Executive summary
It is discussed that the privately owned Dutch Bros Coffee is an American coffee franchise with more than 400 stores spread across 11 states. In Grants Pass, Oregon, the business began as a single coffee cart in 1992 and has since grown quickly. For example, Dutch Bros Coffee offers various coffee beverages, smoothies, teas, and other specialty drinks. The enterprise has an established brand image and a devoted customer base, and its distinctive workplace culture and dedication to community involvement are credited with its continued prosperity. Therefore, this study will seek to audit Dutch Bros Coffee’s past, examines the market and industry, and assesses the company’s strengths, weaknesses, opportunities, and threats. The report also gives recommendations and conclusions determined by the analysis and forecast, as well as a forecast of the economy, industry, and company for the year after that.
Historical overview of a company
The two brothers named Dane and Travis Boersma, came up with the idea of creating the Dutch Bros Coffee in Grants Pass, Oregon, in 1992. The firm was founded by the brothers as a single coffee cart, which quickly gained popularity because of the superior coffee and the helpful service offered by the staff. In 1996, the business launched its first drive-thru site after undergoing fast growth. Typically, Dutch Bros Coffee opened new stores in Oregon, California, Washington, and Idaho in the early 2000s as part of their ongoing expansion. The company’s loyalty program, the Dutch Mafia, rewards clients with free beverages and other goodies was created in 2007. The program has significantly contributed to the company’s development and has assisted in creating a strong base for the consumers to thrive.
The firm Dutch Bros Coffee has recently expanded to over 400 outlets throughout 11 states. The company’s positive, collaborative, and community-focused culture has earned it widespread recognition. Among the fastest-growing privately held firms in the United States, Dutch Bros Coffee has also won multiple honours for its social and environmental consciousness.
Analysis of economy and industry.
The analysis of the economic set and industry shows that the coffee shop business is a subset of the larger food and beverage sector, which is highly sensitive to macroeconomic indicators like unemployment and inflation. For example, the demand for specialized beverages and nutritious meal alternatives is impacting the food and beverage industry. Additionally, the unemployment rate in the United States is at a historic low, and personal incomes are on the rise. The food and drink business, including coffee shops, has expanded thanks to these factors. Opportunities have arisen for businesses like Dutch Bros. Therefore, coffee results from the rising demand for specialty coffee and healthy food alternatives.
Moreover, a lot of competition has been seen in the coffee shop business, as both huge chains and small businesses strive to attract customers. Despite the competition, Dutch Bros Coffee has succeeded thanks to the strength of its brand and the dedication of its consumer setup both locally and internationally.
The SWOT Analysis of The Company.
Below is the SWOT analysis of the Dutch Bros Firm:
Strengths:
- Solid consumer base and widespread brand recognition
- Distinctive corporate values that prioritize giving back to the community
- Healthy eating and artisanal coffee are two trends that continue to rise in popularity.
Weaknesses:
- Compared to rivals, it has a smaller geographic footprint.
- Risk of Over-concentration on a Singular Product (Coffee and Associated Beverages)
Opportunities:
- Entering Untapped Markets and Expanding Geographic Reach
- Launch of brand-new wares and fare
- There has been a shift in emphasis toward online and mobile ordering to reflect the rising demand for convenience.
Threats:
- The threat posed by more well-funded, larger competitors
- Changes in the cost of commodities such as coffee beans
- Altering tastes and fads among consumers
Forecast Of the Economy, Industry, And Company
Revenue at Dutch Bros Coffee Company has grown steadily over the last three years, increasing 48.43% in 2022, 52.06% in 2021, and 37.36% in 2020. Their gross profit also increased, from 96 to 181, reflecting this progress. However, their running costs have grown significantly, more than tripling in size, from 66 to 184. We realize that the operating gap was negatively obstructed, dropping the margin from 12.71% to -22.34%. Additionally, their profit margin decreased, going from 2.55 in 2021 to -0.64 percent in 2022. This is probably a result of their rapid growth-related greater costs. Additionally, their free cash flow has dropped, from 7.25 % in 2019 to -17.1 % in 2022. This suggests that the company is losing money relative to its income.
Although the sales and gross profit of Dutch Bros Coffee Company have increased overall, this gain has been tempered by rising operating costs. Their free cash flow and profit margin have both decreased. Arising from its well-known brand, dedicated customer base, and ambitious growth goals, Dutch Bros Coffee stands to gain substantially from the industry’s projected increase in size. In 2022, the company aimed to open 60 additional locations, continuing its rapid expansion. The company has distinguished itself from rival coffee shops by emphasizing quickness, quality, and effective customer service delivery.
Pro-forma Income Statement and Balance Sheet
The following pro-forma income statement and balance sheet have been created for the company based on its financial statements for the previous year and its growth plans:
Proforma Income statement(in a million dollars)
| Revenues | $1200 |
| Cost of goods sold | $360 |
| Gross profit | $840 |
| Operating expenses | $600 |
| Operating income | $240 |
| Interest expense | $10 |
| Net income before tax | $230 |
| Income tax expenses | $69 |
| Net income | $161 |
Proforma balance sheet ( in millions of dollars)
| Assets | |
| Cash and equivalents | $100 |
| Accounts receivables | $40 |
| Inventory | $30 |
| Property, plant and equipment | $500 |
| Total assets | $670 |
| Liabilities and Equity | |
| Accounts payable | $50 |
| Short term debt | $20 |
| Long term debt | $200 |
| Equity | $400 |
| Total Liabilities and Equity | $670 |
Recommendations and conclusions.
- Concerning the projections and findings of the analysis, Dutch Bros. Coffee is in a solid position to continue growing and extending its business activities. On the other hand, the company will have to deal with some obstacles in the coming years, such as the growing rivalry from other coffee chain businesses and the rising cost of the initial supplies in the market segments.
- As an alternative to achieving these obstacles, the company needs to preserve its selling points, such as its priority on quality, swiftness, and providing excellent service to its clients. In addition, the corporation needs to investigate ways to lessen its dependency on raw materials, such as by purchasing goods from local vendors or forming partnerships with businesses committed to environmental responsibility and growth.
Therefore, in summary, the future looks bright for Dutch Bros Coffee; the company has a powerful brand, a large customer base that is committed to the company, and growth plans that position it well to benefit from the continued expansion of the coffee industry, in general, both today and shortly. By putting appropriate measures in place, the company could achieve all these.
References
Yang, Y., Wang, X., Ruan, J., Huang, L., & Gao, S. Identifying Financial Report Fraud of US Listed Chinese Companies. https://aemps.ewapublishing.org/media/caa1d880983f4b8684f4b0dbf37c18a1_uBwKt66.pdf
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