Dutch Bros falls 19% as margin pressure clouds Q2 earnings beat

Dutch Bros shares plunged 19% to $53.32 after Q2 revenue rose 32.5% to $550.9 million.

Higher coffee and occupancy costs will pressure adjusted EBITDA margin by about 20 basis points this year, management said, tempering the headline growth.

Diluted earnings per share climbed 40% to $0.28, while net income rose to $37.4 million from $25.6 million a year earlier. The company opened 48 net new shops in the quarter, bringing the total to 1,177, up from 1,043 a year earlier, and company-operated same-shop sales rose 8.3% with transactions up 3.4%. Cost of goods sold stepped up to 26.1% of company revenue, partly from the food rollout now live in roughly 750 shops, while occupancy rose to 16.3%. Dutch Rewards members now account for more than 73% of transactions, with Order Ahead at about 16%.

The selloff leaves the stock trading at a price-to-sales multiple of 3.8, down from roughly 6.2 at the end of 2025. Management guided to revenue growth in the high 20s for 2026 and same-store sales growth of 4% to 5% in the third quarter, a slowdown from the second quarter's 5.8% systemwide gain. The company plans 185 net new shops this year and targets 2,029 locations by 2029, up from 1,225 today. Sell-side analysts project revenue will compound at 27% annually between 2025 and 2028, with adjusted diluted EPS rising 28% a year.

The expansion is partly funded by acquiring franchise shops and distressed drive-thru sites, adding integration and capital-allocation risk. Contribution margin held at roughly 31% on $510 million of company-operated revenue in the quarter, while management cited record productivity from new shops and extended the chain's streak of positive systemwide same-store sales growth to 19 years. The food program, tied to morning visits and incremental tickets, is central to lifting average order size as pricing laps get harder.

The margin guidance signals near-term profitability will lag the pace of store expansion, even as the chain outgrows rivals such as Starbucks. Investors will watch the third-quarter results for whether food adoption and pricing offset rising coffee and occupancy costs.

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