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And about 12 months ago, I was nerding out on this idea of an IPO of a company called Dutch Bros. (NYSE:
BROS).
If you guys aren't familiar, it's a coffee company. It started over I think it was in Seattle, Washington and it has gone country wide. They're pushing for 4,000 coffee shops to be opened by 2036, and I did a little analysis on the company. And so what this is, is my first post on Seeking Alpha's website as a actual author, which is an update to that original IPO idea. So if you guys want to, be happy to walk you all through this, but generally speaking here, I think the summary does a good job, right?
Dutch Bros reported inflation induced margin compression in Q1. The companies seem to kind of turn this around and turn this into an opportunity to raise prices in Q2. And despite their recent operational momentum, however, the stock seems overvalued at $40 a share.
- Solid, I kid you not. I read it immediately. Great takes, you obviously broke down about the competition with Starbucks and where they're expanding. I mean, I don't have a Dutch Bros near me, but I know that there's so much talk, and there was definitely a lot of hype about it when it was coming out into the market. So obviously I rely on people like you that can go and visit a Dutch Bros, and didn't you document this on one of your TikTok videos? You went to a Dutch Bros?
- I did. I did. So if you guys don't know, like my whole thing is I really like to share this information bite in size pieces. But beyond just doing that in a written format, I love making TikTok videos. I don't know why. It's just so much fun and people eat 'em up. And so what I did was I made this sort of vlog where I went to a local Dutch Bros Coffee here in Nashville, Tennessee, and I walked through and I showed everyone just how busy it was, what I got, and I kind of walked through the fundamentals, their menu, all that, the margins, the AUV, all that fun stuff. So yeah...
But what's interesting about Dutch Bros actually and they're opening sort of strategy is they find these little pockets of areas that are underserved and they open them very quickly. So what they'll do is they'll open something like they did here in Nashville. I think it was over in Germantown. They see the demand on a daily, weekly, and quarterly basis and then realize, wow, it might be it's higher than we expected. Let's now quickly open two more. And so I kid you not in a three month period, I saw one Dutch Bros, then another Dutch Bros, then another Dutch Bros, very, very fast. And actually we talk about that and how that ate into their margins during this first quarter. But yeah, it's a really cool, interesting opening strategy....