Part of the market, part of the stereotype? Is Dutch Bros becoming just another coffee stand?

 

 A simple question, if you accidentally make an extra cup of coffee, do you throw it away? Most people would give that extra cup of coffee away, …...but not the new face of Dutch Bros?

 As many of you I am sure are aware, our very own local coffee family Dutch Bros, went public on the stock exchange September 15th of this year. This company historically has aligned well with my own value system, and I have even had the opportunity to meet Travis, and it is very important to me that it maintains its mission statement. Travis is the type of guy who would finance one of his employees, starting up their own franchise, if they showed the passion for it   (Assuming all other prerequisites for franchising had been met).  All employees started at the same level, and genuinely had equal opportunity. There was no outside influence, and so the values of Dutch Bros were consistent. But with Travis no longer running the show, new changes like the app coming out, and most recently the company going public, people are wondering if this company will stay the same or become the next Starbucks?

      The next Starbucks, what exactly does that mean?  The simple truth is that Dutch Bros does not inherently make a better cup of coffee than Starbucks. The reason you shop Dutch Bros is for their value proposition outlined in their mission statement which states, “We are a fun-Loving, mind blowing company, that makes a massive difference one cup at a time.” You go to Starbucks for a quick cup of coffee, you go to Dutch Bros for a conversation. The Dutch Bros stand that I used to frequent, located out in Corvallis, memorized the sound of my mom's car. Every time we drove up to the window her drink was already made, and they spent the time they would normally spend making that cup of coffee, simply having a conversation with us. So what is the environment now, since the changes started rolling out ….starting with the new phone app, and what are people saying?

Aaron Wattson, a stock investor advisor on YouTube dropped a video called Dutch Bros Ipo should you invest.  In his video he questioned whether or not Dutch Bros could compete with larger mainstream companies, only having stores in 11 states on the west coast and a market cap of only just over 1.5billion;  When compared to companies like Krispy kreme which has a market cap of 2.7 billion ( Which did not perform well when it opened up to stock trade by the way), other larger stores like Dunkin Donuts having a market cap of over 10 billion, and of course the behemoth that is Starbucks with a market cap over 100 billion. You also have people like jess.veex, who is one of many, spamming Instagram asking for more Dutch Bros near them with more and more people asking about the company's expansion plans.

                 With high pressure for the company to expand, and a low market cap when compared to competitors, Dutch Bros continues to have an aggressive approach to expansion, hoping to take the total number of store fronts in the near future to upwards of 4000 locations. When asked about the franchises, versus the company owned locations, Dutch Bros said "While we maintain great relationships with our existing franchise partners and they continue to open new shops as they look to infill their high-demand markets, the majority of our growth is expected to continue to come from company-operated shops,”.

               The simple truth is I don't care for the direction Dutch Bros is headed. Speaking from personal experience, I have seen drastic change in the hiring parameters and the attitude around Dutch Bros employees. My little brother was harassed when he went to get his birthday drink, because he did not have the app.  I have seen multiple new hires not stop to engage in relationship building conversations with customers.. I have seen miss made drinks thrown away. And I have seen employees, who genuinely love this company, concerned that the values are changing. With comparatively less funds than other larger brands, and a company that appears to be losing sight of its value system, I doubt they will be able to compete in this market.

          If I was in charge of the promotional team for Dutch Bros, I would provide a clear comprehensive outline of our expansion plans. I would let my company base know where I was planning on expanding, and a general timeline of when they could expect that. I would build the hype surrounding it, and make staggering sales. I would let them know that I was reopening independent franchising, for long term employees working every position in Dutch Bros; hoping to attract the personality and mindset that has turned Dutch Bros into a massively growing  company for years.

               I would say during my research what I have gained an appreciation for, is how large corporations function much like an ecosystem. There is a great level of diversity, there is a finite number of resources or in this case customers, and they all reach a point where they can not sustain further growth.

Here's hoping Dutch Bros will maintain its diversity,AKA it's culture, and that it doesn't get assimilated. "part of the market, part of the stereotype".