Does Dutch Bros have a moat?

Earlier this week, I stopped by a new Dutch Bros (BROS) coffee drive-thru to conduct a little firsthand research.

The line was fairly long. But it was worth the wait – and not just because of the delicious drink I got out of it: a Golden Eagle® vanilla & caramel breve with caramel drizzle.

There was also the fact that employees were energized and personable yet still quick with their service, which is exactly what management aims for. In fact, Dutch Bros believes it’s “broken the compromise” between speed and service.

If true, that’s something significant to talk about.

It’s one of several reasons why I’m not surprised Dutch Bros’ growth runway appears so substantial. While the company had 1,225 open coffee shops spread across 25 states as of June, management believes it can up that national number to 7,000+.

Meanwhile, its shares were recently trading at 16.9x price to earnings before interest, taxes, depreciation, and amortization (EBITDA). Whereas Starbucks (SBUX) is sitting at roughly 19.3x.

That doesn’t automatically make Dutch Bros cheap, mind you. Starbucks is the dominant competitor by far despite the pressure it’s been under.

Even so, the comparison is intriguing since investors do appear to be paying a lower EBITDA multiple for the faster-growing concept.

Drinking it all in left me with two simple questions – neither of which were about whether Dutch Bros makes an appealing product or not. (Answer: It does.)

It was whether this coffee upstart has a wide enough moat to continue its momentum. And, if so, whether its current share price gives investors an entry point worth acting on.

That’s why I went digging. And here’s what I found…

Though many beverage connoisseurs are only hearing about it now, Dutch Bros actually began back in 1992. That’s when brothers Dane and Travis Boersma began by serving espresso from a pushcart in Grants Pass, Oregon.

But, man, has their operation grown since. Today, Dutch Bros. is one of the country’s fastest-growing beverage chains around thanks to how it does business.

Starbucks, for its part, built its brand around the “third place” – a gathering spot between home and work. That’s a concept Dutch Bros isn’t trying to compete with at all.

Its small-box, standalone, drive-thru-focused format is built with speed, convenience, personalization, and pleasant but brief human interaction in mind. Customers are there for beverages, not for free Wi-Fi.

That distinction affects almost everything it does, from the real estate it selects to the construction costs it pays, to the labor it deploys, and the menus it designs.

As such, it definitely does seem as if Dutch Bros has a moat, one that’s composed of four separate elements:

That last element is worth zeroing in on, considering its combined scope. The dependably mature global coffee market alone was worth around $74 billion in 2024. And it’s expected to hit $79 billion by 2030.

So getting a piece of that pie is profitable enough.

Energy drinks, meanwhile, were a $52 billion market in 2024… and could grow roughly 40% to $73 billion by 2032. That’s growth Dutch Bros. is actively engaged with through its Dutch Bros Rebel line that can be personalized with a wide range of flavors.

Its diverse lineup also includes refreshers, lemonades, teas, sodas, and blended beverages: basically all the sips younger consumers keep asking for. So, all told, the company has an enormous national expansion runway to work with.

At the same time, investors (and Dutch Bros itself) have to realize that none of the four elements it’s working with are proprietary. Competitors can come in and replicate any or all of them.

Dutch Bros’ biggest advantage, therefore, might be how it’s already hard at work implementing this combined system across hundreds – and eventually thousands – of locations. And it’s constantly working hard at improving that advantage significantly.

Now, again, Dutch Bros doesn’t have thousands of locations just yet. Only 1,225 shops as of June.

In comparison, Starbucks has 16,933 in the U.S. alone and 41,304 worldwide, while Dunkin’ Donuts has 10,000 and 14,200, respectively.

Dutch Bros also has to account for the privately held 7 Brew with its 770+ locations – up from just 38 locations in January 2023 – not to mention the mom-and-pop coffee shops and cafes most towns feature. So there’s plenty of competition out there.

Fortunately for Dutch Bros though, it doesn’t need to displace the big guys, Starbucks or Dunkin’ Donuts, to keep growing. Again, it’s offering similar products but in different ways.

What it does need to do is keep replicating those differences as it grows while preserving attractive economics. And that’s precisely what it seems to be doing.

Since management estimates the U.S. can support more than 7,000 Dutch Bros shops, this means it’s captured just 18% of its market. That leaves room for nearly sixfold growth from here, an opportunity it’s tackling aggressively.

The coffee company has set a 2029 target of having 2,029 stores up and running: 804 net new locations in the next three and a half years, or about 230 annually.

That achievement would expand Dutch Bros’ footprint by roughly 66% from its mid-2026 level. Yet it would still only capture 30% of its estimated national opportunity.

In the midst of these plans, management is growing same-store sales as well. The numbers show that very strongly.

For starters, it generated around $1.64 billion in consolidated revenue last year, up from $327.4 million in 2020. This represents a five-year revenue compound annual growth rate (CAGR) of about 38%.

Not bad, right?

Yet company-operated shop revenue grew even faster from roughly $244.5 million in 2020 to $1.51 billion in 2025 – a roughly 44% CAGR. And systemwide sales hit $2.22 billion, up from $687 million.

Looking at Q2-26, Dutch Bros increased revenue 32% year over year to $551 million and adjusted EBITDA by 28% to $114 million. It’s also now achieved 13 consecutive quarters of systemwide same-shop sales growth (achieving 5.8% in Q2) and eight consecutive quarters of transaction growth.

Considering all of that, I do think it’s trading at a bargain at 16.9x P/EBITDA with a price to operating cash flow multiple of 17.3x.

As shown above, Wide Moat Research’s total return forecast for Dutch Bros is 40% annually.

After my Dutch Bros visit and subsequent research, I do believe it has a moat worth talking about.

That might not be a secret coffee bean, patented machine, or irreplaceable piece of real estate. But its doing quite nicely nonetheless with its own take on culture, convenience, product, and speed.

As publicly traded coffee shops go, there’s no doubt that Starbucks has vastly greater scale, brand recognition, and purchasing power. But considering Dutch Bros’ past and current successes combined with management’s continued drive, I’m confident it can meet its 2029 goals.

And if it can preserve the elements that have made it great along the way, it may have the makings of a wide-moat growth company well before it’s reached total U.S. saturation.

I don’t know about you, but I’ll drink to that.

Happy SWAN investing,

Brad Thomas
Editor, Wide Moat Daily