The beverage industry has started to bounce back over the past year as COVID-19 mandates relaxed and consumer activity began to return to normal. However, the market isn’t what it used to be. Between supply chain issues and changes in consumer habits, many food and beverage companies have had to reconsider their approach — including closing sit-down locations in favor of drive-through and takeaway options.
However, Dutch Bros Coffee hasn’t faced the same issues as some beverage industry giants. As a drive-through coffee chain with a simple (yet widely customizable) menu, Dutch Bros has experienced continued growth and success.
To learn more, we spoke with Dutch Bros CEO Joth Ricci on a recent episode of the ICR podcast, Welcome to the Arena. Ricci shared his thoughts on how a simple model and multifaceted approach to growth has benefitted the company, both over its 30-year history and recent years surrounding the pandemic.
A Simple Approach
Compared to other coffee companies, Dutch Bros offers a straightforward, no-frills approach. “We have a very simple menu,” says Ricci, explaining that the company focuses on offering customizations to a core base menu of espresso and energy drinks. With a short ingredients list, the company works with a very small number of suppliers, and that has allowed the company to avoid many of the supply chain issues that so many retail brands have experienced over the past year.
Service That Starts on the Inside
Above all else, culture drives Dutch Bros. “From day one, this business has been about serving the customer, understanding their needs, and treating them very well,” Ricci explains. “It’s also about treating our internal customers well — our employees.”
That people-first culture has led to an impressively low turnover rate, as well as a company that continually grows from within. “We don’t hire from the outside,” says Ricci. “In our management ranks, everyone grows up from within the company.” And in fact, the company won’t commit to a new location unless they know they have the right leadership in place within the system to support that growth.
And treating employees well naturally leads to better customer service. “We have a team that’s out there not just serving great drinks, but treating people with the ultimate service model,” Ricci says. “Dutch Bros is really about great, authentic service — and we just happen to do it through beverages.”
A Multi-Pronged Approach to Growth
Dutch Bros started in the Pacific Northwest, but over 30 years, has expanded to include locations in 11 states. In addition to expanding into new territories, Dutch Bros also focuses on infill development, or, in other words, opening multiple units within one territory. “You go into market with one unit, and it’s kind of ‘land and expand,’” Ricci explains. By making sure there are enough locations to meet demand, the company can make sure they offer a great customer experience.
While Dutch Bros has found success by expanding their market and reach, they are also experiencing growth in same-store sales. The company’s new rewards program app, for example, already has 3.2 million users. The app adds efficiencies — such as mobile payments and automatic point tallies (rather than paper stamp cards) — and helps foster brand awareness.
Over its 30-year history, Dutch Bros Coffee has stayed true to its unique company culture, and as a result, it has differentiated itself from competitors in the industry — and the company’s growth and success is a testament to that. For more insights into Dutch Bros Coffee, including a look into the company’s philanthropic efforts and finances, listen to the full podcast episode.
