After a stellar IPO last year that saw Dutch Bros stock surge as much as 70% shortly after debuting, the popular Oregon-based coffee chain is now seeing its stock get hammered in pre-market trading. As of the time of this writing, Dutch Bros stock (ticker: BROS) is down over 39%.
So, what’s causing the Dutch Bros crash? In a word: inflation.
As The Oregonian reports, Dutch Bros posted some good Q1 2022 numbers when it announced quarterly results yesterday. Revenue was up 54% year-over-year and the company announced it would open 130 drive-thru’s in 2022–five more than originally intended.
But Dutch Bros also announced it expected its same shop sales for the rest of 2022 will be “flat to slightly negative as we face macro-economic headwinds impacting consumer discretionary income and gas prices.” In other words, inflation is increasing costs and risks consumers’ willingness to splash out on expensive lattes.
“Still, we were not immune to the record inflation that surpassed our expectations and pressured margins in our company-operated shops,” Joth Ricci, Dutch Bros CEO, said in an earnings press release. “While we believe these margin impacts may be short term, we have opted to take a more conservative stance regarding adjusted EBITDA for 2022 as we monitor our pricing and the escalating cost environment.”
And with that disappointing outlook, BROS stock crashed. As of the time of this writing, its share price sits around $20.85–a far cry from its $76.24 all-time high last October and even its $34.37 closing price yesterday before quarterly results were announced.