable 6.9% increase in same-store sales for Q4, along with a revenue total of $1.28 billion for 2024, reflecting a substantial 32.6% year-over-year growth. Additionally, their expansion strategy is poised to rapidly increase its locations from 831 to around 1,000 by the end of 2025.

Profit Margins and Expansion Potential
Dutch Bros operates with an impressive 30% profit margin at the restaurant level, anticipating a 20% net income margin as it consolidates its expansion. If Dutch Bros successfully scales its operations to approximately 3,000 stores in the next decade, they project systemic sales could reach around $7.5 billion. This outlook provides a compelling narrative for investors to consider, particularly given that Dutch Bros market cap has ballooned to $11.8 billion after gaining traction this past year.

Investor Consideration
The competitive dynamics between Starbucks and Dutch Bros could significantly influence investor sentiment and stock prices. While Starbucks struggles to regain momentum, Dutch Bros appears poised for a long-term upward trajectory. Investors might view Dutch Bros as an appealing investment opportunity given its rapid growth and positive sales trends. On the other hand, Starbucks is likely to experience caution among investors due to its ongoing challenges and leadership changes.

Stocks: SBUX BROS