The Motley Fool on $BROS (Nov 5, 2026)
BROS comps guidance was cut from 8% to 5%, guest traffic flatlined and price-increase gains have a ceiling; 250 new stores in existing markets risk cannibalizing traffic and pressuring margins. But with revenue still growing 20-30% at 2.5x sales and 37x forward earnings, it is starting to get a little tempting, and its simple beverage menu and caffeine edge beat Cava.
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Dutch Bros are down about 16%. And so seeing these stock uh drops that we're seeing today, is this another case of both of these companies not necessarily meeting lofty expectations for their respective stocks?
Dutch Brothers from 8% to 5%. to be fair, both of these companies are still doing great considering the environment. Both are still growing revenue in the 20 to 30% range.
They were just priced a little bit too aggressively for the uncertainty we're seeing in the in the economy right now.
same store sales still up at both companies. However, the guest traffic has pretty much flatlined for both. the gains are coming from price increases that does have a ceiling especially in this environment
you look at Dutch Bros however looking to open 250 new locations in the coming year mostly in existing markets and one thing that investors are concerned about with traffic already flatlining to an extent.
You open up more stores in those locations or or more locations in those in those areas. Does guest traffic then actually drop per location because now they're stealing sales away from each other.
So this is something that could in fact profit affect profit margins. It is something that investors are concerned about.
I would say that if you look at Dutch Bros, trading at two and a half times sales right now, 37 times forward earnings, still adding so many new locations. This is starting to get a little tempting for me.
I don't see Dutch Brothers abandoning that plan to open, I think, 250 new stores is what we just said. And I mean, I I don't blame Dutch Brothers for expanding aggressively into markets that it's not currently in.
I would say that Dutch Bros has a less complex business to run than something such as a Cabba because I mean it's a beverage. It's a beverage company. That's a pretty easy menu to execute.
So I would say that the advantage goes to Dutch Bros here. also has the slight advantage of selling a an addictive product, which is caffeine. Not that it's a bad thing. I love my caffeine, too.
But, you know, the addictive nature does help ever so slightly.