Dutch Bros Inc. 2026 Q2 Earnings Call

Thank you for standing by. Welcome to the Dutch Bros Inc. second quarter 2026 earnings conference call and webcast. This conference call and webcast is being recorded today, August 5th, 2026, at 5:00 P.M. Eastern Time. It will be available for replay shortly after it has concluded. Following the company's presentation, we will open the lines for questions. Instructions to queue up will be provided at that time. I would now like to turn the call over to Neil Patel, Dutch Bros' Director, Investor Relations. Please go ahead. Good afternoon.

I'm joined by Christine Barone, CEO and President, and Josh Guenser, CFO. We issued our earnings press release for the quarter ended June 30th, 2026, after the market close today. The earnings press release, along with a supplemental information deck, have been posted to our investor relations website at investors.dutchbros.com. Please be aware that all statements in our prepared remarks and in response to your questions, other than those of historical fact, are forward-looking statements and are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially. They are qualified by the cautionary statements in our earnings press release and the risk factors in our latest SEC filings, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q. We assume no obligation to update any forward-looking statements. We will also reference non-GAAP financial measures on today's call.

As a reminder, non-GAAP measures are neither substitutes for, nor superior to, measures that are prepared under GAAP. Please review the reconciliation of non-GAAP measures to compare GAAP results in our earnings press release. During the question and answer portion of today's call, please limit yourself to one question and avoid multi-part questions so that we can accommodate as many participants as possible. With that, I would like to turn the call over to Christine.

Thank you, Neil. Good afternoon, everyone. Dutch Bros continues to be powered by a differentiated people-led culture, expanding customer occasions, and a real estate development engine that is unlocking new growth opportunities across the country. The success of our strategy was evident in Q2 as we delivered our eighth consecutive quarter of transaction growth. Again, delivered strong comp sales that have compounded year-over-year. Durable growth built on an already strong base. In fact, Q2 marked our 13th straight quarter of positive comp sales. This performance is the product of years of foundational investment, not one lever, but a full playbook we've built deliberately and are executing with intention. This gives us incredible confidence in our ability to continue growing this business for the long term.

Based on our performance so far this year and the recent acquisition of one of our Phoenix franchisees, we are raising our full year guidance. Turning to our Q2 results, total revenues increased an outstanding 32%, accompanied by strong profitability with adjusted EBITDA up 28%. Our distinctive value proposition continued to resonate in Q2, and we saw system-wide transaction growth driven by the strength of our brand and our endlessly customizable offerings delivered with speed, quality, and service. Development momentum remained exceptionally strong during the quarter, with 48 system shop openings, reinforcing our confidence in our pipeline and the path ahead to reaching 2,029 shops in 2029. Our transaction-driving initiatives, including the rollout of food and category-leading innovation, are working, serving as an important proof point in our ability to continue growing transactions while scaling nationally.

System-wide AUVs continued their record upward momentum in Q2, and new shop productivity was exceptional, an important validation of Dutch Bros' long-term growth opportunity and the continued expansion of the beverage category. Our Q2 results are a direct reflection of the investments we've made across the business over the past several years. Our foundation remains exceptionally strong, and we're building on that momentum. As we look ahead, the power of our brand, industry-leading innovation, and our ability to grow customer occasions give us tremendous confidence in the long-term trajectory of Dutch Bros. None of it would be possible without our team who bring the Dutch Bros experience to life every day. At Dutch Bros, everything starts with our people. Our people-led culture remains the foundation of our success and the driving force behind how we grow.

Our Broistas, the heartbeat of our brand, pour into their communities, make customers feel seen, and create meaningful moments that keep customers coming back. These genuine customer connections remain the strongest differentiator of the Dutch Bros experience. Customers come to us for more than a drink. They come for the moment at the window that makes their day a little better. That connection has been the hallmark of our brand since our very first stand. Because we grow our leaders from behind the window, that special feeling of connection only gets stronger as we grow. It is the reason we continue to be at the top of the industry in customer ratings for pleasant and friendly service. The exceptional people across our brand allow us to execute consistently, scale into new markets, and deliver the unmatched Dutch Bros energy our customers know and love.

Today, we have more than 525 operator candidates in our pipeline with an average tenure of nearly eight years. A leadership bench that gives us tremendous confidence in our ability to continue growing in a unique way only Dutch Bros can. At the end of June, I spent time with more than 2,000 of our field leaders at A Better World, our immersive and engaging field event focused on developing the next generation of Dutch Bros leaders. Being surrounded by the people who bring our culture to life every day reinforced what makes Dutch Bros so special. Their passion for growing others, serving with kindness, and living our mission gives me tremendous confidence that our people will continue to be our greatest differentiator as we grow. The road to 2,029 shops in 2029 remains very clear, supported by our robust development pipeline.

As we deepen our presence in existing markets and thoughtfully expand into new ones, each new shop opening reinforces the power of the Dutch Bros brand from coast to coast. Importantly, density continues to be a competitive advantage. We believe density matters and continue to view it as a strategic asset of both our expansion model and growing brand awareness. While we continue this densification strategy, we are also entering new markets as we expand our footprint across the country. New market performance continues to give us even more confidence in our growth path ahead. One of the best examples is in the Chicago market. Last quarter, we provided an update on our entry into the greater Chicago area, highlighting that our first shop was pacing to a volume of approximately $4 million.

During Q2, we expanded our footprint in the greater Chicagoland area with our Melrose Park shop, which is pacing to a volume of approximately $7 million. The response from the community has been incredible. Opening day demand exceeded our expectations and set a new company record, further underscoring the portability of the Dutch Bros brand. The early results affirm our belief that the greater Chicagoland area represents a meaningful long-term growth opportunity. Across several newer markets, we are also seeing incredible traction. From Atlanta to Charlotte to Tampa, we are seeing many new markets annualizing meaningfully above expectations, showcasing firsthand how well the Dutch Bros brand travels and resonates across diverse geographies. We are also excited to have entered our 26th state, Mississippi, in July. We recently completed the Phoenix East Valley acquisition following the retirement of our franchise partner, who had been with Dutch Bros for nearly 20 years.

Looking ahead, our development momentum remains very strong. We are opening shops ahead of schedule, our pipeline is rapidly growing, and we continue to see attractive conversion opportunities, both from emerging growth concepts and legacy beverage and drive-thru players. Whether we are entering new markets or building density in existing ones, the broad appeal of the Dutch Bros brand and the significant runway ahead become even more evident with each shop we open. Growth isn't just about expanding our footprint. It is also about creating more reasons for customers to choose Dutch Bros throughout the day. In Q2, innovation across our menu and our relentless focus on the customer experience helped strengthen customer routines, drive frequency, and deepen engagement with the brand. Let me start with food. Food continues to be one of our most important sales drivers and a key component of our morning day part strategy.

By the end of Q2, we completed the rollout of our new food program across approximately 750 system shops ahead of schedule. Throughout the rollout, the response from customers and Broistas has exceeded expectations. We are seeing customers incorporate Dutch Bros into more morning occasions, creating additional opportunities to engage with the brand and strengthening our position within customers' daily routine. Beyond food, innovation across our beverage menu and merch drops kept customers engaged and excited to visit Dutch Bros in the quarter. In May, we introduced Myst Energy Refreshers, a new category of plant-powered energy drinks to complement our proprietary Rebel platform, further strengthening our leadership position in the energy space. Myst allows us to broaden our occasions and reach new customers while bringing meaningful innovation to the beverage industry.

At launch, we drove trial of Myst through our Fill-A-Tray event, making it easy for customers to mix and match and discover this new platform. Myst headlined our Q2 LTO lineup alongside the return of fan favorites Strawberry Colada, Te De Leche, and drove outstanding year-over-year growth in LTO unit velocity. Since the launch of Myst, we've increased our overall energy mix and driven retention rates ahead of recent LTO benchmarks. Given the overwhelmingly positive customer response, we've made the decision to give Myst a permanent home on the menu alongside our Rebel program. Together, Myst and Rebel reinforce our innovation edge in energy and create a sustainable growth engine for the business. Beyond beverages, our merch drops continue to generate excitement and engagement, giving customers another reason to make a special trip to Dutch Bros while becoming truly signature events for the brand.

We saw another quarter of meaningful sales lift with standout drops like the State Sticker and Frog Charm delivering the strongest merch and sticker drops of the year. Our digital ecosystem also continues to deepen customer engagement. We ended Q2 with over 73% of transactions flowing through Dutch Rewards, reflecting continued customer adoption and engagement. Rewards penetration has been on a consistent climb over the last three years. We have grown our registered members per shop by over 50%. In Q2, Dutch Rewards also delivered its strongest contribution to comp since the start of our customer segmentation journey. Our ongoing investment in segmentation and personalization is enabling more relevant customer experiences and remains an important lever to drive long-term transaction growth.