Yahoo Finance Dutch Bros Inc (BROS) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and Strategic ...
Revenue: $275 million, up 39% year-over-year.
Same-Store Sales Growth: 10%, strongest since Q4 2021.
Adjusted EBITDA: $53 million, increased by 120% year-over-year.
System AUVs: Reached $2 million, highest on record for Q1.
New Shop Openings: 45 new shops, 11th consecutive quarter of 30+ openings.
Company-Operated Shop Contribution Margin: 29.8%, expanded by 560 basis points year-over-year.
Adjusted SG&A: Fell to 14.7% of revenue, down 370 basis points from Q1 2023.
Cost of Goods Sold: Improved by 260 basis points year-over-year.
Labor Costs: Improved by 160 basis points year-over-year.
Occupancy and Other Costs: Improved by 90 basis points year-over-year.
Adjusted EBITDA Margin: 19.1%, up 700 basis points over last year.
2024 Revenue Guidance: Raised to between $1.2 billion and $1.215 billion.
2024 Adjusted EBITDA Guidance: Now estimated to be between $195 million and $205 million.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Dutch Bros Inc reported a strong revenue increase of 39% year-over-year, reaching $275 million in Q1.
Adjusted EBITDA saw a significant rise of 120% year-over-year, totaling $53 million.
Same shop sales growth was robust at 10%, marking the strongest single quarter growth since Q4 2021.
The company successfully opened 45 new shops, maintaining a consistent expansion rate for the 11th consecutive quarter.
Dutch Bros Inc's rewards program contributed to a record 66% of all transactions, enhancing customer engagement and sales.
Negative Points
Despite strong sales, the company noted potential challenges with ingredient costs, particularly sugar and cocoa prices, which could impact future profitability.
The introduction of the California minimum wage increase on April 1 may affect labor cost leverage in upcoming quarters.
Some product outages occurred due to high demand, particularly for the newly launched BofA, which could affect sales consistency.
The company anticipates needing to make further investments in technology and marketing to support growth, which could impact short-term margins.
While new shop openings are strong, the company is cautious about the pace of future deep infill and is focusing on expanding into new markets, which may take time to mature and achieve expected sales levels.
Q & A Highlights
Q: Are the question is on Mobile Order & Pay. And as you see it you mentioned it would significantly speed up the ordering process, but you don't expect to actually reduce the amount of hours that you have for store-level employees. So are you expecting into reallocate some of the outside employees to perhaps inside and as you speed up the ordering process, do you also have similar plans to speed up the production process? In other words, are we just shifting the bottleneck from one thing to another or can both aspects of the Dutch Bros?A: Christine Barone, Dutch Bros, Inc. - President and CEO: I think, John, as we were just getting started on testing mobile order. So we're in several shops now in Arizona and U.S. As we look at kind of where we are, we can speed up both production and the lines. A couple of things to note is one. We do have variability across our system in our AUVs. And so we do have a number of shops that are operating at very, very high AUVs where we have different deployment standards in those shops because of those very high AUVs. So as we take that as a learning as we go into something like mobile order. We have a very thoughtful way of at different volumes, how we can best deploy our teams and best get through our lines. And so you're exactly right that as we look at mobile order and pay, we think it's incredibly important that we really keep our brand differentiator and that brand differentiator is our service. And so that we will deploy more folks to making sure that we have great conversations with our customers, including both at the window and in the line. So if you drive through the line you're going to have an awesome conversation as you come through, have similarly reach you and say I've got a mobile order. Let me help you with that. If you come up to the window you're going to come and have that same conversation. And so it's very intentional that we want to reinvest this labor back into both production and into ensuring that we can have great conversations with our customers.
Q: Great work going through Charlie just wondering kind of on your comments on April on the consumer environment. I mean, you're after an incredible start, your, you know, your guide for the rest of the year implies a pretty modest same-store sales growth. So just kind of wondering what what's in there b the B side, so a fair amount of conservatism I would imagine.A: Charley Jemley, Dutch Bros, Inc. - CFO: Thanks for your question, Andy. And so as we look at the rest of the year, one thing we're being very thoughtful about is what the rollover looks like from last year. So we did see an acceleration between Q1 and Q2, Q2 last year in our same-Shack sales and in our traffic between those two quarters and really throughout the rest, the rest of the year as we look at our guidance, we're also taking into consideration numerous price moves. And you know, as I shared when we look at April, one of the unique things about Q1 is that we had one promo in 2023, and we lap that this year with two promos. So having protein coffee and BofA lapping over our white chocolate lavender launch from last year.
Q: I guess then just a really basic numbers question. Charlie, could you break down the comp for us in terms of traffic versus ticket?A: Christine Barone, Dutch Bros, Inc. - President and CEO: Yes, Sharon. So out of that 10% comp, February 29th contributed a part, approximately a point of that menu pricing contributed approximately six points of that discount and mix shifts generated about three points about the balances and traffic and note that sales transfers in there, and that was at the lower end of our expected range of 200 to 300 basis points, and that's how you get them.
Q: Great. Thanks. Hi, guys. This is Patrick on for Chris and Charlie obviously been a pleasure. So Christine, I did want to start with the paid advertising, and I'm curious if you feel like you've found an effective marketing mix that you believe will increase brand awareness, specifically in markets like Texas that maybe can only help comp but also start to address some of that new unit volume pressure you've been seeing?A: Christine Barone, Dutch Bros, Inc. - President and CEO: And thanks, Patrick, you that is an area that we absolutely saw success with in Q1. And so we really started kind of experimenting in earnest in Q4 of last year with different channels, different messaging and how best to reach new customers, particularly in new markets. And we're incredibly encouraged by the results that we're seeing of that work. And I think that with the very strong rewards penetration that we have at that 66% of transactions, we have an awesome channel to talk to existing customers, especially in our mature markets where that penetration rate is even higher. And we really are using our paid spend and our paid advertising to go after and introducing new customers to our brand.
Q: Thank you. I just question on the entrance into Florida. Christine, you spoke to a good start in the prepared remarks. Maybe you just elaborate talk about what you're doing on the brand awareness front and seeing with the consumer reception? And then just related, just to confirm, is it fair to say the stores are hitting your underwriting expectations thus far from from an AUV and a margin perspective? If you could just comment on that, too, that would be great.A: Christine Barone, Dutch Bros, Inc. - President and CEO: Yes, I would share it. It's definitely still early on I think what we were very pleased by us to go and open into a new market. We just saw lots of buzz around our openings. We were able to see that we have customers coming from from lots of different places away to come and visit us in our new shops. And we only have two shops open. But as I shared, the shops are exceeding what we what we had expected them to do. So very excited to be in this new market and to be meeting lots of new customers in Florida. Okay. Thank you and Charlie, Ben, congrats and best of luck.
Q: Thank you. And I wanted to ask a couple of questions. One is if you could just talk a bit about and they are mobile order. And I think it sounded like the expectation is that if you will be a part of the consideration set of customers. So that does that mean bringing in new customers and or is it or greater frequency with existing customers? I think we've seen from other restaurants that sometimes the mobile app is a good customer acquisition tool. I wanted to get your thoughts on that.A: Christine Barone, Dutch Bros, Inc. - President
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
