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What changed in Dutch Bros Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Dutch Bros Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+483 added−427 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-23)

Top changes in Dutch Bros Inc.'s 2024 10-K

483 paragraphs added · 427 removed · 358 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+36 added−21 removed20 unchanged
Biggest changeWe will expand our business to positively impact our communities through the following growth strategies: DEVELOP AND SUPPORT OUR PEOPLE, WHO ARE OUR GROWTH CAPITAL • Recruit, develop, and retain great people • Provide robust internal training and career advancement programs, which help develop a high-quality talent pool of candidates seeking larger roles within the Company • Target 100% internal promotion for regional operators from a list of 350+ qualified candidates with an average tenure of 7 years • Invest in leadership team to effectively scale OPEN NEW SHOPS WHEREVER PEOPLE WANT GREAT BEVERAGES • Leverage strong unit-level economics, ample liquidity, and robust underwriting standards to open shops with attractive returns, balancing building types, lease financing structure, and market entry strategies as needed • Target 4,000+ shops with a focus on drive-thru convenience with the long term objective of mid-teen annual percentage growth rate DEEPEN CUSTOMER ENGAGEMENT TO DRIVE TRAFFIC AND TRIAL • Continue increasing the sophistication of our rewards program by investing in rewards and analytics and offering more specific and targeted offers • Build and amplify brand awareness in new and existing markets through paid media and community engagement • Utilize innovation to keep the brand fresh, encourage trial, and add occasions • Employ promotions that encourage “multiples-based” purchases and facilitate group-buying behavior and word-of-mouth trial EXPAND 4-WALL MARGINS AND DRIVE G&A LEVERAGE • Continue targeting year-2 contribution margins of 30%+ for new shops, which support quick paybacks and funds new unit growth • Continue to invest in state-of-the-art roasting facility in Texas to support our expansion strategy and supply chain requirements in what we believe will be a cost-advantaged manner in the long-term • Continue achieving G&A leverage through strong top line growth and smart investments Dutch Bros Inc. | Form 10-K | 8 Table of Contents Operations Sourcing and Supply Chain We pride ourselves on the quality of our coffee.
Biggest changeWe will continue expanding our business to positively impact our communities through the following growth strategies: GROW OUR PEOPLE: SCALE OUR CULTURE • Recruit, develop, and retain great people • Provide robust internal training and career advancement programs, which help develop a high-quality talent pool of candidates seeking larger roles within the Company • Target 100% internal promotion for regional operators from a list of 400+ qualified candidates with an average tenure of 7 years • Invest in our leadership team to support operations and drive strategy Dutch Bros Inc. | Form 10-K | 8 Table of Contents GROW OUR SHOP BASE: EXECUTE ON OUR LARGE WHITESPACE • Open new shops with superior financial returns • Target a “mid-teens” annual new shop growth rate • Invest in our shop development teams so they can utilize new data sources, analytic techniques, and tighter underwriting standards • Utilize a refined real estate strategy that balances penetration and pacing to support new shop productivity as we grow in new markets GROW TRANSACTIONS: DEVELOP SALES LAYERS • Innovation - assume an innovation leadership position within the beverage industry, keeping the brand fresh and encouraging trial and frequency • Paid Media - build brand awareness in new and existing markets through enhanced messaging and elevated spending • Dutch Rewards - increase sophistication of our segmentation and offers to drive more effective communication and higher frequency • Mobile Order - offer greater convenience, widen our addressable customer set, and seek to drive frequency, especially in the morning daypart where customers may have greater time constraints. • Food - test an expanded food offering in 2025 to better address customer needs in the critical morning daypart.
Competition The beverage industry is highly competitive and fragmented, and our shops compete on a variety of factors, including convenience, taste, price, quality, service, and location. We believe our primary competitors include national and regional coffee chains, local specialty coffee shops, regional drive-thru coffee chains, and drive-thru quick service restaurants with coffee and other beverage programs.
Competition The beverage industry is highly competitive and fragmented, and our shops compete on a variety of factors, including convenience, taste, price, quality, service, labor, and location. We believe our primary competitors include national and regional coffee chains, local specialty coffee shops, regional drive-thru beverage chains, and drive-thru quick service restaurants with coffee and other beverage programs.
Broista ê Shift Lead í î Path A: Shop Level Operations Path B: Shop Opening Team Shop Lead Master of Broistas (MOB) Manager Assistant Lead MOB Regional Manager Lead MOB î í Regional Operator This leadership program develops a pipeline of home-grown talent, which we believe will be sufficient for our new shop growth over the next several years.
Broista ê Shift Lead í î Path A: Shop Level Operations Path B: Shop Opening Team Shop Lead Master of Broistas (MOB) Manager Lead MOB Regional Manager î í Regional Operator This leadership program develops a pipeline of home-grown talent, which we believe will be sufficient for our new shop growth over the next several years.
Dutch Bros Inc. | Form 10-K | 13 Table of Contents Government Regulation and Environmental Matters We are subject to extensive federal, state, local, and foreign laws and regulations, as well as other statutory and regulatory requirements, including those related to, among others, nutritional content labeling and disclosure requirements, food safety regulations, local licensure, building, and zoning regulations, employment regulations, and laws and regulations related to our licensed operations.
Dutch Bros Inc. | Form 10-K | 15 Table of Contents Government Regulation and Environmental Matters We are subject to extensive federal, state, local, and foreign laws and regulations, as well as other statutory and regulatory requirements, including those related to, among others, nutritional content labeling and disclosure requirements, food safety regulations, local licensure, building, and zoning regulations, employment regulations, and laws and regulations related to our licensed operations.
Seasonality Our business is subject to seasonal fluctuations that impact our revenue and company-operated shop gross profit margins. We typically experience higher nominal system sales in the summer months, which impacts revenue and company-operated shop gross profit margins in our second and third quarters of our fiscal year.
Seasonality Our business is subject to seasonal fluctuations that impact our revenue and shop gross profit margins. We typically experience higher nominal system sales in the summer months, which impacts revenue and shop gross profit margins in our second and third quarters of our fiscal year.
The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only. Dutch Bros Inc. | Form 10-K | 16 Table of Contents
The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only. Dutch Bros Inc. | Form 10-K | 17 Table of Contents
We believe that our drive-thru business model places a premium on customer convenience without sacrificing the personal experience. Our shops and our real estate strategy are designed from the ground up to support the drive-thru business.
We believe this business model places a premium on customer convenience without sacrificing the personal experience. Our shops and our real estate strategy are designed from the ground up to support this drive-thru centric business.
Every May, in honor of our co-founder Dane Boersma, we raise funds for the Muscular Dystrophy Association to find a cause and cure for ALS (Amyotrophic Lateral Sclerosis), or Lou Gehrig’s disease.
Every May, in honor of our co-founder Dane Boersma, we raise funds for the Muscular Dystrophy Association to find a cause and cure for ALS, or Lou Gehrig’s disease.
Earlier in her career, she held positions with Bain & Company and Raymond James. Since March 2020, Ms. Barone has served on the Board of Directors of Yelp Inc. Ms. Barone holds a B.A. in Applied Mathematics and an M.B.A. from Harvard University. Charles Jemley, 60 Chief Financial Officer Mr.
Earlier in her career, she held positions with Bain & Company and Raymond James. Since March 2020, Ms. Barone has served on the Board of Directors of Yelp Inc. Ms. Barone holds a B.A. in Applied Mathematics and an M.B.A. from Harvard University. Joshua Guenser, 46 Chief Financial Officer Mr.
Broista Training • 2 day cultural immersion, history, and fundamental knowledge • 10 shifts of on-the-job training • Review of “Manifesto,” field guide, and employee handbook, and have proficiency tests twice per year Leadership Pathways We exclusively source regional operators, who we view as the linchpins of our field organization and lead between 3-7 shops at scale, from within our organization.
Broista Training • 2 day cultural immersion, history, and fundamental knowledge • 10 shifts of on-the-job training • Review of “Manifesto,” field guide, and employee handbook, and have proficiency tests twice per year Dutch Bros Inc. | Form 10-K | 13 Table of Contents Leadership Pathways We exclusively source regional operators, who we view as the linchpins of our field organization and lead between 3-7 shops at scale, from within our organization.
The chart below provides the approximate percentage of systemwide employees by shop type and by state location: Dutch Bros Inc. | Form 10-K | 10 Table of Contents The charts below provide the approximate percentages of our company-operated shop and headquarters employees by gender and ethnicity: Diversity, Equity, and Inclusion We are committed to DEI in our Company, at the window, and in our communities, cultivating an inclusive environment of love, acceptance, and kindness.
The chart below provides the approximate percentage of systemwide employees by shop type and state location: Dutch Bros Inc. | Form 10-K | 11 Table of Contents The charts below provide the approximate percentages of our company-operated shop and headquarters employees by gender and ethnicity: Dutch Bros Inc. | Form 10-K | 12 Table of Contents Sharing the Dutch Luv We are committed to sharing the Dutch Luv at our headquarters, at the window, and in our communities, cultivating an inclusive environment of love, acceptance, and kindness.
Davila is a Fulbright Scholar and holds a B.A. from Washington University in St. Louis, a J.D. from Seton Hall University, and an M.B.A. from Emory University. Victoria Tullett, 56 Chief Legal Officer Ms.
Davila is a Fulbright Scholar and holds a B.A. in International Studies and German from Washington University in St. Louis, a J.D. from Seton Hall University, and an M.B.A. from Emory University. Victoria Tullett, 57 Chief Legal Officer Ms.
On average, we typically have approximately four months of green coffee bean inventory stored at our two ports of entry in the United States or at our roasting facility in Grants Pass, Oregon.
On average, we typically have approximately four months of green coffee bean inventory stored at our two ports of entry in the United States or at our roasting facilities.
Dutch Bros Inc. | Form 10-K | 6 Table of Contents Legacy Configuration Current Configuration Endcap Configuration Size: ~500 square feet Size: ~800-1,000 square feet Size: ~1,200 square feet Geographies: Legacy West Coast Geographies: Widespread Geographies: Select Locations Characteristics: May have drive-thru lanes on both sides of the building; walk-up window optional; no lobby; storage outbuilding may be needed.
Legacy Configuration Current Configuration Endcap Configuration Size: ~500 square feet Size: ~800-1,000 square feet Size: ~1,200 square feet Geographies: Legacy West Coast Geographies: Widespread Geographies: Select Locations Characteristics: May have drive-thru lanes on both sides of the building; walk-up window optional; no lobby; storage outbuilding may be needed.
Most of our shops also have walk-up ordering windows and “escape lanes” that enable customers to exit the line after a runner delivers their drink before reaching the window, helping increase throughput and reducing congestion. For illustration of our shop model, see the graphic below.
Dutch Bros Inc. | Form 10-K | 7 Table of Contents Many of our shops also have walk-up ordering windows and “escape lanes” that enable customers to exit the line after a runner delivers their drink before reaching the window, helping increase throughput and reducing congestion. For illustration of our shop model, see the graphic below.
As of December 31, 2023, we and our franchise partners have approximately 24,000 employees, of which 16,000 employees are in our company-operated shops and headquarters.
As of December 31, 2024, we and our franchise partners have approximately 26,000 employees, of which approximately 18,000 employees are in our company-operated shops and headquarters.
Our competitors operate company-operated, franchised, and mixed business models. In addition, due to our proprietary Dutch Bros. Blue Rebel energy beverages, we also compete with convenience stores. Intellectual Property We own many registered trademarks and service marks in the United States, the most important of which might be our trademarked Windmill logo.
Our competitors operate company-operated, franchised, and mixed business models. In addition, we also compete with convenience stores. Intellectual Property We own many registered trademarks and service marks in the United States, the most important of which might be our trademarked Windmill logo. Other important trademarks include our “Dutch Bros,” “Dutch Bros Coffee,” “Dutch Bros Rebel,” and “Dutch Bros.
Quality, Health, and Safety We and our franchise partners strive to maintain a safe, healthy environment at each shop through the careful training and supervision of personnel and by following rigorous quality standards.
Quality, Health, and Safety We and our franchise partners strive to maintain a safe, healthy environment at each shop through the careful training and supervision of personnel and by following rigorous quality standards. Our quality assurance team informs, monitors, and reports on standards for preparation and cleaning at each of our shops.
Boersma attended Southern Oregon University. Christine Barone, 50 Chief Executive Officer and President Ms. Barone has served as our Chief Executive Officer and as a member of our Board since January 2024, and as our President since February 2023. Ms.
Barone has served as our Chief Executive Officer and as a member of our Board since January 2024, and as our President since February 2023. Ms.
To ensure we are able to consistently deliver high-quality coffee across our 831 shops in our system, we are actively involved in the sourcing, roasting, packaging, and distribution of coffee beans to our systemwide shops. We partner with third-party importers and exporters to purchase and import our green coffee beans.
To ensure we are able to consistently deliver high-quality coffee across all shops in our system, we are actively involved in the sourcing, roasting, packaging, and distribution of coffee beans. Dutch Bros Inc. | Form 10-K | 9 Table of Contents We partner with third-party importers and exporters to purchase and import our green coffee beans.
Boersma is our Co-Founder and has served as our Executive Chairman since August 2021 and as the Executive Chairman of Dutch Bros OpCo since February 2021. Prior to serving as our Executive Chairman, he served as the Chief Executive Officer of Dutch Bros OpCo from February 2019 to February 2021. Mr. Boersma has led us as Co-Founder since 1992. Mr.
Prior to serving as our Executive Chairman, he served as the Chief Executive Officer of Dutch Bros OpCo from February 2019 to February 2021. Mr. Boersma has led us as Co-Founder since 1992. Mr. Boersma attended Southern Oregon University. Christine Barone, 51 Chief Executive Officer and President Ms.
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, we anticipate that substantially all new shops we open each year will be company-operated shops.
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, we anticipate that the majority of new shops we open each year will be company-operated shops. OUR GROWTH STRATEGIES We are a high-growth company with considerable whitespace and opportunities.
Our energy platform helps unlock the afternoon daypart and helps us appeal to a diverse customer base. • Other: the remaining ~25% 1 of our menu mix is a wide variety of teas, lemonades, sodas, and smoothies. _________________ 1 Based on number of drinks sold across our system in 2023.
Our energy platform helps unlock the afternoon daypart and helps us appeal to a diverse customer base. • Refreshments and Other: the remaining ~25% 1 of our menu mix is a wide variety of teas, lemonades, smoothies, food, and sodas offering caffeine-lite and caffeine-free beverages that can be enjoyed across all dayparts and by customers of all ages. _________________ 1 Based on number of drinks sold across our system in 2024.
A culture of philanthropy and giving back to build better communities permeates the entire Dutch Bros organization, energizing both our broistas and customers alike. We host three company-wide givebacks days each year.
A culture of philanthropy and giving back to build better communities permeates the entire Dutch Bros organization, energizing our broistas and customers alike. We host three company-wide giveback days each year. Dutch Bros, along with our franchise partners and the Dutch Bros Foundation (the Foundation) provide donations for funds raised in each of these giveback days.
Dutch Bros Inc. | Form 10-K | 14 Table of Contents Information About our Executive Officers The executive officers of Dutch Bros Inc. as of the filing of this Form 10-K, are as follows: Travis Boersma, 53 Co-founder and Executive Chairman of the Board Mr.
Information About our Executive Officers The executive officers of Dutch Bros Inc. as of the filing of this Form 10-K, are as follows: Travis Boersma, 54 Co-founder and Executive Chairman of the Board Mr. Boersma is our Co-Founder and has served as our Executive Chairman since August 2021 and as the Executive Chairman of Dutch Bros OpCo since February 2021.
Dutch Bros Inc. | Form 10-K | 4 Table of Contents The Dutch Bros Experience Dutch Bros is more than just the products we serve: we are dedicated to making differences in the lives of our employees, customers, and the communities in which we operate.
For additional information regarding company-operated and franchise shops by state, refer to Part I, Item 2 Properties of this Form 10-K Dutch Bros Inc. | Form 10-K | 4 Table of Contents The Dutch Bros Experience Dutch Bros is more than just the products we serve: we are dedicated to making differences in the lives of our employees, customers, and the communities in which we operate.
This runner explains the menu and helps customers personalize their orders. Using tablets, our runners take orders, sending them to broistas inside the shop, who utilize our flexible systems to hand-craft custom beverages.
When our shops are busy, a “runner” broista leaves the shop and greets our customers before they reach the drive-thru window. The runner explains the menu and helps customers personalize their orders. Using tablets, our runners take orders, sending them to broistas inside the shop, who utilize our flexible systems to hand-craft custom beverages.
After the coffee beans are roasted, we blend them to create our signature Private Reserve espresso. We package and ship our Private Reserve, Decaf and White Coffee espresso blends to 15 distribution centers that supply all our company-operated and franchised locations. We designed our supply chain to be flexible in response to changes in the market.
We package and ship our Private Reserve, Decaf and White Coffee espresso blends to several distributors across the country that supply all our company-operated and franchised shops. We designed our supply chain to be flexible in response to changes in the market.
We intend to continue investing in consumer insights and moving toward more personalized marketing to offer targeted messaging, offers, and rewards that enhance the Dutch Bros experience at an attractive return on investment. Our Shops We are a drive-thru focused business: over 90% of our business is conducted through the drive-thru.
We intend to continue investing in consumer insights and moving toward more personalized marketing to offer targeted messaging, offers, and rewards that enhance the Dutch Bros experience at an attractive return on investment. Mobile Order In 2024, we launched mobile order functionality within our Dutch Rewards app.
We believe distributing a portion of our Blue Rebel Energy drink via a “bag in a box” system for use in shop beverage taps will help us reduce our dependence on aluminum cans.
In 2023, we began rolling out tap systems and distributing our Dutch Bros Rebel energy drink via a “bag in a box” system for use in shop beverage taps, with a goal of helping us reduce our dependence on aluminum cans.
Other important trademarks include our “Dutch Bros,” “Dutch Bros Coffee,” “Dutch Bros Rebel,” and “Dutch Bros. Blue Rebel” word marks and our recognizable Dutch Bros sign logo. We believe the Dutch Bros name and the many distinctive marks associated with it are of significant value and are very important to our business.
Blue Rebel” word marks and our recognizable Dutch Bros sign logo. We believe the Dutch Bros name and the many distinctive marks associated with it are of significant value and are very important to our business. Accordingly, as a general policy, we pursue registration and monitor the use of our marks in the United States and challenge unauthorized use.
We examine each suppliers’ safety and quality records and verify insurance coverage. We believe that our established requirement for franchise partners to purchase certain supplies and equipment from approved vendors further enhances safety and quality within our system. People Our people are the driving force of our mission and are fundamental to our success.
We examine new and existing suppliers’ food safety and quality records through compliance assessments, and we reserve the right to conduct spot-checks, onsite audits, and verify insurance coverage. We believe that our established requirement for franchise partners to purchase supplies and equipment from approved vendors further enhances safety and quality within our system.
In the event of a supply disruption in any one of our production origins, we have identified alternate coffee beans with substantially similar flavor profiles that can be sourced and incorporated to produce our blend. We have taken several steps to increase our diversity of supply and reduce transportation costs as we expand company-operated shops eastward within the United States.
In the event of a supply disruption in any one of our production origins, we have identified alternate coffee beans with substantially similar flavor profiles that can be sourced and incorporated to produce our blend. In mid-2024, we opened a new roasting facility in Melissa, Texas.
Our shops typically have a smaller footprint than other drive-thru formats - this compact footprint allows us greater flexibility to place locations on more parcels. We typically target lots that are at least 25,000 square feet to handle substantial car volume.
Although our shops typically have a smaller overall footprint than other drive-thru formats, essentially all of our square footage is used to support the production of beverages. We typically target lots that are at least 25,000 square feet to handle substantial car volume.
These agreements typically restrict third parties’ activities with respect to use of the marks, impose brand standards requirements, and require licensees to inform us of any potential infringement of the marks. We register some of our copyrighted material and otherwise rely on common law protection of our copyrighted works. Such copyrighted materials are not material to our business.
We license the use of our marks to franchise partners, third-party vendors and others through franchise agreements, vendor agreements, and licensing agreements. These agreements typically restrict third parties’ activities with respect to use of the marks, impose brand standards requirements, and require licensees to inform us of any potential infringement of the marks.
Points and rewards generally expire after six months. We offer members the ability to preload funds on their account and pay through our app, a function we call Dutch Pass. In addition to being convenient for customers, Dutch Pass enables us to increase our speed of service by reducing the payment collection time.
These rewards can be utilized to receive free drinks or shared with others. Points and rewards generally expire after six months. We offer members the ability to preload funds on their account and pay through our app, a function we call Dutch Pass.
Our Quality Assurance team informs, monitors, and reports on standards for preparation and cleaning, as well as inspects every shop in the system on a quarterly basis in preparation for biannual health inspections. As part of our people-first culture, the health and safety of our customers and employees are our highest priority.
The quality assurance team inspects both Company-owned and franchise shops on a regular cadence. As part of our people-first culture, the health and safety of our customers and employees are our highest priority.
“Dutch Luv” “Drink One for Dane” “Buck for Kids” Every February, we donate $1 from every drink sold to local organizations working to fight food insecurity in our communities.
The Foundation is a not-for-profit founded by the Company that provides philanthropy to coffee farmers and local communities. Dutch Bros Inc. | Form 10-K | 14 Table of Contents “Dutch Luv” “Drink One for Dane” “Buck for Kids” Every February, we donate proceeds from every drink sold to local organizations working to fight food insecurity in our communities.
Our Dutch Pass functionality also allows users to purchase and share digital gift cards, providing more customers the opportunity to share in the Dutch Bros Experience. We utilize Dutch Rewards to communicate and interact directly with our customers and drive traffic.
In addition to being convenient for customers, Dutch Pass enables us to increase our speed of service by reducing the payment collection time. Our Dutch Pass functionality also allows users to purchase and share digital gift cards, providing more customers the opportunity to share in the Dutch Bros experience.
Except for a handful of legacy “coffee houses”, all our shops deploy either a single or double drive-thru window with multiple feeder lanes for traffic flow.
Except for a handful of legacy “coffee houses,” which do have lobby areas, our shops are designed to enable customers to drive-thru or walk-up and enjoy their beverage off premises. Most of our shops feature either a single or double drive-thru window with multiple feeder lanes for traffic flow and a walk-up window.
Our Menu We sell a wide range of customizable hot, iced, and blended beverages. • Coffee: coffee-based beverages make up ~50% 1 of our menu mix. Coffee-based beverages include our espresso-based custom drinks, cold brew, and our proprietary “Freeze” blended beverages. Our Private Reserve coffee is a 100% Arabica three-bean blend, roasted in our Grants Pass facility.
Our Menu We sell a wide range of customizable hot, iced, and blended beverages. • Coffee: coffee-based beverages make up ~50% 1 of our menu mix. In our shops, we utilize premium La Marzocco machines to handcraft espresso shots for both our hot and cold custom classic and signature coffee beverages.
In our shops, we utilize premium La Marzocco machines to extract the coffee and deliver shots of smooth, full-bodied espresso. • Energy: ~25% 1 of our menu mix is based upon our proprietary Blue Rebel energy drink, which is highly customizable with flavors and modifiers and can be served blended or over ice.
Our Private Reserve coffee is a 100% Arabica three-bean blend, roasted by Dutch Bros in our Grants Pass, Oregon or Melissa, Texas facilities. • Energy: ~25% 1 of our menu mix is based upon our proprietary Dutch Bros Rebel® energy drink, which is highly customizable with flavors and modifiers and can be served blended or over ice.
We have continued to grow penetration even as we have rapidly built new shops and entered new geographies. In 2023, approximately 65% of all transactions were attributable to Dutch Rewards members. Dutch Rewards uses a spend-based model, where customers collect points that can be redeemed for rewards. These rewards can be utilized to receive free drinks or shared with others.
Our Dutch Rewards Loyalty Program Dutch Rewards is our app-based digital loyalty program. In 2024, approximately 68% of all transactions were attributable to Dutch Rewards members, up from approximately 65% in 2023. Dutch Rewards uses a spend-based model, where customers collect points that can be redeemed for rewards.
Our people are the key to our success, and our broistas are the face of Dutch Bros, delivering on the Company’s core values of QUALITY, SPEED, and SERVICE. • QUALITY: Our broistas are provided with the resources and training to provide high-quality hand-crafted beverages to our customers. • SPEED: When our shops are busy, a “runner” broista leaves the shop and greets our customers before they reach the drive-thru window.
Our people are the key to our success and our broistas are the face of Dutch Bros, delivering on our core values of SPEED, QUALITY and SERVICE. • SPEED: Our drive-thru and walk-up windows enable us to rapidly serve our customers.
As of December 31, 2023, we had 831 shops, of which 542 were company-operated and 289 were franchise, across 16 states as shown in the graphic below. For additional information regarding company-operated and franchise shops by state, refer to Part I, Item 2 Properties of this Form 10-K.
As of December 31, 2024, we had 982 shops, of which 670 were company-operated and 312 were franchise, across 18 states as shown in the graphic below.
Every September, we dedicate a day to give $1 from every drink sold to nonprofit organizations helping create brighter futures for local kids. 2023 Donations More than $0.9 million $2.5 million More than $0.9 million Additionally, our operators and franchise partners are empowered to create their own local, shop-specific giveback programs that help support and build relationships within their communities.
Every September, we dedicate a day to donate proceeds from every drink sold to nonprofit organizations helping create brighter futures for local kids. 2024 Donations $0.9 million $2.5 million More than $1.0 million In addition, during 2024, we donated our previous Grants Pass, Oregon headquarters building for development of a children’s learning center and recorded a net donation of $1.8 million.
We offer a comprehensive suite of benefits to our broistas, shop management, and headquarters employees, including, but not limited to, the following: • company-wide minimum wage of at least $10.00 per hour across all markets; • company paid parental leave of more than eight weeks, after one full year of employment for shop management and headquarters employees; • wellness program to help employees live their best lives and free access to our employee assistance program for all employees; • tuition assistance toward employees’ professional development after one full year of employment; • flexible working arrangements for headquarters employees, including on-site, hybrid, and remote options; Dutch Bros Inc. | Form 10-K | 11 Table of Contents • up to 16 hours of paid volunteer hours for all employees to use when helping out the community; and • team focused culture with growth and leadership opportunities that support career advancement.
Our comprehensive suite of benefits reflects this commitment and includes several key offerings for our broistas, shop management, and headquarters employees, such as: • Competitive Compensation: We uphold a company-wide minimum wage of at least $10.00 per hour, ensuring fair pay across all markets. • Parental Leave: Employees in management roles and those at our headquarters benefit from more than eight weeks of company-paid parental leave after completing one year of service. • Wellness Initiatives: Our wellness program empowers employees to prioritize their health and well-being, while our employee assistance program offers free access to support resources for all team members. • Tuition Assistance: We provide financial support for professional development through tuition assistance, available after one full year of service, enabling our employees to enhance their skills and advance in their careers. • Flexible Working Arrangements: Flexible working arrangements are a feature of our headquarters, which fosters a positive work-life balance through a hybrid work environment. • Community Engagement: We encourage social responsibility by offering up to 16 hours of paid volunteer time for all employees, allowing them to contribute positively to their communities. • Growth Opportunities: Our culture emphasizes teamwork and collaboration, with numerous opportunities for leadership development and career advancement.
See “Our Shops” section for illustration of our shop model. • SERVICE: We embrace a customer-first attitude and use every interaction during the drive-thru experience to connect with our customers and seek to deliver an experience that exceeds our customers’ expectations.
In 2024, we launched mobile order functionality which we expect could help us elevate throughput and enhance convenience. • QUALITY: We take pride in the training and skills of our broistas, which enable them to provide consistent, high-quality hand-crafted beverages to our customers. • SERVICE: We embrace a customer-first attitude and use every interaction to connect with our customers and seek to deliver an experience that exceeds our customers’ expectations.
Dutch Bros Inc. | Form 10-K | 9 Table of Contents Our commitment to beverage and food safety is strengthened through the direct relationship between our supply chain, culinary, food safety, and quality assurance teams. We review our supply partners’ material decisions regarding ingredients, and we reserve the right to conduct spot-checks.
Our commitment to beverage and food safety is strengthened through the direct relationships among our supply chain, culinary research and development, food safety, operations, and quality control teams. We collaborate with our supply chain partners on material decisions regarding ingredients and process changes to ensure our final customer-facing product meets our standards of approval.
From July 2018 to December 2019, he served as the Chief Financial Officer of CKE Restaurant Holdings, Inc., a quick service restaurant company. From February 2006 to January 2018, Mr. Jemley served in various senior management positions at Starbucks Corporation (Nasdaq: SBUX), including as Senior Vice President Finance, International and Consumer Products Group. From April 1990 to January 2006, Mr.
Prior to that, he served in various roles at Starbucks Corporation (Nasdaq: SBUX), a global coffee chain, from October 2009 to March 2020, most recently as Senior Vice President, Finance - Americas from January 2019 to March 2020, and prior to that, as Vice President, Finance - US Retail from July 2018 to January 2019. Mr.
Total Rewards We offer competitive salaries and wages and continually assess them across business environments and labor markets. We are continually making enhancements to our total rewards program to attract and retain top talent as part of our growth strategy.
As part of our strategic growth initiatives, we continuously enhance our total rewards program, which is designed to attract and retain exceptional talent.
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This system, in combination with “escape lanes,” in many shops that allow customers to receive their drinks and exit before reaching the window if their drinks are ready, helps our team manage throughput all day.
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We also sell our proprietary coffee-based “Freeze” blended beverages and cold brew. We import and roast our own coffee beans.
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Dutch Bros Inc. | Form 10-K | 5 Table of Contents Customers are encouraged to explore our robust “secret” menu and customize beverages through the addition of flavors and other modifiers. Many of our customers add “soft-top,” a sweet, creamy whipped topping that can be added to almost any order.
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Dutch Bros Inc. | Form 10-K | 5 Table of Contents Customization is at the core of what we do, and we encourage our customers to make their drinks “their own” through the addition of flavors and other modifiers including protein milk, boba, soft top and a variety of other mix-ins and toppings.
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High-levels of customization encourage innovation, creating a competitive moat and helping drive a broad demographic appeal. Our Dutch Rewards Loyalty Program In early 2021, we released our app-based digital loyalty program (Dutch Rewards) and quickly scaled it to account for approximately 60% of transactions by the end of 2021.
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We believe this customization process helps create a competitive moat and drives a broad demographic appeal. Because of our robust pantry and “made-to-order” process, we also have the ability to tailor many of our drinks to specific dietary needs, including sugar-free, dairy-free, caffeine-free, and fat-free, which positions us favorably as customer trends evolve.
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Over time, we have been developing increased sophistication as we have moved toward a more targeted approach where we use consumer insights to drive behaviors that we expect will create lasting value.
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We utilize Dutch Rewards to communicate and interact directly with our customers and drive traffic. We see an opportunity to continue enhancing the sophistication of our segmentation and targeting efforts, using consumer insights to drive behaviors that we expect will create lasting value.
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Our Long-Term Franchise Partners Historically, we used a franchising strategy alongside company-operated shop development to drive growth in select markets. Over time, as we decided to grow more from within, we only offered franchise partnership opportunities to the highest-quality employees within our network. Since 2017, our focus has been a company-operated strategy with all operators recruited from within our system.
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As of December 31, 2024, over 95% of systemwide shops had mobile order functionality enabled. In most cases, customers can choose to park and pick-up at our walk-up window or pick up their order in our drive thru. To date, many customers have chosen to utilize the pick-up feature, which we believe has considerable capacity.
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Dutch Bros Inc. | Form 10-K | 7 Table of Contents OUR GROWTH STRATEGIES We are in the early stages of our growth story.
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Whether customers choose our drive thru or walk-up window, their drink is personally delivered with a friendly interaction from a broista, which we believe helps maintain and strengthen service and connection as competitive differentiators. Our mobile order system interacts with our existing point-of-sale and kitchen display system, easing integration with our operations.
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Through this relationship, we source high-quality coffee beans from across Central and South America. We typically purchase coffee contracts 18-24 months in advance of when we take physical delivery of the beans, allowing us to lock in pricing and to better manage our input costs.
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We believe our shops are well situated for mobile order, with multiple beverage production bars and escape lanes and pick-up windows at many of our shops. We have the ability to throttle production at peak times to help ensure smooth operations.
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This practice also allows us to be a good partner to our coffee producers, providing security of future business. We currently roast all our coffee in our roasting facility in Grants Pass, Oregon. We roast our coffee bean varietals to specific profiles designed to highlight each of the coffee bean’s unique flavors and aromas.
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Dutch Bros Inc. | Form 10-K | 6 Table of Contents We believe mobile order provides enhanced convenience to our customers, allowing for orders to be placed in advance of customers arriving at a shop and offering an alternative to waiting in line.
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We anticipate our new roasting facility in Texas will be operational in 2024. We also manufacture our own proprietary Dutch Bros. Blue Rebel Energy Drink via a co-bottling and co-packaging relationship. In 2023, we began testing beverage tap systems for our Blue Rebel Energy drink in shops.
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Compared to our peers in the beverage industry, we believe we have an opportunity to drive traffic in the morning daypart. Mobile order may present an opportunity to appeal to a broader range of customers who may be time-constrained in the morning and have not previously considered Dutch Bros as part of their morning routine.
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One of the most important relationships we have is with our employees, who are key members of the communities we love and support. We attract and seek out potential employees by identifying those with a love for life, a natural ability to connect with people under any circumstance, and most of all, a genuine smile!
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Our Shops Speed is core to what we do at Dutch Bros. We primarily utilize a drive-thru model: approximately 90% of our business is conducted through the drive-thru with the remaining 10% conducted at our walk-up windows. The vast majority of our shops do not have lobbies with customer seating areas.
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Our DEI commitment strives to ensure all customers, crews, and communities are welcomed, honored, and loved. We are actively working to develop a holistic DEI program that can be a resource for everyone we serve.
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Our Long-Term Franchise Partners We believe we have a high-quality and strong franchise base, made up of long-term franchise partners. Many of these franchise partners began their Dutch Bros journeys working in the shops as broistas. Throughout our history, we have used a variety of development models, including both franchise and company-operated led growth.
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The events of the past several years have offered another reminder of how critically important our efforts have become, and as a result we have taken real, meaningful steps toward advancing our DEI program including, but not limited to, the following: • hired two female executives in the past 18 months: our Chief Executive Officer and President and Chief Marketing Officer; • expanded our library of DEI training, events, and resources to headquarters employees and shop management.
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We currently utilize a mixed model, where we continue to encourage our franchisees to develop within their existing operating areas (where we believe there is significant room for continued growth) while developing new regions with company-operated shops. Since 2017, our focus has been a company-operated strategy with all operators recruited from within our system.
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The Company, along with our franchise partners and Dutch Bros Foundation (the Foundation) provide donations for funds raised in each of these giveback Dutch Bros Inc. | Form 10-K | 12 Table of Contents days. The Foundation is a not-for-profit founded by the Company that provides philanthropy to coffee farmers and local communities.
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We aim to capture beverage occasions that might be “lost” by potential customers who desire breakfast with their morning beverage and choose options other than Dutch Bros currently.
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In addition to the 2023 donations noted above for the Company-wide giveback days, the Company, along with our franchise partners and the Foundation donated nearly $2.5 million in 2023 to various organizations through our local giveback days.
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GROW MARGINS: DELIVER LONG-TERM MARGIN EXPANSION • Continue targeting year-2 contribution margins of 30%+ for new shops, which support quick paybacks and funds new unit growth • Seek opportunities to continue to reinforce our shop-level P&L through operational improvement, which will enable us to continue investing to maintain our competitive advantages • Continue targeting and achieving Adjusted SG&A leverage through strong revenue growth and smart investments Operations Coffee Procurement and Roasting We pride ourselves on the quality of our coffee.
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Accordingly, as a general policy, we pursue registration and monitor the use of our marks in the United States and challenge unauthorized use. We license the use of our marks to franchise partners, third-party vendors and others through franchise agreements, vendor agreements and licensing agreements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

215 edited+66 added−25 removed351 unchanged
Biggest changeTo the extent Dutch Bros Inc. does not distribute such cash as dividends on Class A and Class D common stock and instead, for example, holds such cash balances, buys additional Dutch Bros OpCo Class A common units or lends such cash to Dutch Bros OpCo, this may result in shares of Class A common stock increasing in value relative to the Dutch Bros OpCo Class A common units.
Biggest changeFor example, Continuing Members could disproportionately benefit in instances where they have received a tax distribution from Dutch Bros OpCo and subsequently redeem or exchange Dutch Bros OpCo Class A common units for shares of Class A common stock on a one-to-one basis when the value of the Class A common stock is increased relative to the Dutch Bros OpCo Class A common units as a result of Dutch Bros Inc. retaining any cash distribution from Dutch Bros OpCo in excess of Dutch Bros Inc.’s liabilities.
As applicable, such rights may include the right to access, correct, or delete certain personal information, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services.
As applicable, such rights include the right to access, correct, or delete certain personal information, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services.
Our ability to open new shops is dependent upon a number of factors, many of which are beyond our control, including our and our franchise partners’ ability to: • identify available and suitable sites, specifically for drive-thru locations; • compete for such sites; • reach acceptable agreements regarding the lease of locations; • obtain or have available the financing required to acquire and operate a shop, including construction and opening costs, which includes access to build-to-suit leases and ground lease construction arrangements; • respond to unforeseen engineering or environmental problems with leased premises; • avoid the impact of inclement weather, natural disasters, and other calamities; • hire, train, and retain the skilled management and other employees necessary to meet staffing needs; Dutch Bros Inc. | Form 10-K | 20 Table of Contents • obtain, in a timely manner and for an acceptable cost, required licenses, permits, and regulatory approvals and respond effectively to any changes in local, state, or federal law and regulations, such as regulatory bans on new drive-thru businesses, that adversely affect our and our franchise partners’ costs or ability to open new shops; and • control construction and equipment cost increases for new shops and secure the services of qualified contractors and subcontractors in an increasingly competitive environment.
Our ability to open new shops is dependent upon a number of factors, many of which are beyond our control, including our and our franchise partners’ ability to: • identify available and suitable sites, specifically for drive-thru locations; • compete for such sites; • reach acceptable agreements regarding the lease of locations; • obtain or have available the financing required to acquire and operate a shop, including construction and opening costs, which includes access to build-to-suit leases and ground lease construction arrangements; • respond to unforeseen engineering or environmental problems with leased premises; • avoid the impact of inclement weather, natural disasters, and other calamities; • hire, train, and retain the skilled management and other employees necessary to meet staffing needs; Dutch Bros Inc. | Form 10-K | 21 Table of Contents • obtain, in a timely manner and for an acceptable cost, required licenses, permits, and regulatory approvals and respond effectively to any changes in local, state, or federal law and regulations, such as regulatory bans on new drive-thru businesses, that adversely affect our and our franchise partners’ costs or ability to open new shops; and • control construction and equipment cost increases for new shops and secure the services of qualified contractors and subcontractors in an increasingly competitive environment.
The global credit and financial markets have experienced extreme volatility and disruptions (including as a result of the ongoing COVID-19 pandemic and actual or perceived changes in interest rates, continued economic inflation, and failures of financial institutions), which has included severely diminished liquidity and credit availability, declines in consumer confidence, prolonged weak consumer demand, a decrease in consumer discretionary spending, declines in economic growth, high inflation, uncertainty about economic stability, and increases in unemployment rates.
The global credit and financial markets have experienced extreme volatility and disruptions (including as a result of the COVID-19 pandemic and actual or perceived changes in interest rates, continued economic inflation, and failures of financial institutions), which has included severely diminished liquidity and credit availability, declines in consumer confidence, prolonged weak consumer demand, a decrease in consumer discretionary spending, declines in economic growth, high inflation, uncertainty about economic stability, and increases in unemployment rates.
Additionally, and although less significant to our operations than coffee or dairy, other commodities, including but not limited to plant-based “milks,” tea, sugar, syrups, energy and packaging material, such as plastics, corrugate, and canning materials, are important to our operations, and may be subject to increased costs, which could negatively impact our margins.
Additionally, and although less significant to our operations than coffee or dairy, other commodities, including but not limited to cocoa, plant-based “milks,” tea, sugar, syrups, energy and packaging material, such as plastics, corrugate, and canning materials, are important to our operations, and may be subject to increased costs, which could negatively impact our margins.
Our financial results could be adversely affected by a shift in consumer spending away from outside-the-home beverages, decreases in general discretionary consumer spending (including due to higher gas prices, inflation or lack of consumer confidence), lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new beverages or higher input costs), brand perception (such as the existence or expansion of our competitors), platforms (such as features of our mobile application and changes in our loyalty rewards programs and initiatives), a reduction in individual car ownership, which in turn may reduce the usefulness and convenience of our drive-thru shops, or customers reducing their demand for our current offerings as new beverages are introduced.
Our financial results could be adversely affected by a shift in consumer spending away from outside-the-home beverages, decreases in general discretionary consumer spending (including due to higher gas prices, inflation or lack of consumer confidence), lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new beverages or higher input costs), brand perception (such as the existence or expansion of our competitors), platforms (such as features of our mobile application and changes in our loyalty rewards programs and initiatives), a reduction in individual vehicle ownership, which in turn may reduce the usefulness and convenience of our drive-thru shops, or customers reducing their demand for our current offerings as new beverages are introduced.
If our company-operated and franchised shops cannot compete successfully with other beverage and coffee shops, including Dunkin’ Donuts, CosMc’s, Starbucks, other specialty coffee shops, drive-thru QSRs, and the growing number of coffee delivery options in new and existing markets, we could lose customers and our revenue could decline.
If our company-operated and franchised shops cannot compete successfully with other beverage and coffee shops, including Dunkin’, CosMc’s, Starbucks, other specialty coffee shops, drive-thru QSRs, and the growing number of coffee delivery options in new and existing markets, we could lose customers and our revenue could decline.
These Tax Receivable Agreements provide for the payment by Dutch Bros Inc. to such Continuing Members and Pre-IPO Blocker Holders of 85% of the benefits, if any, that Dutch Bros Inc. is deemed to realize (calculated using certain assumptions) as a result of certain tax attributes and benefits covered by the Tax Receivable Agreements.
These Tax Receivable Agreements provide for the payment by Dutch Bros Inc. to the Continuing Members and Pre-IPO Blocker Holders of 85% of the benefits, if any, that Dutch Bros Inc. is deemed to realize (calculated using certain assumptions) as a result of certain tax attributes and benefits covered by the Tax Receivable Agreements.
Our independent registered public accounting firm has issued and may in the future issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating.
Our independent registered public accounting firm has issued in the past and may in the future issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating.
Some of our competitors have substantially greater financial and other resources to devote to innovation in products, technology, and market and consumer data analytics, including integration, use, or offering of new technologies, including artificial intelligence.
Some of our competitors have substantially greater financial and other resources to devote to innovation in products, technology, and market and consumer data analytics, including integration, use, or offering of new technologies, including artificial intelligence (AI).
Also, because we sometimes purchase real property for various shop locations, we are subject to all the risks generally associated with owning real estate, including changes in the investment climate for real estate, demographic trends and supply or demand for the use of the shops, which may result from competition from similar restaurants in the area as well as strict, joint and several liability for environmental contamination at or from the property, regardless of fault.
Also, because we sometimes purchase real property for various shop locations and company facilities, we are subject to all the risks generally associated with owning real estate, including changes in the investment climate for real estate, demographic trends and supply or demand for the use of the shops, which may result from competition from similar restaurants in the area as well as strict, joint and several liability for environmental contamination at or from the property, regardless of fault.
For example, in 2022, we believe fluctuating increases in gas prices negatively impacted consumer discretionary spending, particularly in the Western United States where such increases were relatively higher and where our shops are geographically concentrated. Dutch Bros Inc. | Form 10-K | 27 Table of Contents If we fail to offer high-quality customer experience, our business and reputation will suffer.
For example, in 2022, we believe fluctuating increases in gas prices negatively impacted consumer discretionary spending, particularly in the Western United States where such increases were relatively higher and where our shops are geographically concentrated. Dutch Bros Inc. | Form 10-K | 29 Table of Contents If we fail to offer high-quality customer experience, our business and reputation will suffer.
Dutch Bros Inc. | Form 10-K | 18 Table of Contents In addition, most of our beverages contain sugar, caffeine, dairy products, and other compounds, such as taurine and artificial coloring, the health effects of which are the subject of public and regulatory scrutiny, including the suggestion of linkages to a variety of adverse health effects.
Dutch Bros Inc. | Form 10-K | 19 Table of Contents In addition, most of our beverages contain sugar, caffeine, dairy products, and other compounds, such as taurine and artificial coloring, the health effects of which are the subject of public and regulatory scrutiny, including the suggestion of linkages to a variety of adverse health effects.
However, Dutch Bros OpCo’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which Dutch Bros OpCo is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Dutch Bros OpCo insolvent.
However, Dutch Bros OpCo’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which Dutch Bros OpCo or its subsidiaries is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering Dutch Bros OpCo insolvent.
Dutch Bros Inc. | Form 10-K | 37 Table of Contents Risks Related to Regulation and Litigation Changes in statutory, regulatory, accounting, and other legal requirements, including changes in accounting principles generally accepted in the United States, could potentially impact our operating and financial results. We are subject to numerous statutory, regulatory, and legal requirements.
Dutch Bros Inc. | Form 10-K | 40 Table of Contents Risks Related to Regulation and Litigation Changes in statutory, regulatory, accounting, and other legal requirements, including changes in accounting principles generally accepted in the United States, could potentially impact our operating and financial results. We are subject to numerous statutory, regulatory, and legal requirements.
Factors that could cause fluctuations in the trading price of our Class A common stock include the risk factors set forth in this section as well as the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of competitors’ stocks; • changes in operating performance and stock market valuations of other companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders, including the Continuing Members; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; Dutch Bros Inc. | Form 10-K | 48 Table of Contents • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, franchises or other assets by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; and • general political and economic conditions and slow or negative growth of our markets.
Factors that could cause fluctuations in the trading price of our Class A common stock include the risk factors set forth in this section as well as the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of competitors’ stocks; • changes in operating performance and stock market valuations of other companies generally, or those in our industry in particular; • sales of shares of our Class A common stock by us or our stockholders, including the Continuing Members; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or data security incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, franchises or other assets by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; and • general political and economic conditions and slow or negative growth of our markets.
As a result, the trading price and volume of our Class A common stock could be adversely affected. Our Co-Founder and Sponsor have significant influence over us, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.
As a result, the trading price and volume of our Class A common stock could be adversely affected. Our Co-Founder continues to have significant influence over us, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.
Intense competition in the food service and restaurant industry could make it more difficult to expand our business and could also have a negative impact on our operating results if customers favor our competitors. • Our failure to manage our growth effectively could harm our business and operating results. • Our inability to identify, recruit, and retain qualified individuals for our shops could slow our growth and adversely impact our ability to operate. • Our shops are geographically concentrated in the Western United States, and we could be negatively affected by conditions specific to that region. • Interruption of our supply chain of coffee, flavored syrups or other ingredients, coffee machines and other restaurant equipment or packaging could affect our ability to produce or deliver our products and could negatively impact our business and profitability. • Increases or sustained inflation in the cost of high-quality arabica coffee beans, dairy, or other commodities or decreases in the availability of high-quality arabica coffee beans, dairy, or other commodities could have an adverse impact on our business and financial results. • Pandemics or disease outbreaks have had, and may continue to have, an effect on our business and results of operations. • Our success depends substantially on the value of our brand and failure to preserve its value could have a negative impact on our financial results. • Food safety and quality concerns may negatively impact our brand, business, and profitability, our internal operational controls and standards may not always be met and our employees may not always act professionally, responsibly and in our and our customers’ best interests.
Intense competition in the food service and restaurant industry could make it more difficult to expand our business and could also have a negative impact on our operating results if customers favor our competitors. • Our failure to manage our growth effectively could harm our business and operating results. • Our inability to identify, recruit, and retain qualified individuals for our shops could slow our growth and adversely impact our ability to operate. • Our shops are geographically concentrated in the Western United States, and we could be negatively affected by conditions specific to that region. • Interruption of our supply chain of coffee, flavored syrups or other ingredients, coffee machines and other restaurant equipment or packaging could affect our ability to produce or deliver our products and could negatively impact our business and profitability. • Increases or sustained inflation in the cost of high-quality arabica coffee beans, dairy, or other commodities or decreases in the availability of high-quality arabica coffee beans, dairy, or other commodities could have an adverse impact on our business and financial results. • Our success depends substantially on the value of our brand and failure to preserve its value could have a negative impact on our financial results. • Food safety and quality concerns may negatively impact our brand, business, and profitability, our internal operational controls and standards may not always be met and our employees may not always act professionally, responsibly and in our and our customers’ best interests.
Risks Related to Ownership of Our Class A Common Stock Additional stock issuances (including pursuant to the redemption of Dutch Bros OpCo Class A common units from our Continuing Members) could result in significant dilution to our stockholders and cause the trading price of our Class A common stock to decline.
Risks Related to Ownership of Our Class A Common Stock Additional stock issuances (including pursuant to the redemption or exchange of Dutch Bros OpCo Class A common units from our Continuing Members) could result in significant dilution to our stockholders and cause the trading price of our Class A common stock to decline.
The accelerated payments required in such circumstances will be calculated by reference to the present value (at a discount rate equal to the lesser of (i) 6.5% per annum and (ii) one year LIBOR, or its successor rate, plus 100 “basis points”) of all future payments that the Continuing Members and Pre-IPO Blocker Holders would have been entitled to receive under the Tax Receivable Agreements, and such accelerated payments and any other future payments under the Tax Receivable Agreements will utilize certain valuation assumptions, including that Dutch Bros Inc. will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the Tax Receivable Agreements and sufficient taxable income to fully utilize any remaining net operating losses subject to the Tax Receivable Agreements on a straight line basis over the shorter of Dutch Bros Inc. | Form 10-K | 46 Table of Contents the statutory expiration period for such net operating losses and the five-year period after the early termination or change of control.
The accelerated payments required in such circumstances will be calculated by reference to the present value (at a discount rate equal to the lesser of (i) 6.5% per annum and (ii) one year LIBOR, or its successor rate, plus 100 “basis points”) of all future payments that the Continuing Members and Pre-IPO Blocker Holders would have been entitled to receive under the Tax Receivable Agreements, and such accelerated payments and any other future payments under the Tax Receivable Agreements will utilize certain valuation assumptions, including that Dutch Bros Inc. will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the Tax Receivable Agreements and sufficient taxable income to fully utilize any remaining net operating losses subject to the Tax Receivable Agreements on a straight line basis over the shorter of the statutory expiration period for such net operating losses and the five-year period after the early termination or change of control.
Our marketing programs may not be successful, and our new menu items and advertising campaigns may not generate increased revenues or profits. We incur costs and expend resources in our marketing efforts on new menu items and advertising campaigns to raise brand awareness and attract and retain customers.
Our marketing programs may not be successful, and our new menu items, advertising campaigns, and other initiatives may not generate increased revenues or profits. We incur costs and expend resources in our marketing efforts on new menu items, advertising campaigns to raise brand awareness and attract and retain customers, and other initiatives.
Our financial results may fluctuate due to a variety of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to: • changes in consumer tastes and nutritional and dietary trends; • successful identification and acquisition of appropriate sites to timely develop and expand our number of profitable shops; • protection of our brand and reputation; • dependence on a small number of suppliers, including for roasting; • expectations regarding our future operating and financial performance; Dutch Bros Inc. | Form 10-K | 52 Table of Contents • the size of our addressable markets, market share, and market trends; • effective management and continued growth of our workforce and operations; • our ability to attract, retain, and motivate skilled personnel, including key members of our senior management; • generation of projected same shop sales growth; • the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs; • dependence on long-term non-cancelable leases; • our employees and the status of our workers; • our inability to maintain good relationships with our franchising partners; • the timing and amount of deferred expenses related to the maintenance of company-operated shops; • the effects of seasonal trends on our results of operations; • our vulnerability to global financial market conditions, including the continuing effects from the recent recession; • adverse weather conditions in local or regional areas where our shops are located; and • our realization of any benefit from our organizational structure net of expenses associated with the same (including our obligations under the Tax Receivable Agreements).
Our financial results may fluctuate due to a variety of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to: • changes in consumer tastes and nutritional and dietary trends; • successful identification and acquisition of appropriate sites to timely develop and expand our number of profitable shops; • protection of our brand and reputation; • dependence on a small number of suppliers, including for roasting; • expectations regarding our future operating and financial performance; • the size of our addressable markets, market share, and market trends; • effective management and continued growth of our workforce and operations; • our ability to attract, retain, and motivate skilled personnel, including key members of our senior management; • generation of projected same shop sales growth; • the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs; • dependence on long-term non-cancelable leases; • our employees and the status of our workers; • our inability to maintain good relationships with our franchising partners; • the timing and amount of deferred expenses related to the maintenance of company-operated shops; • the effects of seasonal trends on our results of operations; • our vulnerability to global financial market conditions, including the continuing effects from the recent recession; • adverse weather conditions in local or regional areas where our shops are located; and • our realization of any benefit from our organizational structure net of expenses associated with the same (including our obligations under the Tax Receivable Agreements).
Our ability to operate new shops profitably and increase average shop revenue and comparable shop sales will depend on many factors, some of which are beyond our control, including: • consumer awareness and understanding of the Dutch Bros brand; • general economic conditions, such as inflation, which can affect shop traffic, local labor costs, and prices we pay for the beverage and other supplies we use; • consumption patterns and beverage preferences that differ from region to region; • changes in consumer preferences and discretionary spending, which we have seen impacted recently by factors such as inflation; • difficulties obtaining or maintaining adequate relationships with distributors or suppliers in new markets; • increases or continued elevation in prices for commodities, including coffee, milk, and flavored syrups; • inefficiency in our labor costs as the staff gains experience; • competition, either from our competitors in the food service and restaurant industry or our own shops; • temporary and permanent site characteristics of new shops; • changes in government regulation; • our ability to hire, motivate, and retain qualified employees who share our values; and • other unanticipated increases in costs, including costs of construction materials and trade labor, any of which could give rise to delays or cost overruns.
Our ability to operate new shops profitably and increase average shop revenue and comparable shop sales will depend on many factors, some of which are beyond our control, including: • consumer awareness and understanding of the Dutch Bros brand; • general economic conditions, such as inflation, which can affect shop traffic, local labor costs, and prices we pay for the beverage and other supplies we use; • consumption patterns and beverage preferences that differ from region to region; • changes in consumer preferences and discretionary spending, which we have seen impacted recently by factors such as inflation; • difficulties obtaining or maintaining adequate relationships with distributors or suppliers in new markets; • increases or continued elevation in prices for commodities, including coffee, milk, and flavored syrups; • inefficiency in our labor costs as the staff gains experience; • competition, either from our competitors in the food service and restaurant industry or our own shops; • temporary and permanent site characteristics of new shops; • changes in government regulation; • our ability to hire, motivate, and retain qualified employees who share our values; • our ability to operate effectively, including timely open and meet demand due to scarcity of equipment or other materials; and • other unanticipated increases in costs, including costs of construction materials and trade labor, any of which could give rise to delays or cost overruns.
The federal PROAct would codify the Browning-Ferris decision that redefined joint employment to include a broader category of conduct by the franchisor. If the proposed or similar laws or rules come into effect, it could increase the possibility of Dutch Bros being held liable for our franchise partners’ employment practices.
The federal PRO Act would codify the Browning-Ferris decision that redefined joint employment to include a broader category of conduct by the franchisor. If the proposed or similar laws or rules come into effect, it could increase the possibility of Dutch Bros being held liable for our franchise partners’ employment practices.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees.
These choices of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees.
Thus, our Co-Founder and our Sponsor exercise control over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the election and removal of directors and the size of our board of directors, any amendment of our certificate of incorporation or bylaws or the approval of any merger or other significant corporate transaction, including a sale of substantially all our assets.
Thus, our Co-Founder exercises control over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the election and removal of directors and the size of our board of directors, any amendment of our certificate of incorporation or bylaws or the approval of any merger or other significant corporate transaction, including a sale of substantially all our assets.
We may also experience an increased risk of privacy and data security breaches and incidents involving our information technology networks and systems and data processing as more of our employees utilize network connections outside our premises or network, including working at home, while in transit, and in public locations.
We may also experience an increased risk of privacy and data security breaches and incidents involving our information technology networks and systems and data processing as our employees continue to utilize network connections outside our premises or network, including working at home, while in transit, and in public locations.
If we or a third party upon whom we rely experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, including reputational harm, costly litigation (including class action litigation), material contract breaches, liability, settlement costs, loss of sales, disruption in our ability (or that of third parties upon whom we rely) to process payments, regulatory scrutiny, actions or investigations, a loss of confidence in our business, systems and Processing of Sensitive Information, a diversion of management’s time and attention, and significant fines, penalties, assessments, fees and expenses.
If we or a third party with whom we work experiences a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, including reputational harm, costly litigation (including class action litigation), material contract breaches, liability, settlement costs, loss of sales, disruption in our ability (or that of third parties with whom we work) to process payments, regulatory scrutiny, actions or investigations, a loss of confidence in our business, systems and Processing of Sensitive Information, a diversion of management’s time and attention, and significant fines, penalties, assessments, fees and expenses.
A breach in the security of our information technology systems or those of our service providers could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits.
A breach in the security of our information technology systems or that of our service providers could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits.
These threats are becoming increasingly difficult to detect and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” personnel (such as through theft or misuse), organized criminal threat actors, sophisticated nation states, and nation-state supported actors.
These threats are prevalent, continue to rise, are becoming increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” personnel (such as through theft or misuse), organized criminal threat actors, sophisticated nation states, and nation-state supported actors.
Any one or more of the factors listed below or described elsewhere in this section could harm our business: • increases in real estate or labor costs in certain markets, which we have recently experienced; • changes in consumer preferences; • disruptions in our supply chain; • the impact of shortages or inflation on our cost of goods or labor, including construction labor, which we have recently seen; • changes in governmental laws and rules, including those regarding minimum wage, and approaches to taxation; • severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our business in such markets, including the price or availability of goods; • labor discord or disruption, geopolitical events, social unrest, war, including repercussions of the war between Russia and Ukraine or the war between Israel and Hamas and the related risk of a larger regional conflict, terrorism, political instability, acts of public violence, boycotts, hostilities and social unrest, COVID-19 variants and other epidemics; and • adverse outcomes of litigation.
Any one or more of the factors listed below or described elsewhere in this section could harm our business: • increases in real estate or labor costs in certain markets, which we have recently experienced; • changes in consumer preferences; • disruptions in our supply chain; • the impact of shortages or inflation on our cost of goods or labor, including construction supplies and labor, which we have recently seen; • changes in governmental laws and rules, including those regarding minimum wage, and approaches to taxation; • severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our business in such markets, including the price or availability of goods; • labor discord or disruption, geopolitical events, social unrest, war, including repercussions of the war between Russia and Ukraine or the war between Israel and Hamas and the related risk of larger regional conflicts, terrorism, political instability or uncertainty, acts of public violence, boycotts, hostilities and social unrest, or resurgence of or new epidemics; and • adverse outcomes of litigation.
We are increasingly dependent on information technology and our ability to process data in order to operate and sell our products, and if we (or our vendors) are unable to protect against software and hardware vulnerabilities, service interruptions, data corruption, cyber-based attacks, ransomware, fraud, or security breaches, or if we fail to comply with our commitments and assurances regarding the privacy and security of such data, our operations could be disrupted, our ability to provide our products could be interrupted, our reputation may be harmed and we may be exposed to liability and loss of customers and business.
We are increasingly dependent on information technology and our ability to process data in order to operate and sell our products, and if we (or the third parties with whom we work) are unable to protect against software and hardware vulnerabilities, service interruptions, data corruption, cyber-based attacks, ransomware, fraud, or security breaches, or if we (or the third parties with whom we work) fail to comply with our commitments and assurances regarding the privacy and security of such data, our operations could be disrupted, our ability to provide our products could be interrupted, our reputation may be harmed and we may be exposed to liability and loss of customers and business.
Sales of a substantial number of shares of our Class A or Class D common stock (after converting to Class A common stock) in the public market, or the perception that these redemptions, exchanges or sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities.
Sales of a substantial number of shares of our Class A common stock in the public market, or the perception that these redemptions, exchanges or sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities.
Our debt could have important consequences to you, including the following: • it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness; • we may need to issue additional Class A common stock to fund the repayment of our debt, which would result in additional dilution to existing investors and may cause our stock price to decline; • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or other general corporate purposes may be impaired; • a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, acquisitions, and other general corporate purposes; • we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; Dutch Bros Inc. | Form 10-K | 53 Table of Contents • our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our level of debt; and • our ability to borrow additional funds or to refinance debt may be limited.
Our debt could have important consequences to you, including the following: • it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness; • we may need to issue additional Class A common stock to fund the repayment of our debt, which would result in additional dilution to existing investors and may cause our stock price to decline; • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or other general corporate purposes may be impaired; • a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, acquisitions, and other general corporate purposes; • we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; • our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our level of debt; and • our ability to borrow additional funds or to refinance debt may be limited.
Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality arabica coffee beans could have a material adverse impact on our profitability.
Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices, increases in the cost of high-quality arabica coffee beans could have a material adverse impact on our profitability.
Any shares we issue upon redemption or exchange of Dutch Bros OpCo Class A common units or upon the conversion of shares of Class D common stock, as applicable, will be “restricted securities” as defined in Rule 144 and may not be sold in the absence of registration under the Securities Act of 1933, as amended (Securities Act) unless an exemption from registration is available, including the exemptions contained in Rule 144.
Any shares we issue upon redemption or exchange of Dutch Bros OpCo Class A common units will be “restricted securities” as defined in Rule 144 and may not be sold in the absence of registration under the Securities Act of 1933, as amended (Securities Act) unless an exemption from registration is available, including the exemptions contained in Rule 144.
Dutch Bros OpCo could be subject to material liabilities pursuant to adjustments to its partnership tax returns if, for example, its calculations or allocations of taxable income or loss are incorrect, which also could limit its ability to make distributions to us.
Dutch Bros OpCo could be subject to material liabilities pursuant to adjustments to its partnership tax returns if, for example, its calculations or allocations of taxable income or loss are incorrect, which also could limit Dutch Bros OpCo’s ability to make distributions to Dutch Bros Inc.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If these third parties experience a security incident or other interruption, we could experience adverse consequences.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative claim or cause of action brought on our behalf; • any claim or cause of action for a breach of fiduciary duty owed by any of our current or former directors, officers, or other employees to us or our stockholders; • any claim or cause of action against us or any of our current or former directors, officers, or other employees arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as each may be amended from time to time); • any claim or cause of action seeking to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws (as each may be amended from time to time, including any right, obligation, or remedy thereunder); • any claim or cause of action as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware; and • any claim or cause of action against us or any of our current or former directors, officers, or other employees governed by the internal-affairs doctrine.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative claim or cause of action brought on our behalf; Dutch Bros Inc. | Form 10-K | 62 Table of Contents • any claim or cause of action for a breach of fiduciary duty owed by any of our current or former directors, officers, or other employees to us or our stockholders; • any claim or cause of action against us or any of our current or former directors, officers, or other employees arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as each may be amended from time to time); • any claim or cause of action seeking to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws (as each may be amended from time to time, including any right, obligation, or remedy thereunder); • any claim or cause of action as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware; and • any claim or cause of action against us or any of our current or former directors, officers, or other employees governed by the internal affairs doctrine.
The multi-class structure of our common stock has the effect of concentrating voting control with Continuing Members, limiting your ability to influence corporate matters. Each share of our Class A common stock entitles its holder to one vote on all matters on which stockholders are entitled to vote generally.
The multi-class structure of our common stock has the effect of concentrating voting control with our Co-Founder, limiting your ability to influence corporate matters. Each share of our Class A common stock entitles its holder to one vote on all matters on which stockholders are entitled to vote generally.
For example, these include the Telephone Consumer Protection Act (TCPA), the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act, as amended (the CCPA), other state, local, and federal laws relating to data privacy and security, and rules and regulations promulgated under the authority of the Federal Trade Commission.
Additional data privacy and security laws include the Telephone Consumer Protection Act (TCPA), the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act, as amended (the CCPA), other state, local, and federal laws relating to data privacy and security, and rules and regulations promulgated under the authority of the Federal Trade Commission.
Distributions from Dutch Bros OpCo may in certain periods exceed Dutch Bros Inc.’s liabilities, including tax liabilities, obligations to make payments under the Tax Receivable Agreements, and other expenses.
Distributions required under the OpCo LLC Agreement from Dutch Bros OpCo to Dutch Bros Inc. may in certain periods exceed Dutch Bros Inc.’s liabilities, including tax liabilities, obligations to make payments under the Tax Receivable Agreements, and other expenses.
Consumer demand for our products and our brand equity could diminish significantly if we, our employees, franchise partners, or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of customers at Dutch Bros shops, or the Dutch Bros Inc. | Form 10-K | 32 Table of Contents use of customer data for general or direct marketing or other purposes.
Consumer demand for our products and our brand equity could diminish significantly if we, our employees, franchise partners, or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of customers at Dutch Bros shops, or the use of customer data for general or direct marketing or other purposes.
Any failure by us or a third-party processor to comply with applicable data privacy and security obligations could subject us to litigation (including class claims), mass arbitration demands, claims, proceedings, actions or investigations by governmental entities, authorities, private parties, or regulators; additional reporting requirements and/or oversight; bans on Processing personal data; and orders to destroy or not use personal data.
Any failure (or perceived failure) by us or a third party with whom we work to comply with applicable data privacy and security obligations could subject us to litigation (including class claims), mass arbitration demands, claims, proceedings, actions or investigations by governmental entities, authorities, private parties, or regulators; additional reporting requirements and/or oversight; bans on Processing personal information; and orders to destroy or not use personal information.
In the past few years, numerous states in the United States—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal information.
In the past few years, numerous states in the United States—including California, Virginia, Colorado, Connecticut, Oregon, New Hampshire, Texas, Montana, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal information.
There has been an increased public focus, including from the United States federal and state governments, on environmental sustainability matters, including with respect to climate change, greenhouse gases, water resources, packaging and waste, animal health and welfare, deforestation, and land use.
There has been an ongoing public focus, including from the United States federal and state governments, on ESG matters, including with respect to climate change, greenhouse gases, water resources, packaging and waste, animal health and welfare, deforestation, and land use.
In addition, as the result of such heightened public focus on environmental sustainability matters, we may face increased pressure to provide expanded disclosure, make or expand commitments, set targets, or establish additional goals and take actions to meet such goals, in connection with such environmental sustainability matters.
In addition, as the result of such focus on ESG matters, we may face increased pressure to provide expanded disclosure, make or expand commitments, set targets, or establish additional goals and take actions to meet such goals, in connection with such ESG matters.
Changing conditions beyond our control could affect the desirability of working in our shops, such as increases in extreme heat or cold, wildfire smoke, and other extreme weather events that make working outdoors or in a limited space more difficult.
Changing conditions beyond our control, including the potential effects of climate change, could affect the desirability of working in our shops, such as increases in extreme heat or cold, wildfire smoke, and other extreme weather events that make working outdoors or in a limited space more difficult.
These and other macroeconomic factors could have an adverse effect on our sales, profitability, or shop development and expansion plans, which could harm our results of operations and financial condition. These factors also could cause us to, among other things, reduce the number and frequency of new shop openings or close shops.
These and other macroeconomic factors could have an adverse effect on our sales, profitability, or shop development and expansion plans, which could harm our results of operations and financial condition. These factors also could cause us to, among other things, reduce the number and frequency of new shop openings or close shops. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyberattacks that could materially disrupt our systems and operations, supply chain, and ability to market, produce, sell, and distribute our products.
During times of war and other major conflicts, we and the third parties with whom we work may be vulnerable to a heightened risk of these attacks, including retaliatory cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to market, produce, sell, and distribute our products.
The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to seek to recover potentially significant statutory damages. In addition, other data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.
The CCPA provides for fines and allows private litigants affected by certain data breaches to seek to recover potentially significant statutory damages. In addition, other data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.
We also purchase significant amounts of dairy products, particularly milk, to support the needs of our shops. For example, in 2022, there were material increases in dairy costs and such dairy costs remained elevated in 2023. If dairy costs further increase, this could harm our business.
We also purchase significant amounts of dairy products, particularly milk, to support the needs of our shops. For example, in 2022, there were material increases in dairy costs and such dairy costs remained elevated through, and increased further in, the third quarter of 2024. If dairy costs further increase, this could harm our business.
Actual tax benefits realized by Dutch Bros Inc. may differ from tax benefits calculated under the Tax Receivable Dutch Bros Inc. | Form 10-K | 45 Table of Contents Agreements as a result of the use of certain assumptions in the Tax Receivable Agreements, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits.
Actual tax benefits realized by Dutch Bros Inc. may differ from tax benefits calculated under the Tax Receivable Agreements as a result of the use of certain assumptions in the Tax Receivable Agreements, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to Sensitive Information or our information technology networks and systems (or those of the third parties upon which we rely).
Any of the previously identified or similar threats and issues could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to Sensitive Information or our information technology networks and systems (or those of the third parties with whom we work).
We have built out our leadership team with an expectation of protecting this culture, an emphasis on shared values and a commitment to diversity and inclusion. In January 2024, we announced shifting approximately 40% of our total support staff to our Phoenix, Arizona office by January 1, 2025, which may create additional challenges maintaining our corporate culture.
We have built out our leadership team with an expectation of protecting this culture, an emphasis on shared values and a commitment to diversity and inclusion. In 2024, we shifted approximately 40% of our total support staff to our Phoenix, Arizona office, which may create additional challenges maintaining our corporate culture.
Our shares of Class C common stock and Class D common stock entitle its holder to three votes for each share (for so long as the aggregate number of outstanding shares of our Class C common stock and Class D common stock represents at least 5% of the total outstanding shares of common stock, and thereafter, one vote per share) on all matters on which stockholders are entitled to vote generally.
Prior to the Secondary Offering in June 2024, our shares of Class C common stock and Class D common stock entitled its holder to three votes for each share (for so long as the aggregate number of outstanding shares of our Class C common stock and Class D common stock represents at least 5% of the total outstanding shares of common stock, and thereafter, one vote per share) on all matters on which stockholders are entitled to vote generally.
The Continuing Members may also have different tax positions from Dutch Bros Inc. that could influence their decisions regarding whether and when to dispose of assets, especially in light of the existence of the Tax Receivable Agreements, whether and when to incur new or refinance existing indebtedness and whether and when Dutch Bros Inc. should terminate the Tax Receivable Agreements and accelerate its obligations thereunder.
Our Co-Founder may also have different tax positions from Dutch Bros Inc. that could influence his decisions regarding whether and when to dispose of assets, especially in light of the existence of the Tax Receivable Agreements, whether and when to incur new or refinance existing indebtedness and whether and when Dutch Bros Inc. should terminate the Tax Receivable Agreements and accelerate its obligations thereunder.
We are also contractually subject to data privacy and security obligations, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with data privacy laws or other obligations and to comply with industry standards adopted by industry groups. We may become subject to new data privacy and security contractual obligations in the future.
We are also contractually subject to data privacy and security obligations, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with data privacy laws or other related obligations and to comply with industry standards adopted by industry groups.
One of the key means to achieving our growth strategy will be through opening new shops and operating those shops on a profitable basis. During the year ended December 31, 2023, we opened 146 new company-operated shops, across 13 states.
One of the key means to achieving our growth strategy will be through opening new shops and operating those shops on a profitable basis. During the year ended December 31, 2024, we opened 128 new company-operated shops, across 15 states.
Each share of Class A common stock entitles the holder to one vote, each share of Class B common stock entitles the holder to ten votes (for so long as the aggregate number of outstanding shares of our Class B common stock represents at least 5% of the total outstanding common stock, and thereafter, one vote per share, provided that the number of votes per share may be adjusted from time to time in accordance with our amended and restated certificate of incorporation, as required to prevent the holders of Class B common stock from holding, in the aggregate, 80% or more of the aggregate voting power of Dutch Bros Inc. at any time) and each share of Class C common stock and Class D common stock entitles the holder to three votes (for so long as the aggregate number of outstanding shares of our Class C common stock and Class D common stock represents at least 5% of the total outstanding common stock, and thereafter, one vote per share) on all matters on which stockholders are entitled to vote generally.
Each share of Class A common stock entitles the holder to one vote and each share of Class B common stock entitles the holder to ten votes (for so long as the aggregate number of outstanding shares of our Class B common stock represents at least 5% of the total outstanding common stock, and thereafter, one vote per share, provided that the number of votes per share may be adjusted from time to time in accordance with our amended and restated certificate of incorporation, as required to prevent the holders of Class B common stock from holding, in the aggregate, 80% or more of the aggregate voting power of Dutch Bros Inc. at any time).
Dutch Bros Inc. | Form 10-K | 29 Table of Contents We rely upon third-party service providers and technologies to operate critical business systems to process Sensitive Information in a variety of contexts, including, without limitation, third-party payment processors, point of sale and order management systems, encryption and authentication technology, human resources systems including scheduling, payroll and compliance systems, internet service providers, enterprise resource planning and financial systems, document management and storage, employee email, our Dutch Rewards mobile app, and other functions.
We rely upon third parties to operate critical business systems to process Sensitive Information in a variety of contexts, including, without limitation, third party payment processors, point of sale and order management systems, encryption and authentication technology, human resources systems including scheduling, payroll and compliance systems, internet service providers, enterprise resource planning and financial systems, document management and storage, employee email, our Dutch Rewards mobile app, and other functions.
For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who Dutch Bros Inc. | Form 10-K | 58 Table of Contents has prepared or certified any part of the documents underlying such offering.
For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying such offering.
Additionally, we may face challenges of integrating, developing, training, and motivating a rapidly growing employee base in our various shops and maintaining our company culture across multiple offices and shops. In January 2024, we announced shifting approximately 40% of our total support staff to our Phoenix, Arizona office by January 1, 2025.
Additionally, we may face challenges of integrating, developing, training, and motivating a rapidly growing employee base in our various shops and maintaining our company culture across multiple offices and shops. In 2024, we shifted approximately 40% of our total support staff to our Phoenix, Arizona office.
If we are unable to effectively combat the use of fraudulent or stolen credit cards, we may be subject to fines and higher transaction fees or be unable to continue to Dutch Bros Inc. | Form 10-K | 35 Table of Contents accept card payments because payment card networks have revoked our access to their networks, any of which would materially adversely impact our business, results of operations, and financial condition.
If we are unable to effectively combat the use of fraudulent or stolen credit cards, we may be subject to fines and higher transaction fees or be unable to continue to accept card payments because payment card networks have revoked our access to their networks, any of which would materially adversely impact our business, results of operations, and financial condition.
If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that Dutch Bros Inc. | Form 10-K | 47 Table of Contents we would be unable to enforce contracts with third parties, and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company.
If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties, and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company.
Any provision in our amended and restated certificate of incorporation or our amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a Dutch Bros Inc. | Form 10-K | 59 Table of Contents premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
Any provision in our amended and restated certificate of incorporation or our amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
Information concerning us may be posted on such platforms at any time. Such platforms could be used for or result in polarizing campaigns or movements involving our brand. Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects, or business.
Such platforms could be used for or result in polarizing campaigns or movements involving our brand. Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects, or business.
Blue Rebel energy drink, and other restaurant equipment or packaging, including any packaging for our for our proprietary products, for any reason, including: the casualty loss of our roasting facility; interruptions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels; trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions; pandemics; social or labor unrest; acts of terrorism; natural disasters; or political disputes and military conflicts could have a negative material impact on our business and our profitability.
Any material interruption in our supply chain, such as material interruption of the supply of coffee, flavored syrups, dairy, coffee machines, cans for our Dutch Bros Rebel energy drink, and other restaurant equipment or packaging, including any packaging for our for our proprietary products, for any reason, including: the casualty loss of our roasting facilities; interruptions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels; trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions; pandemics; social or labor unrest; acts of terrorism; natural disasters; or political disputes and military conflicts could have a negative material impact on our business and our profitability.
Dutch Bros Inc. | Form 10-K | 39 Table of Contents The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and, therefore, have an adverse effect on our results of operations.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and, therefore, have an adverse effect on our results of operations.
Dutch Bros OpCo may make distributions of cash to Dutch Bros Inc. in excess of the amounts used by Dutch Bros Inc. to make distributions to its stockholders and pay its expenses (including taxes and payments under the Tax Receivable Agreements).
Dutch Bros Inc. | Form 10-K | 48 Table of Contents Dutch Bros OpCo may make distributions of cash to Dutch Bros Inc. in excess of the amounts used by Dutch Bros Inc. to make distributions to its stockholders and pay its expenses (including taxes and payments under the Tax Receivable Agreements).
The risk of negative publicity is particularly great with respect to our franchise partner shops because we are limited in the manner in which we can regulate them, especially on a real-time basis, and negative publicity from our franchise partners’ shops may also significantly impact company-operated shops.
The risk of negative publicity is particularly great with respect to our franchise partner shops because we are limited in the manner in which we can regulate them, especially on a real-time basis, and negative publicity from our franchise partners’ shops may also significantly impact company- Dutch Bros Inc. | Form 10-K | 24 Table of Contents operated shops.
Payments under the Tax Receivable Agreements will be based on the tax reporting positions that we determine, and the Internal Revenue Service (IRS) or another tax authority may challenge all or part of the tax basis increases, as well as other related tax positions we take, and a court could sustain such challenge.
Dutch Bros Inc. | Form 10-K | 50 Table of Contents Payments under the Tax Receivable Agreements will be based on the tax reporting positions that we determine, and the Internal Revenue Service (IRS) or another tax authority may challenge all or part of the tax basis increases, as well as other related tax positions we take, and a court could sustain such challenge.
This concentrated control will limit or preclude the ability of holders of Class A common stock to influence corporate matters for the foreseeable future. As a public company utilizing a multi-class capital structure, FTSE Russell and Standard & Poor’s will not include our stock in their indices.
This concentrated control will limit or preclude the ability of holders of Class A common stock to influence corporate matters for the foreseeable future. Dutch Bros Inc. | Form 10-K | 54 Table of Contents As a public company utilizing a multi-class capital structure, FTSE Russell and Standard & Poor’s will not include our stock in their indices.
There can be no assurance that Dutch Bros OpCo and its subsidiaries will generate sufficient cash Dutch Bros Inc. | Form 10-K | 43 Table of Contents flow to make such distributions, or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such distributions.
There can be no assurance that Dutch Bros OpCo and its subsidiaries will generate sufficient cash flow to make such distributions, or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such distributions.
Our (and those of the third parties upon which we rely) information technology networks and systems, and the Processing of Sensitive Information they perform, may be vulnerable to data security and privacy threats, cyber and otherwise.
Our (and those of the third parties with whom we work) information technology networks and systems, and the Processing of Sensitive Information they perform, may be vulnerable to data security and privacy threats, cyber and otherwise.
A breach of any of the covenants in the 2022 Credit Facility could result in an event of default, which could trigger acceleration of our indebtedness and may result in the acceleration of or default under other debt we may incur in the future, which could have a material adverse effect on our business, results of operations, and financial condition.
Dutch Bros Inc. | Form 10-K | 58 Table of Contents A breach of any of the covenants in the 2022 Credit Facility could result in an event of default, which could trigger acceleration of our indebtedness and may result in the acceleration of or default under other debt we may incur in the future, which could have a material adverse effect on our business, results of operations, and financial condition.
Our charter documents also contain other provisions that could have an anti-takeover effect, such as: • permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships; • providing that directors may only be removed pursuant to the provisions of Section 141(k) of the Delaware General Corporation Law; • prohibiting cumulative voting for directors; • the ability of the holders of our Class C common stock, voting as a separate class, to elect up to two directors, subject to the limitations set forth in our amended and restated certificate; • requiring super-majority voting to amend some provisions in our amended and restated bylaws; • authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • eliminating the ability of stockholders to call special meetings of stockholders; and • our multi-class common stock structure as described above.
Our charter documents also contain other provisions that could have an anti-takeover effect, such as: • permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships; Dutch Bros Inc. | Form 10-K | 63 Table of Contents • providing that directors may only be removed pursuant to the provisions of Section 141(k) of the Delaware General Corporation Law; • prohibiting cumulative voting for directors; • requiring super-majority voting to amend some provisions in our amended and restated bylaws; • authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • eliminating the ability of stockholders to call special meetings of stockholders; and • our multi-class common stock structure as described above.
Furthermore, Dutch Bros Inc.’s allocable share of Dutch Bros OpCo’s net taxable income will increase over time as the Continuing Members redeem or exchange their Dutch Bros OpCo Class A common units for shares of Class A common stock or cash.
Furthermore, Dutch Bros Inc.’s economic interest in Dutch Bros OpCo will increase over time as the Continuing Members redeem or exchange their Dutch Bros OpCo Class A common units for shares of Class A common stock or cash, and, accordingly, Dutch Bros Inc.’s allocable share of Dutch Bros OpCo’s net taxable income is expected to increase over time.
From time to time, legislative proposals are made to increase the minimum wage at the federal, state, and local level, such as AB1228 in California, which creates a minimum wage of $20 per hour for fast food workers (beginning on April 1, 2024), among other provisions.
From time to time, legislative proposals are made to increase the minimum wage at the federal, state, and local level, such as Assembly Bill 1228 in California, which created a minimum wage of $20 per hour for fast food workers, effective April 1, 2024, among other provisions.
We generally cannot terminate these leases without incurring substantial costs. Additional sites that we lease are likely to be subject to similar long-term non-cancelable leases.
We generally cannot terminate these leases without incurring substantial costs. Additional sites that we lease, including facilities for corporate support staff, are likely to be subject to similar long-term non-cancelable leases.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CTO is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel. Our CTO and her team are responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Biggest change(NASDAQ: LULU), and prior to that as Chief Technology Officer at Premera Blue Cross. Our Chief Technology and Information Officer is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel.
Our information technology team is responsible for identifying, assessing, and managing the Company’s cybersecurity threats and risks under the oversight of our Chief Technology Officer. This team works with third parties from time to time to help identify, assess, and manage cybersecurity risks, including professional services firms and other vendors.
Our information technology team is responsible for identifying, assessing, and managing the Company’s cybersecurity threats and risks under the oversight of our Chief Technology and Information Officer. This team works with third parties from time to time to help identify, assess, and manage cybersecurity risks, including professional services firms and other vendors.
We identify cybersecurity threats as part of our risk management processes, including (depending on the environment or systems) through internal monitoring, monitoring the threat environment using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors, conducting scans of the threat environments, evaluating our and our industry’s risk profile, evaluating threats reported to us, conducting threat assessments for internal and external threats, and conducting vulnerability assessments to identify vulnerabilities.
We identify cybersecurity threats as part of our risk management processes, including (depending on the environment or systems) through internal monitoring, monitoring the threat environment using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors, conducting scans of the threat environments, evaluating our and our industry’s risk profile, evaluating threats reported to us, conducting threat assessments for internal and external threats, and conducting security vulnerability assessments to identify vulnerabilities.
Our Chief Legal Officer oversees an annual enterprise risk assessment that addresses certain applicable cybersecurity risks, the results of which are presented to the Audit and Risk Committee. We engage a third party consulting firm to assist with the annual enterprise risk assessment.
Additionally, our Chief Legal Officer oversees an annual enterprise risk assessment that addresses certain applicable cybersecurity risks, the results of which are presented to the Audit and Risk Committee. We also engage a third party consulting firm to assist with our annual enterprise risk assessment.
Depending on the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, for certain service providers, our vendor management process may include reviewing the cybersecurity practices of certain providers, contractually imposing obligations on certain providers related to the services they provide and/or the information they process, conducting security assessments, requiring providers to complete written questionnaires regarding their services and data handling practices, conducting periodic re-assessments during their engagement, using a third party vendor management security company to provide certain ongoing monitoring, or annually collect certain information security-related compliance documentation and reports.
Depending on the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, for certain service providers, our vendor management process includes reviewing the cybersecurity practices of certain providers, contractually imposing obligations on certain providers related to the services they provide and/or the information they process, conducting security vulnerability assessments, requiring providers to complete written questionnaires regarding their services and data handling practices, conducting periodic re-assessments during their engagement, using a third party vendor management security company to provide certain ongoing monitoring, or annually collecting certain information security-related compliance documentation and reports.
The risk management and reduction measures we implement for certain of our environments or systems include: policies and procedures designed to address cybersecurity threats, including an incident response policy, acceptable use policy, and vulnerability management policy; internal and/or external audits of some environments to assess our exposure to cybersecurity threats, environment, compliance with risk mitigation procedures, and effectiveness of relevant controls; documented risk assessments; encryption of certain data; network security controls in certain systems; physical and electronic access controls in certain environments; asset management, tracking and disposal; systems monitoring of certain systems; employee security training; penetration testing of certain environments; and maintaining cyber insurance; and a dedicated cybersecurity officer.
The risk management and reduction measures we implement for certain of our environments or systems include: policies and procedures designed to address cybersecurity threats, including an incident response policy, acceptable use policy, and vulnerability management policy; internal and/or external security audit assessments of select environments to assess our exposure to cybersecurity threats, compliance with risk mitigation procedures, and the effectiveness of relevant controls; documented risk assessments; encryption of certain data; network security controls in certain systems; physical and electronic access controls in certain environments; asset management, tracking and disposal; systems monitoring of certain systems; employee security training; penetration testing of certain environments; maintaining cyber insurance; and a dedicated cybersecurity leader.
The Chief Legal Officer is responsible for informing the Audit and Risk Committee regarding the Company’s significant cybersecurity threats and risk and meets with the Audit and Risk Committee at periodic or special meetings to review and discuss issues.
The Chief Legal Officer is responsible for informing the Audit and Risk Committee regarding certain significant cybersecurity threats and risks, and meets with the Audit and Risk Committee periodically or at special meetings to review and discuss issues.
Risks from cybersecurity threats are among those that we address in the Company’s general risk management program. As part of our overall risk management processes, the Company maintains various policies related to information security, including an Incident Response Policy and a Cybersecurity Incident Reporting Policy.
Dutch Bros Inc. | Form 10-K | 65 Table of Contents Risks from cybersecurity threats are among those that we address in the Company’s general risk management program. As part of our overall risk management processes, the Company maintains various policies related to information security, including, for example, an Incident Response Policy and a Cybersecurity Incident Reporting Policy.
Under our Cybersecurity Incident Reporting Policy, the Chief Legal Officer is also responsible for communicating to the Audit and Risk Committee the activities of the Company related to the assessments and reporting of potentially significant cybersecurity incidents. Dutch Bros Inc. | Form 10-K | 62 Table of Contents
Under our Cybersecurity Incident Reporting Policy, the Chief Legal Officer is also responsible for communicating to the Audit and Risk Committee the activities of the Company related to the assessments and reporting of potentially significant cybersecurity incidents.
We utilize certain third-party service providers to perform a variety of functions, such as to outsource certain business critical functions, to augment staff for after-hours support, to help track chain of custody for physical PCI devices for our shops, application providers, hosting companies, distributors, supply chain resources, property management, cloud-based infrastructure, data center facilities, encryption and authentication technology, corporate productivity services, and other functions.
We utilize certain third-party service providers to perform a variety of functions, such as outsourcing certain business critical functions, augmenting staff for after-hours support, help tracking chain of custody for physical PCI devices for our shops, providing applications, hosting our systems, distributing our products, property management, providing cloud-based infrastructure, data center facilities, encryption and authentication technology, supporting corporate productivity services, and other functions.
See "Risks Related to Our Business" in Item 1A, Risk Factors for more information. Governance The Audit and Risk Committee of the board of directors is responsible for oversight of the Company’s processes and policies for enterprise risk identification, management, and assessment, including key risks around data privacy, technology, and information security.
Governance The Audit and Risk Committee of the board of directors is responsible for oversight of the Company’s processes and policies for enterprise risk identification, management, and assessment, including certain risks around data privacy, technology, and information security.
Dutch Bros Inc. | Form 10-K | 61 Table of Contents Our business, results of operations, or financial condition could be materially affected as a result of such risks, due to: the cost of and modification of business activities related to prevention or incident response; potential system failure, data loss, fraud or theft, or other material adverse consequences; disruptions, including in operations, due to potential delays in remediation of high risk or critical vulnerabilities; costs of notices and other disclosures that may be required by applicable data privacy and security obligations; or our inability to recover such costs under insurance policies or contractual rights.
Our business, results of operations, financial condition, or reputation could be materially affected as a result of certain risks from cybersecurity threats, including for example, due to: the cost of and modification of business activities and implementation of security measures; system failure, data loss, fraud or theft; disruptions, including in operations; delays in remediation of high risk or critical vulnerabilities; costs of notices and other disclosures that may be required by applicable data privacy and security obligations; or our inability to recover such costs under insurance policies or contractual rights.
Our cybersecurity incident response processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including reporting certain incidents to a cross-functional group responsible for making ongoing assessments of reported incidents, led by our Chief Legal Officer and Chief Technology Officer, and includes members of our standing Disclosure Committee.
Dutch Bros Inc. | Form 10-K | 66 Table of Contents Our cybersecurity incident response processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including reporting certain incidents to a cross-functional group responsible for making ongoing assessments of reported incidents.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our Chief Technology Officer (CTO), Leigh Gower, who has more than 20 years of experience in the information technology field, including work in cybersecurity risk management.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our Chief Technology and Information Officer, Venki Krishnababu, who has over 30 years of experience in the information technology field. Prior to serving the Company, Mr. Krishnababu served in various information technology roles, most recently as Chief Technology Officer, at lululemon athletica inc.
Removed
Prior to serving the Company, our CTO gained cybersecurity experience serving as Vice President, Technology at Blue Nile, as Senior Director, Product & Technology at T-Mobile, and as Management Consultant at Slalom Consulting.
Added
See "Risks Related to Our Business" in Item 1A, Risk Factors for more information and a description of the risks from cybersecurity threats that materially affect the Company.
Added
Our Chief Technology and Information Officer and his team are responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
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This group is led by our Chief Legal Officer and Chief Technology and Information Officer, and includes members of our standing Disclosure Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our company-operated shops, we own and lease the following facilities: Location Primary Function(s) Square Feet Owned or Leased Grants Pass, Oregon Corporate headquarters 16,000 Owned Grants Pass, Oregon Headquarters office space 26,000 Leased Grants Pass, Oregon Roasting and packing facility 36,000 Owned Grants Pass, Oregon Roasting and warehouse facility 21,000 Leased Grants Pass, Oregon Aircraft hangar and transportation operations 84,000 Leased Scottsdale, Arizona Office space 7,000 Leased Our principal executive offices are located at 110 SW 4th Street, Grants Pass, Oregon, 97526.
Biggest changeDutch Bros Inc. | Form 10-K | 67 Table of Contents In addition to our company-operated shops, we own and lease the following facilities: Location Primary Function(s) Square Feet Owned or Leased Grants Pass, Oregon Headquarters office space 21,000 Leased Grants Pass, Oregon Roasting and packing facility 36,000 Owned Grants Pass, Oregon Roasting and warehouse facility 21,000 Leased Melissa, Texas Roasting and packing facility 65,000 Owned Scottsdale, Arizona Office space 25,000 Leased Tempe, Arizona Headquarters office space 136,000 Leased Our principal executive offices are located at 300 N.
For additional information regarding leases, see NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies and NOTE 8 — Leases in our consolidated financial statements, included elsewhere in this Form 10-K. Dutch Bros Inc. | Form 10-K | 63 Table of Contents
For additional information regarding leases, see NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies and NOTE 8 — Leases in our consolidated financial statements, included elsewhere in this Form 10-K.
ITEM 2. PROPERTIES As of December 31, 2023, we had 542 company-operated and 289 franchise shops with 831 total shops in 16 states. The chart below shows our properties by state as of December 31, 2023.
ITEM 2. PROPERTIES As of December 31, 2024, we had 670 company-operated and 312 franchise shops with 982 total shops in 18 states. The chart below shows our properties by state as of December 31, 2024.
We believe our current facilities are suitable for our near term needs, and expect to add additional capacity related to the planned shift of approximately 40% of our total support staff to Arizona. In addition, we expect to continue to add additional capacity on an as-needed basis.
Valley Drive, Grants Pass, Oregon, 97526. We believe our current facilities are suitable for our near-term needs. In addition, we expect to continue to add additional capacity on an as-needed basis.
Removed
We are in the process of constructing a roasting facility in Texas to service our shops in new markets as we expand eastward, in line with our growth strategy.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePursuant to Section 3(a)(9) of the Securities Act, on November 15, 2023 and December 18, 2023, we made an unregistered issuance of our Class A common stock via (i) exchange of approximately 4.2 million Dutch Bros OpCo Class A common units and conversion of approximately 1.4 million shares of Dutch Bros Inc.
Biggest changeDuring the year ended December 31, 2024, pursuant to Section 3(a)(9) of the Securities Act, we made unregistered issuances of our Class A common stock via exchange of approximately 13.8 million Dutch Bros OpCo Class A common units (and corresponding cancellation of the same number of shares of Class C common stock) and conversion of approximately 4.4 million shares of our Class D common stock, held by our Sponsor for shares of our Class A common stock on a one-for-one basis.
Such shares of Class A common stock were then reserved for sale directly by our Co-Founder pursuant to a Rule 10b5-1 trading arrangement, and no proceeds were received by the Company.
Dutch Bros Inc. | Form 10-K | 70 Table of Contents Such shares of Class A common stock were then reserved for sale directly by our Co-Founder pursuant to a Rule 10b5-1 trading arrangement, and no proceeds were received by the Company.
Dutch Bros Inc. | Form 10-K | 65 Table of Contents September 15, 2021 December 31, 2021 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Dutch Bros Inc. $ 100.00 $ 138.79 $ 76.85 $ 86.23 $ 77.56 $ 63.39 $ 86.34 S&P 500 Index $ 100.00 $ 106.37 $ 85.69 $ 91.71 $ 99.32 $ 95.70 $ 106.45 S&P 500 Consumer Discretionary Index $ 100.00 $ 109.67 $ 68.46 $ 79.25 $ 90.59 $ 86.06 $ 96.55 The above Stock Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
Dutch Bros Inc. | Form 10-K | 69 Table of Contents Sep 15, 2021 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Dec 31, 2024 Dutch Bros Inc. $ 100.00 $ 138.79 $ 76.85 $ 86.34 $ 89.97 $ 112.87 $ 87.32 $ 142.80 S&P 500 Index $ 100.00 $ 106.37 $ 85.69 $ 106.45 $ 117.27 $ 121.87 $ 128.61 $ 131.27 S&P 500 Consumer Discretionary Index $ 100.00 $ 109.67 $ 68.46 $ 96.55 $ 101.14 $ 101.59 $ 109.31 $ 124.68 The above Stock Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
Stockholders As of December 31, 2023, our Class A common stock was held by 105 holders of record. The actual number of stockholders of Class A common stock is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
The actual number of stockholders of Class A common stock is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Recent Sales of Unregistered Securities On October 23, 2023, pursuant to Section 3(a)(9) of the Securities Act, we made an unregistered issuance of our Class A common stock via exchange of approximately 4.1 million Dutch Bros OpCo Class A common units held by our Co-Founder for shares of our Class A common stock on a one-for-one basis.
During the year ended December 31, 2024, pursuant to Section 3(a)(9) of the Securities Act, we made an unregistered issuance of our Class A common stock via exchange of approximately 2.4 million Dutch Bros OpCo Class A common units (and corresponding cancellation of the same number of shares of Class B common stock) held by our Co-Founder for shares of our Class A common stock on a one-for-one basis.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. As of December 31, 2023, we also had three holders of record of our Class B common stock, two holders of record of our Class C common stock, and two holders of record of our Class D common stock.
As of December 31, 2024, we also had three holders of record of our Class B common stock, and one holder of record of our Class C common stock. Dividend Policy We have not declared or paid dividends on our Class A common stock.
Removed
Dividend Policy We have not paid dividends on our common stock, and we do not anticipate paying dividends in the foreseeable future.
Added
Since June 2024, there have been no shares of Class D common stock outstanding. Stockholders As of December 31, 2024, our Class A common stock was held by 122 holders of record.
Removed
Class D common stock, and (ii) exchange of approximately 1.0 million Dutch Bros OpCo Class A common units and conversion of approximately 0.3 million shares of Dutch Bros Inc. Class D common stock, respectively, held by our Sponsor for shares of our Class A common stock on a one-for-one basis.
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Holders of our Class B common stock and Class C common stock are not entitled to participate in any dividends. We intend to continue to retain earnings for our use in operation and expansion of our business.
Added
Any future determination to pay dividends to holders of our Class A common stock will be at the discretion of our Board and will depend upon many factors, including our results of operations, financial condition, capital requirements, restrictions in our debt agreements, and other factors that our Board deems relevant.
Added
Recent Sales of Unregistered Securities The Continuing Members, from time-to-time, may require us to exchange all or a portion of their Dutch Bros OpCo Class A common units (together with the cancellation of any shares of our Class B common stock or Class C common stock paired with such units) for shares of Class A common stock on a one-for-one basis.
Added
The shares of Class B common stock or Class C common stock paired with such Dutch Bros OpCo Class A common units will be canceled on a one-for-one basis upon any such issuance of Class A common stock.
Added
Issuer Purchases of Equity Securities The following table summarizes purchases of Class A common stock during the three months ended December 31, 2024: Period Total Number of Shares Purchased 1 Weighted-Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2024 — — — — November 1 - 30, 2024 4,092 $ 33.40 — — December 1 - 31, 2024 — — — — _________________ 1 In connection with the vesting of RSUs granted pursuant to the Dutch Bros Inc. 2021 Equity Incentive Plan, as amended, shares of Class A common stock are delivered to Dutch Bros by employees to satisfy tax withholding obligations.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeBeverage, Food, and Packaging Costs Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Beverage, food and packaging costs $ 230,133 $ 171,864 $ 102,222 $ 58,269 33.9 % $ 69,642 68.1 % As a percentage of company-operated shop revenues 26.9 % 26.9 % 25.3 % N/A — bps N/A 160 bps Dutch Bros Inc. | Form 10-K | 73 Table of Contents Year Ended December 31, 2023 v. 2022 The beverage, food and packaging costs impacts for the year-over-year comparison, in dollars and basis points (as a percentage of current year company-operated shop revenues), were driven by the following: (in thousands, except BPS; unaudited) $ BPS Shop weeks $ 49,089 N/A Ingredient costs 4,241 50 Volume 971 N/A Timing N/A 30 Pricing impacts N/A (130) Other 3,968 50 Total change $ 58,269 — Labor Costs Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Labor costs $ 230,505 $ 182,861 $ 122,161 $ 47,644 26.1 % $ 60,700 49.7 % As a percentage of company-operated shop revenues 26.9 % 28.6 % 30.3 % N/A (170) bps N/A (170) bps Year Ended December 31, 2023 v. 2022 The labor costs impacts for the year-over-year comparison, presented in dollars and basis points (as a percentage of current year company-operated shop revenues), were driven by the following: (in thousands, except BPS; unaudited) $ BPS Shop weeks $ 52,966 N/A Staffing management (8,276) (100) Volume 517 N/A Timing N/A 20 Pricing impacts N/A (130) Other 2,437 40 Total change $ 47,644 (170) Occupancy and Other Costs Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Occupancy and other costs $ 140,895 $ 109,366 $ 63,570 $ 31,529 28.8 % $ 45,796 72.0 % As a percentage of company-operated shop revenues 16.4 % 17.1 % 15.7 % N/A (70) bps N/A 140 bps Dutch Bros Inc. | Form 10-K | 74 Table of Contents Year Ended December 31, 2023 v. 2022 The occupancy and other costs impacts for the year-over-year comparison, presented in dollars and basis points (as a percentage of current year company-operated shop revenues), were driven by the following: (in thousands, except BPS; unaudited) $ BPS Shop weeks $ 31,747 N/A Timing N/A 10 Pricing impacts N/A (80) Other (218) — Total change $ 31,529 (70) Pre-opening Costs Year Ended December 31, (in thousands, except shop data; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Pre-opening costs $ 14,083 $ 17,986 $ 12,801 $ (3,903) (21.7) % $ 5,185 40.5 % As a percentage of company-operated shop revenues 1.6 % 2.8 % 3.2 % N/A (120) bps N/A (40) bps New company-operated shops opened 146 120 82 26 21.7 % 38 46.3 % Pre-opening costs per new company-operated shop $ 96 $ 150 $ 156 $ (54) (36.0) % $ (6) (3.8) % Year Ended December 31, 2023 v. 2022 The decrease in pre-opening costs was primarily driven by opening a higher proportion of shops in existing markets, which do not require as much support, in the year ended December 31, 2023 as compared to 2022.
Biggest changeDutch Bros Inc. | Form 10-K | 78 Table of Contents Pre-opening Costs Year Ended December 31, (in thousands, except shop data; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Pre-opening costs $15,133 $14,083 $17,986 $1,050 7.5% $(3,903) (21.7)% As a percentage of company-operated shop revenues 1.3% 1.6% 2.8% N/A (30) bps N/A (120) bps New company-operated shops opened 128 146 120 (18) (12.3)% 26 21.7% Pre-opening costs per new company-operated shop $118 $96 $150 $22 22.9% $(54) (36.0)% Year Ended December 31, 2024 v. 2023 The increase in pre-opening costs was primarily driven by increased travel for setup and training teams and lease expense related to unopened shops, in the year ended December 31, 2024 as compared to the same period in 2023.
Management uses these metrics as indicators of our system’s overall financial health, growth and future expansion prospects. 5 Company-operated and franchise shops operating weeks are calculated based on the number of operating days for the shop base and dividing by 7. Our shop base is defined as shops opened as of the period end date.
Management uses these metrics as indicators of our system’s overall financial health, growth and future expansion prospects. 5 Company-operated and franchise shop operating weeks are calculated based on the number of operating days for the shop base and dividing by 7. Our shop base is defined as shops opened as of the period end date.
Our current and long-term material cash requirements as of December 31, 2023, primarily include the following: • Debt Obligations: Refer to NOTE 9 — Debt, of the notes to the consolidated financial statements, included elsewhere in this Form 10-K, for further information of our obligations and the timing of expected payments. • Operating and Finance Leases: Refer to NOTE 8 — Leases, of the notes to the consolidated financial statements, included elsewhere in this Form 10-K, for further information of our obligations and the timing of expected payments. • Purchase Obligations: include all legally binding contracts, including firm minimum commitments for inventory purchases, commitments for the purchase, construction or remodeling of real estate facilities, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts.
Our current and long-term material cash requirements as of December 31, 2024, primarily include the following: • Debt Obligations: Refer to NOTE 9 — Debt, of the notes to the consolidated financial statements, included elsewhere in this Form 10-K, for further information of our obligations and the timing of expected payments. • Operating and Finance Leases: Refer to NOTE 8 — Leases, of the notes to the consolidated financial statements, included elsewhere in this Form 10-K, for further information of our obligations and the timing of expected payments. • Purchase Obligations: include all legally binding contracts, including firm minimum commitments for inventory purchases, commitments for the purchase, construction or remodeling of real estate facilities, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts.
We will continue to evaluate further pricing actions to protect our operating results, however, if there is a time lag between increasing commodity prices and our ability to increase menu prices or take other action in response, or if we choose not to pass on the cost increases by increasing menu prices, our operating results could be negatively affected.
We will continue to evaluate further pricing actions to protect our operating results, however, if there is a time lag between increasing costs and our ability to increase menu prices or take other action in response, or if we choose not to pass on the cost increases by increasing menu prices, our operating results could be negatively affected.
As of December 31, 2023, purchase obligations were approximately $180 million, of which substantially all are expected to be paid within one to two years. • TRAs Obligations: Refer to NOTE 11 — Tax Receivable Agreements and NOTE 17 — Commitments and Contingencies, of the notes to the consolidated financial statements, included elsewhere in this Form 10-K, for further information of our obligations.
As of December 31, 2024, purchase obligations were approximately $210 million, of which substantially all are expected to be paid within one to two years. • TRAs Obligations: Refer to NOTE 11 — Tax Receivable Agreements and NOTE 17 — Commitments and Contingencies, of the notes to the consolidated financial statements, included elsewhere in this Form 10-K, for further information of our obligations.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Annual Report on Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Annual Report on Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 23, 2024.
Further, the section of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Further, the section of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
While these pressures have impacted our operating results, we have taken measures over the past year to gradually increase our menu prices, adjust our Dutch Rewards loyalty program, and make operating adjustments that increase productivity to help offset them. Menu price increases may lead to decreases in consumer demand.
While these pressures have impacted our operating results, we have taken measures to gradually increase our menu prices, adjust our Dutch Rewards loyalty program, and make operating adjustments that increase productivity to help offset them. Menu price increases may lead to decreases in consumer demand.
Year Ended December 31, (unaudited) 2023 2022 2021 Systemwide shop base 503 414 354 Company-operated shop base 246 173 120 4 Systemwide sales and systemwide same shop sales are operating measures that include sales at company-operated shops and sales at franchised shops during the comparable periods presented.
Year Ended December 31, (unaudited) 2024 2023 2022 Systemwide shop base 641 503 414 Company-operated shop base 370 246 173 4 Systemwide sales and systemwide same shop sales are operating measures that include sales at company-operated shops and sales at franchised shops during the comparable periods presented.
The operating weeks calculations, reflect re-acquired franchises through 2022. Management uses these metrics as indicators of our system’s overall financial health, growth and future expansion prospects. 6 Dutch Rewards, a digitally-based rewards program available exclusively through the Dutch Rewards mobile app, was launched February 2021.
The operating weeks calculations reflect re-acquired franchises through 2022. Management uses these metrics as indicators of our system’s overall financial health, growth and future expansion prospects. 6 Dutch Rewards is our digitally based rewards program available exclusively through the Dutch Rewards app.
Management uses this metric as an indicator of shop growth and future expectations of mature locations. 3 Same shop sales reflects the change in year-over-year sales, for the comparable shop base, which we define as shops open for 15 complete months or longer as of the first day of the reporting period.
Management uses these metrics as an indicator of shop growth and future expectations of mature locations. 3 Same shop sales represents the estimated percentage change in year-over-year sales, for the comparable shop base, which we define as shops open for 15 complete months or longer as of the first day of the reporting period.
General Macroeconomic Uncertainties As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in macroeconomic conditions. A continued economic downturn may have a material adverse effect on our business, financial condition or results of operations.
Impact of Global Events General Macroeconomic Uncertainties As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in macroeconomic conditions. Inflation may have a material adverse effect on our business, financial condition or results of operations.
Variations in judgment applied to these estimates could result in material differences such as the following: Dutch Bros Inc. | Form 10-K | 81 Table of Contents • Lease expenses, including rent, depreciation and amortization • Present value of lease right-of-use assets and lease liabilities • Reasonably certain lease term See NOTE 8 — Leases for further details.
Variations in judgment applied to these estimates could result in material differences such as the following: • Lease expenses, including rent, depreciation and amortization • Present value of lease right-of-use assets and lease liabilities • Reasonably certain lease term See NOTE 8 — Leases for further details.
Credit Facility JP Morgan Credit Facility On August 4, 2023, the Company amended its senior secured credit facility, dated February 28, 2022 with JP Morgan Chase Bank, N.A. (as amended, the 2022 Credit Facility) to increase borrowing capacity by $150 million to a total of $650 million.
Credit Facility JPMorgan Credit Facility On August 4, 2023, we amended our senior secured credit facility, dated February 28, 2022 with JPMorgan Chase Bank, N.A. (as amended, the 2022 Credit Facility) to increase borrowing capacity by $150 million to a total of $650 million.
We also established a catastrophic leave policy that provided paid leave to employees who were required to quarantine due to in-shop exposures and could not work their regular hours. The catastrophic leave program was retired in May 2023.
COVID-19: Catastrophic leave Costs related to a catastrophic leave policy that provided paid leave to employees who were required to quarantine due to in-shop exposures and could not work their regular hours. The catastrophic leave program was retired in May 2023.
Given this strategic initiative's magnitude and scope, the Company does not expect such costs will recur in the foreseeable future. The Company does not consider such costs reflective of the ongoing costs necessary to operate its business.
Given this strategic initiative's magnitude and scope, we do not expect such costs will recur in the foreseeable future, and do not consider such costs reflective of the ongoing costs necessary to operate our business.
Non-GAAP adjustments Below are the definitions of the non-GAAP adjustments that are used in the calculation of our non-GAAP measures, as described above. Equity-based compensation Non-cash expenses related to the grant and vesting of stock awards, restricted stock awards and restricted stock units in Dutch Bros Inc. and/or Profit Interest Units in Dutch Bros OpCo to certain eligible employees.
Non-GAAP adjustments Below are the definitions of the non-GAAP adjustments that are used in the calculation of our non-GAAP measures, as described above. Equity-based compensation Non-cash expenses related to the grant and vesting of stock awards, including RSAs and RSUs, in Dutch Bros Inc. to certain eligible employees.
Cash Requirements We believe that proceeds from our Follow-On Offering, 2022 Credit Facility, and cash provided by operating activities are adequate to fund our debt service requirements, lease obligations, and working capital obligations for at least the next 12 months.
Cash Requirements We believe that cash provided by operating activities and proceeds from our 2022 Credit Facility are adequate to fund our debt service requirements, lease obligations, cash distributions required by the OpCo LLC Agreement and the TRAs, and working capital obligations for at least the next 12 months.
Deferred taxes are recorded using the asset and liability method, whereby tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Dutch Bros Inc. | Form 10-K | 84 Table of Contents Deferred taxes are recorded using the asset and liability method, whereby tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Dutch Bros Inc. | Form 10-K | 80 Table of Contents Interest on borrowings under the 2022 Credit Facility is based on (a) the Alternate Base Rate plus an applicable margin, or (b) the Adjusted Term SOFR plus an applicable margin, and is payable in accordance with the selected interest rate period (at least quarterly) and upon maturity.
Interest on borrowings under the 2022 Credit Facility is based on (a) the Alternate Base Rate plus an applicable margin, or (b) the Adjusted Term SOFR plus an applicable margin, and is payable in accordance with the selected interest rate period (at least quarterly) and upon maturity.
We currently expect to fund our current and long-term material capital requirements with operating cash flows and, as needed, additional proceeds from our 2022 Credit Facility, but we may also seek additional debt or equity financing.
Further, the payments that we may be required to make under the TRAs may be significant. We currently expect to fund our current and long-term material capital requirements with operating cash flows and, as needed, additional proceeds from our 2022 Credit Facility, but we may also seek additional debt or equity financing.
Depreciation and Amortization Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Depreciation and amortization $ 62,088 $ 36,306 $ 16,291 $ 25,782 71.0 % $ 20,015 122.9 % As a percentage of company-operated shop revenues 7.2 % 5.6 % 4.0 % N/A 160 bps N/A 160 bps Year Ended December 31, 2023 v. 2022 The increase in depreciation and amortization was primarily driven by the opening of 146 new company-operated shops during 2023.
Depreciation and Amortization Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Depreciation and amortization $86,809 $62,088 $36,306 $24,721 39.8% $25,782 71.0% As a percentage of company-operated shop revenues 7.4% 7.2% 5.6% N/A 20 bps N/A 160 bps Year Ended December 31, 2024 v. 2023 The increase in depreciation and amortization was primarily driven by the opening of 128 new company-operated shops during 2024.
Adjusted EBITDA — definition and/or calculation Defined as EBITDA (as defined above), excluding equity-based compensation, expenses and donations associated with equity offerings, COVID-19: “Thank You” pay and catastrophic leave expenses, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executives transitions costs, (gain) loss on the remeasurement of the liability related to the TRAs, estimated expenses related to certain legal disputes, and organization realignment and restructuring costs.
Dutch Bros Inc. | Form 10-K | 85 Table of Contents Adjusted EBITDA — definition and/or calculation Defined as EBITDA, excluding equity-based compensation, expenses associated with equity offerings, COVID-19: catastrophic leave expenses, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executives transitions costs, (gain) loss on the remeasurement of the liability related to the TRAs, estimated expenses related to certain legal disputes, sale of aircraft, and organization realignment and restructuring costs.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Segment contribution Definition and/or calculation Segment gross profit, before depreciation and amortization.
Our future capital requirements may vary materially from period to period and will depend on many factors, primarily our expansion and growth by opening additional company-operated shops and/or reacquiring existing franchised shops.
Our future capital requirements may vary materially from period to period and will depend on many factors, primarily our expansion and growth by opening additional company-operated shops and/or reacquiring existing franchised shops, and our large-scale organization realignment including relocation of key business operations to Arizona.
Critical Accounting Estimates The methods, assumptions, and estimates that we use in applying our accounting policies may require us to apply judgments regarding matters that are inherently uncertain.
Dutch Bros Inc. | Form 10-K | 83 Table of Contents Critical Accounting Estimates The methods, assumptions, and estimates that we use in applying our accounting policies may require us to apply judgments regarding matters that are inherently uncertain.
As of December 31, 2023, we recognized $290.9 million of liabilities relating to our obligations under the TRAs.
As of December 31, 2024, we recognized $627.8 million of liabilities relating to our obligations under the TRAs.
Management uses this metric as an indicator of customer loyalty adoption of our Dutch Rewards mobile app and future promotional plans. 7 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Company-operated Shop Results The results for our company-operated shops segment were as follows: Year Ended December 31, 2023 2022 2021 (in thousands; unaudited) $ % $ % $ % Company-operated shop revenues 857,939 100.0 639,710 100.0 403,746 100.0 Beverage, food, and packaging costs 230,133 26.9 171,864 26.9 102,222 25.3 Labor costs 230,505 26.9 182,861 28.6 122,161 30.3 Occupancy and other costs 140,895 16.4 109,366 17.1 63,570 15.7 Pre-opening costs 14,083 1.6 17,986 2.8 12,801 3.2 Depreciation and amortization 62,088 7.2 36,306 5.6 16,291 4.0 Company-operated shop costs and expenses 677,704 79.0 518,383 81.0 317,045 78.5 Company-operated shop gross profit 180,235 21.0 121,327 19.0 86,701 21.5 Company-operated shop contribution 1 242,323 28.2 157,633 24.6 102,992 25.5 _________________ 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Dutch Bros Inc. | Form 10-K | 72 Table of Contents Company-operated Shops Segment Performance Company-operated Shop Revenues Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Company-operated shop revenues $ 857,939 $ 639,710 $ 403,746 $ 218,229 34.1% $ 235,964 58.4% Year Ended December 31, 2023 v. 2022 The Company-operated shop revenue increase was primarily driven by the following: + $208.6 million from company-operated shops opened in the last 15 months. + $9.6 million from an increase in same shop sales in the comparable shop base. 1 _________________ 1 For purposes of calculating company-operated same shop revenue, the revenue for 246 company-operated shops was included in the comparable shop base. _________________ 1 The comparable shop bases were 120, 173, and 246 for the three years ended December 31, 2021, 2022, and 2023, respectively.
Management uses this metric as an indicator of customer loyalty adoption of our Dutch Rewards app and future promotional plans. 7 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Dutch Bros Inc. | Form 10-K | 76 Table of Contents Company-operated Sho p Results Results for our company-operated shops segment were as follows: Year Ended December 31, 2024 2023 2022 (in thousands; unaudited) $ % $ % $ % Company-operated shop revenues 1,165,830 100.0 857,939 100.0 639,710 100.0 Beverage, food, and packaging costs 296,752 25.5 230,133 26.9 171,864 26.9 Labor costs 315,805 27.1 230,505 26.9 182,861 28.6 Occupancy and other costs 191,372 16.4 140,895 16.4 109,366 17.1 Pre-opening costs 15,133 1.3 14,083 1.6 17,986 2.8 Depreciation and amortization 86,809 7.4 62,088 7.2 36,306 5.6 Company-operated shop costs and expenses 905,871 77.7 677,704 79.0 518,383 81.0 Company-operated shop gross profit 259,959 22.3 180,235 21.0 121,327 19.0 Company-operated shop contribution 1 346,768 29.7 242,323 28.2 157,633 24.6 _________________ 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Company-operated Shops Segment Performance Company-operated Shop Revenue Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Company-operated shop revenue $1,165,830 $857,939 $639,710 $307,891 35.9% $218,229 34.1% Year Ended December 31, 2024 v. 2023 The company-operated shop revenue increase was driven by $262.3 million from newly opened shops not yet in the comparable shop base and $45.6 million from an increase in same shop sales within the comparable shop base. _________________ 1 The comparable same shop bases were 370, 246, and 173 for the three years ended December 31, 2024, 2023, and 2022, respectively.
Executives transition Employee severance and related benefit costs, as well as sign-on bonus(es) for several executive-level transitions occurring in 2022 and 2023. TRAs remeasurements (Gain) loss impacts on consolidated statements of operations related to adjustments of our TRAs liabilities. Dutch Bros Inc. | Form 10-K | 84 Table of Contents Legal proceedings Estimated loss accrual related to certain legal disputes.
Dutch Bros Inc. | Form 10-K | 86 Table of Contents Executive transitions Employee severance and related benefit costs, as well as sign-on bonus(es) for several executive-level transitions occurring in 2022 and 2023, and amortized through the first quarter of 2024. TRAs remeasurements (Gain) loss impacts related to adjustments of our TRAs liabilities.
Adjusted selling, general, and administrative (in dollars and as a percentage of revenue) Definition and/or calculation Selling, general, and administrative expenses, excluding equity-based compensation expense, expenses and donations associated with equity offerings, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executives transitions, estimated expense related to certain legal disputes, and organization realignment and restructuring costs.
Adjusted selling, general, and administrative Definition and/or calculation Selling, general, and administrative expenses, excluding depreciation and amortization, equity-based compensation expense, expenses associated with equity offerings, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executive transitions, legal proceedings, and organization realignment and restructuring costs.
EBITDA, Adjusted EBITDA (in dollars and as a percentage of revenue) EBITDA — definition and/or calculation Net income (loss) before interest expense (net of interest income), income tax expense (benefit), and depreciation and amortization expense.
EBITDA, Adjusted EBITDA EBITDA — definition and/or calculation Net income before interest expense (net of interest income), income tax expense, and depreciation and amortization expense.
Liquidity and Capital Resources Cash Overview We had cash and cash equivalents of $133.5 million and $20.2 million as of December 31, 2023 and December 31, 2022, respectively. For the year ended December 31, 2023, our principal sources of liquidity were cash flows from our Follow-On Offering in September 2023, our revolving credit facility, and operations.
Liquidity and Capital Resources Cash Overview We had cash and cash equivalents of $293.4 million and $133.5 million as of December 31, 2024 and December 31, 2023, respectively. For the year ended December 31, 2024, our principal sources of liquidity were cash flows from operations and our delayed draw term loan facility.
While we are not able to fully predict the potential impacts of these conditions, we do not currently believe any potential impacts of these macroeconomic conditions would be material to our business.
While we are not able to fully predict the potential impacts of these conditions, we do not currently believe any potential impacts of these macroeconomic conditions would be material to our business. Minimum Wage Increases We continued to experience the effects of legislated minimum wage increases that took effect in 2024 in certain states.
Management uses this metric as an indicator of shop growth and future expansion strategy. The number of shops included in the systemwide and company-operated comparable bases for the respective periods are presented in the following table.
Same shop sales can be impacted by changes in customer transaction counts and by changes in the per-ticket amounts. Management uses these metrics as an indicator of shop growth and future expansion strategy. The number of shops included in the systemwide and company-operated comparable bases for the respective periods are presented in the following table.
Dutch Bros Inc. | Form 10-K | 79 Table of Contents From time to time, we may explore additional financing sources which could include equity, equity‑linked, and debt financing arrangements.
From time to time, we may explore additional financing sources which could include equity, equity‑linked, and debt financing arrangements.
Dutch Bros Inc. | Form 10-K | 82 Table of Contents Non-GAAP Financial Measures In addition to disclosing financial results in accordance with GAAP, this document contains references to the non-GAAP financial measures below.
Non-GAAP Financial Measures In addition to disclosing financial results in accordance with GAAP, this document contains references to the non-GAAP financial measures below.
The interest rate swap matures on February 28, 2027. There were no changes to the interest rate swap contract resulting from the amendment to our credit facility. See NOTE 9 — Debt and NOTE 10 — Derivative Financial Instruments for additional details related to our 2022 Credit Facility and interest rate swap contract.
See NOTE 9 — Debt and NOTE 10 — Derivative Financial Instruments for additional details related to our 2022 Credit Facility and interest rate swap contract.
We expect these inflationary pressures to continue to affect our operating results in the foreseeable future. For example, California’s minimum wage will increase to $20 per hour beginning in April 2024 for covered employees in our industry.
We expect these pressures to continue to affect our operating results in the foreseeable future. For example, California’s minimum wage increased to $20 per hour effective April 2024 for covered employees in our industry. Additionally, several other states that we operate in have increased their minimum wage requirements in 2025.
Dutch Bros Inc. | Form 10-K | 70 Table of Contents Key Performance Indicators The key performance indicators (KPIs) that we use to effectively manage and evaluate our business are as follows: Year Ended December 31, (in thousands, except shop count data; unaudited) 2023 2022 2021 Shop count, beginning of period Company-operated 396 271 182 Franchised 275 267 259 Total shop count 671 538 441 Company-operated new openings 146 120 82 Franchised new openings 13 13 16 Acquisition of franchise shops — 5 7 Re-openings / (Closures) 1 1 — (1) Shop count, end of period Company-operated 542 396 271 Franchised 289 275 267 Total shop count 831 671 538 Systemwide AUV 2 $ 1,973 $ 1,924 $ 1,850 Company-operated shops AUV 2 $ 1,902 $ 1,895 $ 1,752 Systemwide same shop sales 3, 4 2.8 % 1.0 % 8.4 % Company-operated same shop sales 3 1.5 % 0.6 % 9.0 % Systemwide sales 4 $ 1,444,433 $ 1,163,182 $ 913,822 Company-operated operating weeks 5 24,395 17,489 11,526 Franchising and other operating weeks 5 14,624 13,828 13,175 Dutch Rewards member registrations 6 2,252 2,004 3,202 Year Ended December 31, 2023 2022 2021 (in thousands; unaudited) $ % $ % $ % Company-operated shop revenues 857,939 100.0 639,710 100.0 403,746 100.0 Company-operated shop gross profit 180,235 21.0 121,327 19.0 86,701 21.5 Company-operated shop contribution 7 242,323 28.2 157,633 24.6 102,992 25.5 Selling, general, and administrative expenses 205,074 21.2 183,528 24.8 264,529 53.1 Adjusted selling, general, and administrative expenses 7 160,749 16.6 136,441 18.5 96,498 19.4 Net income (loss) 9,952 1.0 (19,253) (2.6) (117,931) (23.7) Adjusted EBITDA 7 160,062 16.6 91,181 12.3 84,132 16.9 Dutch Bros Inc. | Form 10-K | 71 Table of Contents _________________ 1 Represents the re-opening of a shop that was temporarily closed in 2021. 2 AUVs are determined based on the net sales for any trailing twelve-month period for systemwide and company-operated shops that have been open a minimum of 15 months.
We have two reportable operating segments: Company-operated shops and Franchising and other. _________________ 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. 2024 vs 2023 2023 vs 2022 Increase in total shops 18.2 % 23.8 % Increase in total revenue 32.6 % 30.7 % Dutch Bros Inc. | Form 10-K | 74 Table of Contents Key Performance Indicators The key performance indicators that we use to effectively manage and evaluate our business are as follows: Year Ended December 31, (in thousands, except shop count data; unaudited) 2024 2023 2022 Shop count, beginning of period Company-operated 542 396 271 Franchised 289 275 267 Total shop count 831 671 538 Company-operated new openings 128 146 120 Franchised new openings 23 13 13 Acquisition of franchise shops — — 5 Re-openings 1 — 1 — Shop count, end of period Company-operated 670 542 396 Franchised 312 289 275 Total shop count 982 831 671 Systemwide AUV 2 $ 2,018 $ 1,973 $ 1,924 Company-operated shops AUV 2 $ 1,933 $ 1,902 $ 1,895 Systemwide same shop sales 3, 4 5.3 % 2.8 % 1.0 % Ticket 5.4 % 7.3 % 4.8 % Transactions (0.1) % (4.5) % (3.8) % Company-operated same shop sales 3 6.8 % 1.5 % 0.6 % Ticket 5.3 % 7.2 % 4.7 % Transactions 1.5 % (5.7) % (4.1) % Systemwide sales 4 $ 1,819,018 $ 1,444,433 $ 1,163,182 Company-operated shops operating weeks 5 31,708 24,395 17,489 Franchising shops operating weeks 5 15,579 14,624 13,828 Dutch Rewards transactions as a percentage of total transactions 6 67.8 % 64.5 % 62.3 % Dutch Bros Inc. | Form 10-K | 75 Table of Contents Year Ended December 31, 2024 2023 2022 (in thousands; unaudited) $ % $ % $ % Company-operated shop revenues 1,165,830 100.0 857,939 100.0 639,710 100.0 Company-operated shop gross profit 259,959 22.3 180,235 21.0 121,327 19.0 Company-operated shop contribution 7 346,768 29.7 242,323 28.2 157,633 24.6 Selling, general, and administrative expenses 234,036 18.3 205,074 21.2 183,528 24.8 Adjusted selling, general, and administrative expenses 7 202,720 15.8 159,101 16.5 133,725 18.1 Net income (loss) 66,450 5.2 9,952 1.0 (19,253) (2.6) Adjusted EBITDA 7 230,283 18.0 160,062 16.6 91,181 12.3 _________________ 1 Re-opening of a shop that was temporarily closed in 2021. 2 AUVs are determined based on the net sales for any trailing twelve-month period for systemwide and company-operated shops that have been open a minimum of 15 months.
Adjusted EBITDA in dollars (as defined), taken as a percentage of total revenue. Usefulness to management and investors These non-GAAP measures are supplemental operating performance measures we believe facilitate comparisons to historical performance and competitors’ operating results.
Usefulness to management and investors These non-GAAP measures are supplemental operating performance measures we believe facilitate comparisons to historical performance and competitors’ operating results.
Our principal uses of liquidity for the year ended December 31, 2023 were the payoff of our revolving credit facility, and to fund our new shop builds and other working capital needs. For additional information related to the Follow-On Offering, see below.
Our principal uses of liquidity for the year ended December 31, 2024 were to fund our new shop builds, our new Texas roasting facility, and other working capital needs.
For the year ended December 31, 2023, we generated $965.8 million of revenue, $10.0 million net income, and $0.03 income per diluted share.
For the year ended December 31, 2024, we generated $1.3 billion of revenue, $66.5 million net income, and $0.34 income per diluted share.
Income Tax Expense (Benefit) Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Income tax expense (benefit) $ 6,967 $ 2,599 $ (1,628) $ 4,368 168.1 % $ 4,227 (259.6)% Effective tax rate 41.2 % (15.6) % 1.4 % N/A N/M N/A N/M Year Ended December 31, 2023 v. 2022 The increase in tax expense was primarily driven by increased current year pre-tax income and changes in the state earnings mix, partially offset by increased credits.
Income Tax Expense Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Income tax expense $18,435 $6,967 $2,599 $11,468 164.6% $4,368 168.1% Effective tax rate 21.7% 41.2% (15.6)% N/A N/M N/A N/M Year Ended December 31, 2024 v. 2023 The increase in tax expense was primarily driven by increased current year pre-tax income and the increase in our ownership interest of Dutch Bros OpCo, changes in state earnings mix, and its impact on deferred taxes.
Dutch Bros Inc. | Form 10-K | 78 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Net cash provided by operating activities $ 139,915 $ 59,883 $ 80,375 $ 80,032 133.6% $ (20,492) (25.5)% Net cash used in investing activities (227,280) (192,572) (121,089) (34,708) 18.0 (71,483) 59.0 Net cash provided by financing activities 200,732 134,361 27,580 66,371 49.4% 106,781 N/M Net increase (decrease) in cash and cash equivalents $ 113,367 $ 1,672 $ (13,134) $ 111,695 6680.3% $ 14,806 (112.7)% Cash and cash equivalents at beginning of period 20,178 18,506 31,640 1,672 9.0 (13,134) (41.5) Cash and cash equivalents at end of period $ 133,545 $ 20,178 $ 18,506 $ 113,367 561.8% $ 1,672 9.0% Operating Activities The increase in operating activities cash flows was primarily driven by: + Working capital management and efficiencies with new shop openings.
Dutch Bros Inc. | Form 10-K | 81 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Net cash provided by operating activities $ 246,432 $ 139,915 $ 59,883 $ 106,517 76.1% $ 80,032 133.6% Net cash used in investing activities (212,072) (227,280) (192,572) 15,208 (6.7) (34,708) 18.0 Net cash provided by financing activities 125,449 200,732 134,361 (75,283) (37.5)% 66,371 49.4% Net increase in cash and cash equivalents $ 159,809 $ 113,367 $ 1,672 $ 46,442 41.0% $ 111,695 6680.3% Cash and cash equivalents at beginning of period 133,545 20,178 18,506 113,367 561.8 1,672 9.0 Cash and cash equivalents at end of period $ 293,354 $ 133,545 $ 20,178 $ 159,809 119.7% $ 113,367 561.8% Operating Activities The increase in operating activities cash flows was primarily driven by higher net income as a result of year-over-year sales growth, expanded company-operated shop contribution, leverage of selling, general and administrative costs, and working capital management.
The interest rate swap has a notional amount of $70 million and hedges interest rate risk on the term loan under the 2022 Credit Facility. The purpose of the floating-to-fixed interest rate swap is to fix the interest base rate charged on the term loan at 2.67% for the $70 million notional amount.
The purpose of the floating-to-fixed interest rate swap is to fix the interest base rate charged on the term loan at 2.67% for the notional amount. The interest rate swap matures on February 28, 2027.
Following are the reconciliations of the most comparable GAAP metric to non-GAAP metrics presented: Year Ended December 31, 2023 2022 2021 (in thousands; unaudited) $ % $ % $ % Company-operated shop gross profit 180,235 21.0 121,327 19.0 86,701 21.5 Depreciation and amortization 62,088 7.2 36,306 5.6 16,291 4.0 Company-operated shop contribution 242,323 28.2 157,633 24.6 102,992 25.5 Year Ended December 31, 2023 2022 2021 (in thousands; unaudited) $ % $ % $ % Net income (loss) 9,952 1.0 (19,253) (2.6) (117,931) (23.7) Depreciation and amortization 69,135 7.2 44,728 6.0 25,217 5.1 Interest expense, net 32,321 3.3 18,018 2.4 7,093 1.4 Income tax expense (benefit) 6,967 0.8 2,599 0.4 (1,628) (0.3) EBITDA 118,375 12.3 46,092 6.2 (87,249) (17.5) Equity-based compensation 39,222 4.1 41,657 5.6 157,716 31.7 Expenses associated with equity offerings — — — — 6,523 1.3 Donations associated with equity offerings — — — — 3,792 0.7 COVID-19: Thank You pay and catastrophic leave — — 1,468 0.2 3,350 0.7 COVID-19: prepaid costs not utilized — — 2,305 0.3 — — Milestone events — — 2,434 0.3 — — Executives transition 1,000 0.1 691 0.1 — — TRAs remeasurement (2,638) (0.3) (3,466) (0.4) — — Legal proceedings 1,950 0.2 — — — — Organization realignment and restructuring: Consulting 2,153 0.2 — — — — Adjusted EBITDA 160,062 16.6 91,181 12.3 84,132 16.9 Dutch Bros Inc. | Form 10-K | 85 Table of Contents Year Ended December 31, 2023 2022 2021 (in thousands; unaudited) $ % $ % $ % Selling, general, and administrative 1 205,074 21.2 183,528 24.8 264,529 53.1 Equity-based compensation (39,222) (4.1) (41,657) (5.6) (157,716) (31.7) Expenses associated with equity offerings — — — — (6,523) (1.3) Donations associated with equity offerings — — — — (3,792) (0.7) COVID-19: prepaid costs not utilized — — (2,305) (0.3) — — Milestone events — — (2,434) (0.3) — — Executives transition (1,000) (0.1) (691) (0.1) — — Legal proceedings (1,950) (0.2) — — — — Organization realignment and restructuring: Consulting (2,153) (0.2) — — — — Adjusted selling, general and administrative 160,749 16.6 136,441 18.5 96,498 19.4 _________________ 1 Selling, general and administrative expenses include depreciation and amortization.
The following are reconciliations of the most comparable GAAP metric to non-GAAP metrics (presented in dollars and as a percentage of revenue): Segment contribution: Year Ended December 31, 2024 2023 2022 (in thousands; unaudited) $ % $ % $ % Company-operated shop gross profit 259,959 22.3 180,235 21.0 121,327 19.0 Depreciation and amortization 86,809 7.4 62,088 7.2 36,306 5.6 Company-operated shop contribution 346,768 29.7 242,323 28.2 157,633 24.6 Year Ended December 31, 2024 2023 2022 (in thousands; unaudited) $ % $ % $ % Franchising and other gross profit 80,170 69.6 71,061 65.9 59,589 60.0 Depreciation and amortization 4,915 4.3 5,398 5.0 5,706 5.8 Franchising and other contribution 85,085 73.9 76,459 70.9 65,295 65.8 Dutch Bros Inc. | Form 10-K | 87 Table of Contents Year Ended December 31, 2024 2023 2022 (in thousands; unaudited) $ % $ % $ % Net income (loss) 66,450 5.2 9,952 1.0 (19,253) (2.6) Depreciation and amortization 93,005 7.3 69,135 7.2 44,728 6.0 Interest expense, net 27,020 2.1 32,321 3.3 18,018 2.4 Income tax expense 18,435 1.4 6,967 0.8 2,599 0.4 EBITDA 204,910 16.0 118,375 12.3 46,092 6.2 Equity-based compensation 11,482 0.9 39,222 4.1 41,657 5.6 Expenses associated with equity offerings 1,489 0.1 — — — — COVID-19: Catastrophic leave — — — — 1,468 0.2 COVID-19: prepaid costs not utilized — — — — 2,305 0.3 Milestone events — — — — 2,434 0.3 Executive transitions 75 — 1,000 0.1 691 0.1 TRAs remeasurement (4,247) (0.3) (2,638) (0.3) (3,466) (0.4) Legal proceedings — — 1,950 0.2 — — Sale of aircraft (1,302) (0.1) — — — — Organization realignment and restructuring: Consulting — — 2,153 0.2 — — Employee-related costs 15,549 1.2 — — — — Other costs 2,327 0.2 — — — — Total organization realignment and restructuring 17,876 1.4 2,153 0.2 — — Adjusted EBITDA 230,283 18.0 160,062 16.6 91,181 12.3 Year Ended December 31, 2024 2023 2022 (in thousands; unaudited) $ % $ % $ % Selling, general, and administrative 234,036 18.3 205,074 21.2 183,528 24.8 Depreciation and amortization (1,281) (0.2) (1,648) (0.1) (2,716) (0.4) Equity-based compensation (10,595) (0.8) (39,222) (4.1) (41,657) (5.6) Expenses associated with equity offerings (1,489) (0.1) — — — — COVID-19: prepaid costs not utilized — — — — (2,305) (0.3) Milestone events — — — — (2,434) (0.3) Executives transition (75) — (1,000) (0.1) (691) (0.1) Legal proceedings — — (1,950) (0.2) — — Organization realignment and restructuring: Consulting — — (2,153) (0.2) — — Employee-related costs (15,549) (1.2) — — — — Other costs (2,327) (0.2) — — — — Total organization realignment and restructuring (17,876) (1.4) (2,153) (0.2) — — Adjusted selling, general and administrative 202,720 15.8 159,101 16.5 133,725 18.1 Dutch Bros Inc. | Form 10-K | 88 Table of Contents
Organization realignment and restructuring Fees and costs, including consulting fees and costs, related to a comprehensive initiative to develop and implement a long-term strategy involving changes to our organizational structure to support our growth, and the resulting realignment activities that have occurred in 2023 and are expected to continue for at least the next two years.
Organization realignment and restructuring Fees and costs, including consulting, employee-related and other costs, in connection with our comprehensive initiative to develop and implement a long-term strategy involving changes to our organizational structure to support our growth.
Financing Activities The increase in financing activities cash flows was primarily driven by: + Proceeds from our Follow-On Offering in September 2023. - Payoff of our revolving credit facility .
Financing Activities The decrease in financing activities cash flows was primarily driven by proceeds received in 2023 from our follow-on offering, partially offset by a prior year payoff of our net revolving credit facility, and our delayed draw term loan advance in 2024.
Dutch Bros Inc. | Form 10-K | 76 Table of Contents Franchising and Other Segment Performance Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Franchising and other revenue $ 107,837 $ 99,302 $ 94,130 $ 8,535 8.6 % $ 5,172 5.5 % Franchising and other gross profit $ 71,061 $ 59,589 $ 66,602 $ 11,472 19.3 % $ (7,013) (10.5) % As a percentage of franchising and other revenue 65.9 % 60.0 % 70.8 % N/A 590 bps N/A (1,080) bps Year Ended December 31, 2023 v. 2022 The Franchising and other gross profit impacts for the year-over-year comparison, presented in dollars, were driven by the following: + $6.0 million primarily from products sold to franchisees, net of costs and adjustments. + $3.1 million from shop weeks, driven by shop openings during the period. + $2.4 million from same shop sales.
Franchising and Other Segment Performance Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Franchising and other revenue $115,185 $107,837 $99,302 $7,348 6.8% $8,535 8.6% Franchising and other gross profit $80,170 $71,061 $59,589 $9,109 12.8% $11,472 19.3% As a percentage of franchising and other revenue 69.6% 65.9% 60.0% N/A 370 bps N/A 590 bps Year Ended December 31, 2024 v. 2023 The franchising and other gross profit increase of $9.1 million was driven by $4.6 million due to newly opened franchised shops not in the comparable shop base, $2.6 million from same shop sales, and a $1.9 million increase from products sold to franchisees, net of costs and adjustments.
Other than operating expenses, including approximately $24 million to $31 million in costs related to our organizational realignment and restructuring initiative, our cash requirements for 2024 are expected to consist primarily of capital expenditures for investments in our new and existing shops, our supply chain, and our corporate facilities, including a new roasting facility that is estimated to be approximately $10 million in incremental spend.
Dutch Bros Inc. | Form 10-K | 82 Table of Contents Other than operating expenses, our cash requirements for 2025 are expected to consist primarily of capital expenditures for investments in our new and existing shops, our supply chain, and our corporate facilities. The total capital expenditures for 2025 are estimated to be approximately $240 million to $260 million.
Other Expense Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Interest expense on finance leases $ (17,516) $ (9,296) $ (4,145) $ (8,220) 88.4% $ (5,151) 124.3% Other interest expense, net (14,805) (8,722) (2,948) (6,083) 69.7% (5,774) 195.9% Interest expense, net $ (32,321) $ (18,018) $ (7,093) $ (14,303) 79.4% $ (10,925) 154.0% Other income (expense) 3,018 3,976 (1,240) (958) (24.1)% 5,216 N/M Total other expense $ (29,303) $ (14,042) $ (8,333) $ (15,261) 108.7% $ (5,709) 68.5% Year Ended December 31, 2023 v. 2022 The increase in interest expense, net was primarily driven by increased borrowings and higher interest rates associated with our credit facility, and additional finance leases for new shop builds.
Dutch Bros Inc. | Form 10-K | 80 Table of Contents Other Expense Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Interest expense on finance leases $ (22,053) $ (17,516) $ (9,296) $ (4,537) 25.9% $ (8,220) 88.4% Other interest expense, net (4,967) (14,805) (8,722) 9,838 (66.5)% (6,083) 69.7% Interest expense, net $ (27,020) $ (32,321) $ (18,018) $ 5,301 (16.4)% $ (14,303) 79.4% Other income 5,812 3,018 3,976 2,794 92.6% (958) (24.1)% Total other expense $ (21,208) $ (29,303) $ (14,042) $ 8,095 (27.6)% $ (15,261) 108.7% Year Ended December 31, 2024 v. 2023 The decrease in interest expense, net was primarily driven by interest income on cash invested in money market funds, partially offset by additional interest on finance leases for new shop builds.
The decrease in other income (expense), net was primarily driven by a decrease in remeasurement gains in the current period related to the TRAs liability.
The increase in other income was primarily driven by higher remeasurement gains in the current year related to the TRAs liability and the gain on sale of our airplane and hangar.
Dutch Bros Inc. | Form 10-K | 75 Table of Contents Company-operated Shop Gross Profit and Contribution 1 Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Company-operated shop gross profit $ 180,235 $ 121,327 $ 86,701 $ 58,908 48.6 % $ 34,626 39.9 % As a percentage of company-operated shop revenues 21.0 % 19.0 % 21.5 % N/A 200 bps N/A (250) bps Company-operated shop contribution 1 $ 242,323 $ 157,633 $ 102,992 $ 84,690 53.7 % $ 54,641 53.1 % As a percentage of company-operated shop revenues 28.2 % 24.6 % 25.5 % N/A 360 bps N/A (90) bps _________________ 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Year Ended December 31, 2023 v. 2022 The Company-operated shop gross profit and contribution impacts for the year-over-year comparison, presented in basis points (as a percentage of current year company-operated shop revenues), were driven by the following: (unaudited) BPS Ingredient costs (50) Labor costs 70 Costs decreases 20 Menu prices 360 Pricing and discounts 360 Pre-opening costs 120 New shop related items 120 Leverage (deleverage) 20 Loyalty points breakage 2 (60) Other (260) Total change in Company-operated shop gross profit 200 Depreciation and amortization 160 Total change in Company-operated shop contribution 1 360 _________________ 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part I, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. 2 Recognition of $4.9 million of breakage revenue from the loyalty points collected prior to January 1, 2022 that expired on December 31, 2022.
Company-operated Shop Gross Profit and Contribution 1 Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Company-operated shop gross profit $259,959 $180,235 $121,327 $79,724 44.2% $58,908 48.6% As a percentage of company-operated shop revenues 22.3% 21.0% 19.0% N/A 130 bps N/A 200 bps Company-operated shop contribution 1 $346,768 $242,323 $157,633 $104,445 43.1% $84,690 53.7% As a percentage of company-operated shop revenues 29.7% 28.2% 24.6% N/A 150 bps N/A 360 bps _______________________ 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Dutch Bros Inc. | Form 10-K | 79 Table of Contents Year Ended December 31, 2024 v. 2023 The increase in the company-operated shop gross profit margin of 130 basis points was driven primarily by a 270 basis point increase due to the impact of increased pricing on the comparable shop base, offset by a 140 basis point decrease due to increased labor costs.
Our customers may have or in the future have less money available for discretionary purchases and may stop or reduce their purchases of our products. On a macro level, conditions (including bank failures and other events affecting financial institutions, rising interest rates, and the impacts of the Russia-Ukraine and Israel-Hamas wars) have created significant uncertainty in the global economy.
On a macro level, conditions, including changes in interest rates, inflation, bank failures and other events affecting financial institutions, geopolitical conflicts (such as the Russia-Ukraine war, the state of war between Israel and Hamas, and the risk of larger regional conflicts), and significant weather events (such as the recent wildfires in California), have created significant uncertainty in the global economy.
Expenses associated with equity offerings Costs incurred as a result of our equity offerings. These costs include legal fees, consulting fees, tax and accounting fees, and payroll taxes related to the grant and vesting of equity awards for certain employees. Donations associated with equity offerings In connection with our IPO, we made a donation to the Foundation.
Expenses associated with equity offerings Costs incurred as a result of our equity offerings, including secondary offerings by our Sponsor. These costs include, but are not limited to, legal fees, consulting fees, tax fees, and accounting fees.
Investing Activities The increase in investing activities cash outflows was primarily driven by: + Investment in capital expenditures as a result of new company-operated shop openings. - Shop acquisitions in the prior year compared to n o acquisitions in the current year.
Investing Activities The decrease in investing activities cash outflows was primarily driven by lower i nvestment in capital expenditures due to fewer new company-operated shop openings in the current period compared to last period, and higher proceeds from disposal of fixed assets in the current year, driven by the sale of our company plane (a non-recurring event) .
Overview and Highlights Dutch Bros is a high growth operator and franchisor of drive-thru shops that focus on serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE. Founded in 1992 by brothers Dane and Travis Boersma, Dutch Bros began with a double-head espresso machine and a pushcart in Grants Pass, Oregon.
Founded in 1992 by brothers Dane and Travis Boersma, Dutch Bros began with a double-head espresso machine and a pushcart in Grants Pass, Oregon. Today, we believe that Dutch Bros is one of the fastest-growing brands in the quick service beverage industry in the United States by location count.
Today, we believe that Dutch Bros is one of the fastest-growing brands in the quick service beverage industry in the United States by location count. As of December 31, 2023, we had 831 company-operated and franchised shops in 16 states, an increase of approximately 23.8% from the same period in the prior year.
Dutch Bros Inc. | Form 10-K | 73 Table of Contents Results of Operations As of December 31, 2024, we had 982 company-operated and franchised shops in 18 states, an increase of approximately 18.2% from the same period in the prior year.
The 2022 Credit Facility expires on February 28, 2027 (the Maturity Date).
The 2022 Credit Facility expires on February 28, 2027 (the Maturity Date). On February 4, 2025, we drew the remaining $50 million on our delayed draw term loan facility before this portion was set to expire on February 4, 2025.
Removed
We have two reportable operating segments: Company-operated shops and Franchising and other. _________________ Dutch Bros Inc. | Form 10-K | 67 Table of Contents 1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Added
Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations Page Overview and Highlights 73 Impact of Global Events 73 Results of Operations 74 Key Performance Indicators 75 Company-operated Shop Results 77 Franchising and Other Segment Performance 80 Selling, General, and Administrative 80 Other Expense 81 Income Tax Expense 81 Liquidity and Capital Resources 81 Non-GAAP Financial Measures 85 Dutch Bros Inc. | Form 10-K | 72 Table of Contents Overview and Highlights Dutch Bros is a high growth operator and franchisor of drive-thru shops that focus on serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE.
Removed
Key Highlights • In February 2023, welcomed new Dutch Bros President, Christine Barone, who, in January 2024, assumed the role of CEO, in addition to President. • Opened 146 company-operated shops across multiple new operating areas in the year ended December 31, 2023, bringing total company-operated shops to 65% of our total shops, an increase of approximately 37% over 2022. • In September 2023, completed the first follow-on offering since our IPO, resulting in net proceeds of approximately $331 million.
Added
Key Highlights • Delivered approximately 33% total revenue growth year-over-year. • Opened 151 systemwide shops across multiple new operating areas, an increase of approximately 18% over 2023. • Launched and implemented mobile ordering in over 95% of systemwide shops. • Opened second roasting facility in Melissa, Texas, increasing the resiliency of our supply chain. • Welcomed new President of Operations, Chief Financial Officer, Chief People Officer, and Chief Technology and Information Officer.
Removed
Impact of Global Events Inflation and Minimum Wage Increases Similar to many of our peers in our industry, we continued to experience the effects of elevated commodity costs due to inflation, including in dairy, coffee, fuel, packaging, and continuing legislated minimum wage increases that took effect this year in certain states.
Added
Our customers may have or in the future may have less money available for discretionary purchases and may reduce or stop their purchases of our products.
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Dutch Bros Inc. | Form 10-K | 68 Table of Contents Results of Operations The following tables provide our operating results and explanation of changes for the periods presented.
Added
Dutch Bros Inc. | Form 10-K | 77 Table of Contents Beverage, Food, and Packaging Costs Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Beverage, food and packaging costs $296,752 $230,133 $171,864 $66,619 28.9% $58,269 33.9% As a percentage of company-operated shop revenues 25.5% 26.9% 26.9% N/A (140) bps N/A — bps Year Ended December 31, 2024 v. 2023 As a percentage of company-operated shop revenues, beverage, food and packaging costs decreased by 140 basis points.
Removed
Consolidated Statements of Operations Year Ended December 31, (in thousands) 2023 2022 2021 REVENUES Company-operated shops $ 857,939 $ 639,710 $ 403,746 Franchising and other 107,837 99,302 94,130 Total revenues 965,776 739,012 497,876 COSTS AND EXPENSES Cost of sales 714,480 558,096 344,573 Selling, general and administrative 205,074 183,528 264,529 Total costs and expenses 919,554 741,624 609,102 INCOME (LOSS) FROM OPERATIONS 46,222 (2,612) (111,226) OTHER EXPENSE Interest expense, net (32,321) (18,018) (7,093) Other income (expense) 3,018 3,976 (1,240) Total other expense (29,303) (14,042) (8,333) INCOME (LOSS) BEFORE INCOME TAXES 16,919 (16,654) (119,559) Income tax expense (benefit) 6,967 2,599 (1,628) NET INCOME (LOSS) 9,952 (19,253) (117,931) Less: Net loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions — — (67,374) Less: Net income (loss) attributable to non-controlling interests 8,234 (14,500) (37,878) NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH BROS INC. $ 1,718 $ (4,753) $ (12,679) Dutch Bros Inc. | Form 10-K | 69 Table of Contents Segment Financials Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 Revenues: Company-operated shops $ 857,939 $ 639,710 $ 403,746 Franchising and other 107,837 99,302 94,130 Total revenues 965,776 739,012 497,876 Cost of sales: Company-operated shops 677,704 518,383 317,045 Franchising and other 36,776 39,713 27,528 Total cost of sales 714,480 558,096 344,573 Segment gross profit: Company-operated shops 180,235 121,327 86,701 Franchising and other 71,061 59,589 66,602 Total gross profit 251,296 180,916 153,303 Depreciation and amortization: Company-operated shops 62,088 36,306 $ 16,291 Franchising and other 5,398 5,706 6,263 All other ¹ 1,649 2,716 2,663 Total depreciation and amortization $ 69,135 $ 44,728 $ 25,217 Segment contribution: Company-operated shops 242,323 157,633 102,992 Franchising and other 76,459 65,295 72,865 Total segment contribution $ 318,782 $ 222,928 $ 175,857 Selling, general and administrative (205,074) (183,528) (264,529) Interest expense, net (32,321) (18,018) (7,093) Other income (expense) 3,018 3,976 (1,240) Income (loss) before income taxes $ 16,919 $ (16,654) $ (119,559) __________________ 1 I ncluded in selling, general and administrative expenses and not part of segment contribution calculation.
Added
This was primarily due to a 110 basis point decrease due to the impact of increased pricing on the comparable shop base .
Removed
The comparable shop base includes mature shops, which we define as open longer than 15 months.
Added
Labor Costs Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Labor costs $315,805 $230,505 $182,861 $85,300 37.0% $47,644 26.1% As a percentage of company-operated shop revenues 27.1% 26.9% 28.6% N/A 20 bps N/A (170) bps Year Ended December 31, 2024 v. 2023 As a percentage of company-operated shop revenues, labor costs increased by 20 basis points.
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Selling, General, and Administrative Year Ended December 31, (in thousands; unaudited) 2023 2022 2021 2023 v. 2022 2022 v 2021 Selling, General and Administrative $ 205,074 $ 183,528 $ 264,529 $ 21,546 11.7 % $ (81,001) (30.6)% As a percentage of total revenues 21.2 % 24.8 % 53.1 % N/A N/M N/A N/M Year Ended December 31, 2023 v. 2022 The selling, general, and administrative impacts for the year-over-year comparison, presented in dollars and basis points (as a percentage of current year total revenues), were driven by the following: + $20.6 million from investments in human capital, processes, and systems to support our revenue growth. + $2.2 million or 20 bps in consulting fees related to our long-term growth strategy and associated changes to our organizational structure to support growth. + $2.0 million or 20 bps in estimated expense for certain legal disputes. - $2.4 million or 30 bps from prior year company-wide event costs celebrating 30 years serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE to our customers. - $2.4 million or 30 bps from lower equity-based compensation charges. - $1.2 million or 10 bps from prior year write-off of prepaid expense for our virtual corporate engagement platform built in response to COVID-19 pandemic as a substitute for in person Dutch Bros Inc. | Form 10-K | 77 Table of Contents engagement practices pre-pandemic.
Added
This was primarily due to 180 basis points from increased wages, partially offset by a decrease of 110 basis points from the impact of increased pricing and a decrease of 50 basis points driven by staffing management.
Removed
The platform was determined ineffective, particularly as we shifted back to in person engagement and easing of restrictions related to the COVID-19 pandemic. The summation of the impact of the specific items above would have decreased selling, general and administrative expenses from prior year by 30 bps to be 24.5% of revenue.
Added
Occupancy and Other Costs Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Occupancy and other costs $191,372 $140,895 $109,366 $50,477 35.8% $31,529 28.8% As a percentage of company-operated shop revenues 16.4% 16.4% 17.1% N/A — bps N/A (70) bps Year Ended December 31, 2024 v. 2023 As a percentage of company-operated shop revenues, occupancy and other costs were flat.
Removed
However, leverage from revenue growth reduces that percentage by 330 bps to be 21.2% of revenue.
Added
This was primarily due to a 40 basis point increase driven by higher repairs and maintenance, offset by a decrease of 50 basis points from the impact of increased pricing.
Removed
Further, the payments that we may be required to make under the TRAs may be significant, and we are currently unable to estimate the timing of the payments that may be due thereunder.
Added
Selling, General, and Administrative Year Ended December 31, (in thousands; unaudited) 2024 2023 2022 2024 v. 2023 2023 v 2022 Selling, General and Administrative $234,036 $205,074 $183,528 $28,962 14.1% $21,546 11.7% As a percentage of total revenues 18.3% 21.2% 24.8% N/A (290) bps N/A N/M Year Ended December 31, 2024 v. 2023 The selling, general, and administrative increase of approximately $29.0 million was primarily driven by increased expenses of $25.8 million primarily consisting of investments in human capital to support our revenue growth and higher performance-based compensation; an increase of $15.7 million of organization realignment and restructuring costs (which includes a $1.8 million net expense that resulted from the donation of our former Grants Pass headquarters building for the development of a children’s learning center); $12.6 million of increased professional fees and technology services to support our growing business; and $4.0 million of increased donations to our Foundation.
Removed
The total capital expenditures for 2024 are estimated to be approximately $280 million to $320 million, including approximately $6 million to $10 million related to our organizational realignment and restructuring initiative.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed5 unchanged
Biggest changeAs of December 31, 2023, we employed approximately 15,000 hourly workers in our company-operated shops. Dutch Bros Inc. | Form 10-K | 86 Table of Contents Interest Rate Risk We have historically been exposed to interest rate risk through fluctuations in interest rates on our debt obligations. Our 2022 Credit Facility carries interest at a floating rate.
Biggest changeIn the future, we may or may not be able to offset these cost increases with operational efficiencies, menu price increases, or other adjustments. As of December 31, 2024, we employed approximately 17,000 hourly workers in our company-operated shops. Interest Rate Risk We have historically been exposed to interest rate risk through fluctuations in interest rates on our debt obligations.
Impact of Inflation The primary inflation factors affecting our operations are commodity and supplies, energy costs, labor costs, and construction costs of company-operated shops. Increases in the minimum wage requirements directly affect our labor costs. Our leases require us to pay taxes, maintenance, repairs, insurance, and utilities, all of which are generally subject to inflationary increases.
Impact of Inflation The primary inflation factors affecting our operations are commodity and supply costs, energy costs, labor costs, and construction costs of company-operated shops. Increases in the minimum wage requirements directly affect our labor costs. Our leases require us to pay taxes, maintenance, repairs, insurance, and utilities, all of which are generally subject to inflationary increases.
Finally, the total cost to build our shops is impacted by inflation. Specifically, increases in sitework and permitting, construction materials, labor, and equipment may increase our overall development costs and capital expenditures, and potentially result in higher rent expenses of new shops.
Finally, the total cost to build our shops is impacted by inflation. Specifically, increases in sitework and permitting, construction materials, labor, and equipment may increase our overall development costs and capital expenditures, and potentially result in higher rent expenses for new shops.
A hypothetical increase of interest rates up to 1% on our outstanding term loan as of December 31, 2023 would result in an increase in our annual interest expense of approximately $1.0 million, excluding any potential impacts of interest rate swaps.
A hypothetical increase of interest rates up to 1% on our outstanding term loan as of December 31, 2024 would result in an increase in our annual interest expense of approximately $2.3 million, excluding any potential impacts of interest rate swaps.
Dutch Bros Inc. | Form 10-K | 87 Table of Contents
Dutch Bros Inc. | Form 10-K | 89 Table of Contents
We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities, including through the use of interest rate swaps to mitigate the potential impacts of changes in benchmark interest rates on interest expense and cash flows.
Our 2022 Credit Facility carries interest at a floating rate. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities, including through the use of interest rate swaps to mitigate the potential impacts of changes in benchmark interest rates on interest expense and cash flows.
However, sustained inflation of or substantial increases in costs and expenses, including dairy, coffee, fuel, and packaging commodities pricing, as we experienced during the year ended December 31, 2023, could impact our operating results to the extent that such costs and expenses remain elevated or increase and cannot be offset by menu price increases.
However, sustained inflation of or substantial increases in costs and expenses, including dairy, coffee, fuel, sugar, cocoa, and packaging commodities pricing, could impact our operating results to the extent that such costs and expenses remain elevated or increase and cannot be offset by menu price increases.
As of December 31, 2023, we had no revolving loans outstanding, and $95.6 million was outstanding on our term loan.
As of December 31, 2024, we had no revolving loans outstanding, and $234.7 million was outstanding on our term loan facilities.
Labor Costs We have experienced minimum wage increases, which increases directly affect our labor costs, and other upward pressure on wage rates in several states. In the future, we may or may not be able to offset these cost increases with operational efficiencies, menu price increases, or other adjustments.
Labor Costs We have experienced minimum wage increases, which directly affect our labor costs, and other upward pressure on wage rates in several states, including in California beginning in April 2024. Additionally, several other states that we operate in have increased their minimum wage requirements in 2025.

Other BROS 10-K year-over-year comparisons