Dutch Bros. vs Starbucks: what investors need to know

Recent IPO Dutch brothers (NYSE: BROS) is a fast growing coffee chain that often makes comparisons with Starbucks (NASDAQ: SBUX), but the reality is, they don’t target exactly the same customers. In this fool live clip, recorded on September 27, Fool.com contributors Danny Vena, Matt Frankel, CFP and Jon Quast discuss the key differences between the two coffee companies that investors should be aware of.

Jon Quest: Danny, can I say there are a few differences I see between Dutch Brothers and Starbucks. It might not be that deep now in the age of the pandemic, but Starbucks really prioritizes its food court, it really wants to be a community center. While the Dutch Brothers are really a drive-thru optimization machine, they try to get people through that line as fast as they can.

Danny Vena: Absoutely.

Quarter: In a way, I almost wonder if they are targeting a slightly different market, not that there isn’t an overlap because of this cafe, so there is an overlap there, but sometimes I wonder if maybe this is just a little enough of a distinguish that they are not going to compete as directly as Dutch Brothers is going to be competing with other coffee chains that are also optimized for service at flying.

Here in North Florida, South Georgia, we have a chain called Eliana’s. Eliana actually looked at the franchise information and it’s really interesting, the unity economy on these things is really good. I guess the little that I have done with the Dutch Brothers is very similar, and so there is a lot to be done for the structure of the Dutch Brothers that I love.

My question is, are they going to be able to come here on the east coast where we have other chains that are kind of like that, and already established and well known, that’s why I put it where I have it. done in The Rang. Not so much because of Starbucks, but because of other chains that look a lot like Dutch Brothers.

Matt Frankel: The recent progress is truly impressive. I know they are expanding somewhat geographically, I want to say that it is in Texas that they have developed recently, but they are slowly moving east. I hope I can try their product, maybe this is one of the reasons I ranked lowest because I never really tried coffee, and I’m a coffee guy, but i love Dutch Brothers.

I heard about them a while back when they did an episode of Undercover Boss, I don’t know if you’ve seen that one, but the CEO is definitely a character that I could see why, like Danny mentioned it, they pride themselves on being fun – a loving coffee company, and the corporate culture really seems to reflect that. I definitely recommend watching this episode if you haven’t already.

Quarter: As far as you are concerned, Matt, I researched this company on Glassdoor, I was really surprised at how high the Glassdoor scores were for it. Glassdoor is just the perception the company has of its own company or the perception of employees of its own company. For a primarily franchised restaurant chain, I just didn’t expect much, but a lot more than I expected, so it seems people love working there.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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