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, today reported financial results for the third quarter ended September 30, 2022.
Joth Ricci, Chief Executive Officer and President of Dutch Bros Inc., stated, “We continue to execute our growth strategy, leveraging our strong team to open new shops and our proven operational playbook and loyalty program to engage and connect with new and existing customers.
In the third quarter, we opened a record 38 shops, grew our revenue by more than 50%, and once again expanded our company-operated shop gross margins quarter-over-quarter. For perspective, we opened almost as many shops this quarter as we did during the entire year of 2019 and have opened at least 30 shops in 5 consecutive quarters. Dutch Bros’ portability and brand acceptance remains impressive as we grow from west to east across the country.
Our 2020 and 2021 classes of new shops are generating annualized volumes that are approximately 10% higher than our system average and are exhibiting predictable and consistent sales performance and upward margin progression.”
He added, “Our new shops are fueling revenue growth, which increased 53.0% year-over-year to $198.6 million. Company-operated shop gross margins improved in the third quarter to 20.0%, 60bps higher than the second quarter and 720bps higher than the first quarter. During the quarter, we took pricing actions to partially combat inflationary pressures and benefited from operational improvements as well as the increased weighting of newer, higher-margin shops in our portfolio. We are now raising our annual revenue guidance based upon the performance of our new shops and our strong pipeline and remain confident in our expectation to generate at least $90.0 million in adjusted EBITDA1 this year.”
He concluded, “We expect to cap off our first full year as a public company by reaching our 2022 development target of at least 130 new shops. Based upon the availability of capable field leaders currently in our people development system and the total number of committed sites in our pipeline, we are targeting at least 150 new shop openings for 2023. This would enable us to reach 800 shops by the end of 2023, a goal we made as a private company five years ago when we had just 328 shops.”
Dutch Bros Inc.: Third Quarter 2022 Highlights:
- Opened 38 new shops, 34 of which were company-operated, across 11 states. The shops opened in the third quarter of 2022 achieved an annualized AUV of $1.9 million.
- Total revenues grew 53.0% to $198.6 million as compared to $129.8 million in the same period of 2021.
- System same shop sales2 grew 1.7% as compared to the same period in 2021 and 11.4% on a 3-year stacked basis. Included in the current period result is the positive benefit of effective aggregate pricing of approximately 9.1% taken in the last four quarters along with headwinds from sales transferred from existing shops to new shops of approximately 1.5%. Company-operated same shop sales grew 1.0% as compared to the same period of 2021 and 8.2% on a 3-year stacked basis3.
- Company-operated shop revenues increased 59.7% to $173.5 million as compared to $108.7 million in the same period of 2021.
- Company-operated shop gross profit was $34.7 million as compared to $23.1 million in the same period of 2021. In the third quarter of 2022, company-operated shop gross margins, which includes 260bps of pre-opening expenses, improved to 20.0%. This is a 60bps increase from the second quarter 2022 and a 720bps increase from the first quarter of 2022. Year-over-year, company-operated shop gross margins decreased 130bps.
- Company-operated shop contribution, a non-GAAP financial measure, grew 61.8% to $44.3 million as compared to $27.4 million4 in the same period of 2021. In the third quarter of 2022, company-operated shop contribution margins, which includes 260bps of pre-opening expenses, improved to 25.6%. Year-over-year, company-operated shop margins increased 40 bps.
- Selling, general, and administrative expenses were $45.4 million (22.8% of revenue) as compared to $153.7 million4 (118.4% of revenue) in the same period of 2021.
- Adjusted selling, general, and administrative expenses5 were $34.7 million (17.5% of revenue) as compared to $24.2 million4 (18.6% of revenue) in the same period of 2021.
- Net income was $1.6 million as compared to a net loss of $(116.8) million4 in the same period of 2021.
- Adjusted EBITDA5, a non-GAAP financial measure, grew 32.8% to $27.8 million as compared to $21.0 million4 in the same period of 2021
- Adjusted net income5, a non-GAAP financial measure, was $14.3 million as compared to $11.4 million4 in the same period of 2021.
- Net income per share of Class A and Class D common stock – diluted was $0.03 as compared to net loss per share of $(0.24) in the same period of 2021.
- Adjusted net income per fully exchanged share of common stock5, a non-GAAP financial measure, was $0.09 as compared to $0.07 in the same period of 2021
Outlook
Dutch Bros is raising guidance for total revenues and reaffirming other elements of its full-year 2022 outlook.
- Total system shop openings in 2022 are expected to be at least 130, of which at least 110 shops will be company-operated. In 2023, total system shop openings are expected to be at least 150.
- Total revenues are now projected to be at least $725 million.
- Same shop sales growth is estimated to be approximately flat.
- Adjusted EBITDA 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.
