SBUX

Starbucks Corporation

86.57
USD
-0.62%
86.57
USD
-0.62%
68.39 117.80
52 weeks
52 weeks

Mkt Cap 102.08B

Shares Out 1.18B

Chat
Send me real-time posts from this site at my email

Is Hypergrowth Stock Dutch Bros the Next Starbucks?

Dutch Bros (NYSE: BROS) and Starbucks (NASDAQ: SBUX) have a lot in common -- both started in the Pacific Northwest and Starbucks has spread across the world, while Dutch Bros, which started 21 years later, is beginning to spread across the United States. Both serve up coffees, lattes, and a growing array of cold beverages. There are some key differences as well -- Dutch Bros locations are primarily drive-thrus, whereas Starbucks has embraced becoming the '"third place" outside of home and the office where customers can come to drink coffee, work, and socialize. Furthermore, it seems unlikely that we will see a drink with a name like the OG Gummybear or the Vampire Slayer on Starbucks' menu anytime soon. If Dutch Bros can continue to grow along the same path that Starbucks has, it would be a great investment for Dutch Bros shareholders as Starbucks has climbed to a $100 billion market cap while growing to nearly 35,000 locations worldwide. Here's another key way that Dutch Bros is beginning to become more like Starbucks -- the growth of its digital loyalty program. Digital expansion Starbucks has an enormous digital loyalty program with about 27 million members. Going digital with its rewards program was a game-changer for Starbucks as it allowed it to remove the friction of physically buying a gift card and loading it with rewards. These members are responsible for about half of U.S. order volume. Dutch Bros is much smaller than Starbucks, but it has quickly grown its own Dutch Rewards loyalty program to 4 million users, with 450,000 new participants joining in the second quarter. Dutch Bros has about 4,000 Dutch Rewards Members per shop. You may be wondering why this matters, since people are going to buy their coffee whether it's with an app or not, right? Why does it matter? Starbucks' and Dutch Bros' digital loyalty programs drive increased sales. Starbucks' loyalty members spend about three times as much as nonmembers. Dutch Bros finds that approximately 63% of its sales come from Dutch Rewards members. Dutch Bros says that Rewards members who also use its Dutch Pass (a feature that allows them to pre-load funds into their Dutch Rewards app) spend 10% more than other Rewards members. Digital loyalty programs help Starbucks and Dutch Bros drive sales by personalizing offers and promotions, and by reconnecting with lapsed customers. During the second quarter, Dutch Bros began to use Dutch Rewards to reach out to these lapsed users and experienced an increase in traffic as well as an uptick in members who were active over the last 90 days, indicating that this outreach works. Unparalleled customer connections Dutch Bros and Starbucks can also use the data gleaned from these apps to offer promotions that are tailor-made to the individual customer, something that would have been unthinkable in the days before digital membership began. Dutch Bros CEO Joth Ricci says that during the quarter, Dutch Bros started to roll out customized offers that "personalize member experience and drive trial frequency and upsizing." The direct customer insights and the one-on-one engagement that these apps enable can help Dutch Bros connect with customers who haven't been to the store for a while, get them to try new products, and make promotions more efficient. Ricci states that, "We are encouraged by the early results of specific campaigns, particularly those featuring our Rebel category, and look forward to expanding on these to unlock value." The unparalleled amount of data on customer behavior that these apps generate gives Starbucks and Dutch Bros insight into patterns based on time of day, time of year, weather, and more, allowing them to optimize and adjust operations and marketing strategy accordingly. Even more room for growth Starbucks and Dutch Bros have gotten great traction with these apps so far, but there is still plenty of runway ahead for more member growth. Dutch Bros says that membership is about 15% higher in its legacy markets than in markets it has newly entered, indicating that more members are likely to join in newer markets as they become more familiar with Dutch Bros. Similarly, Morningstar finds that while Starbucks has a titanic 27 million membership base, it is only about 33% penetrated, meaning that there are tens of millions of customers worldwide who could still join. The next monster growth stock Dutch Bros could eventually become the next Starbucks by spreading across the United States and, perhaps, the world. Right now, Dutch Bros has about 600 locations and is aiming to reach 4,000 over the next 10 to 15 years, so it has a long way to go before it comes close to Starbucks' North American footprint, which includes over 17,000 stores. Like Starbucks, Dutch Bros is smartly utilizing its growing scale to invest in its digital loyalty program. Not that long ago, companies wouldn't have been able to dream of a solution that allows them to re-engage with old customers, get cutting-edge insights into customer trends, and seamlessly tailor promotions to individual customers. But now, Starbucks and Dutch Bros are using these tools to expand and energize their growing customer bases. This digital success is a key reason why Dutch Bros is a top growth stock and why it has a chance to become the next Starbucks. 10 stocks we like better than Dutch Bros Inc. When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Dutch Bros Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of August 11, 2022 Michael Byrne has positions in Dutch Bros Inc. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends the following options: short October 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue