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Like many QSRs, popular coffee chain Dutch Bros. Coffee, a growing chain based in Oregon, has faced rising costs of goods recently due to inflation and supply issues. In fact, coffee has been more impacted than most other ingredients, as Arabica Futures have surged 80% over the past 2 years due to weather-damaged crops in South America. In response to soaring costs, Dutch Bros. implemented two price hikes in the past year – one in Fall 2021 and another in Spring 2022, raising prices 3% each time.
Have customers taken note of the price changes? Dutch Bros. CEO Joth Ricci recently talked to Fox Business about the trends they’re seeing. Ricci noted that while overall changes have been minor, “we’ve definitely seen an impact in California specifically on a lower household income consumer that has really decided to walk away at some point. We’ve seen up to a 40% reduction in transactions from that segment of the population.”
Azira took a look at the data to explore how Dutch Bros. in 3 different markets in California (Fresno, Sacramento, Redding) have fared in 2022, compared to 3 markets in the chain’s home state of Oregon (HQ location Grant’s Pass, Eugene, Portland). We explored the average store visitation for those markets for January – August of 2022 versus the same months in 2021.
At a high level, California stores have seen a significantly bigger drop in average footfall than those in Oregon, suggesting that Dutch Bros. has more loyalty in its home state than the neighbor to the South.
2022 vs. 2021 Dutch Bros. Average Store Visitors by State
When looking more closely at footfall impact by market, we also compared the median household income for the area. The California markets did see a correlation between income and footfall, with lower income areas seeing the biggest drop in footfall. Fresno and Redding, with relatively lower median HHIs of the California markets, saw the biggest decreases in footfall of 13-14%.
2022 vs. 2021 Dutch Bros. Store Visitors by Market
In Oregon, where loyalty to the local chain may be higher, this correlation doesn’t seem to exist. In fact, both Portland and Grant’s Pass, home of Dutch Bros.’ HQ, saw slight increases in footfall in 2022 versus the prior year. Meanwhile Eugene, Oregon has seen a decrease in foot traffic, but not to the same degree as California markets like Fresno and Redding with a similar HHI.
Despite economic headwinds, Dutch Bros. Coffee is still growing rapidly. The chain has been well-positioned to weather the pandemic with a drive-thru oriented model and an emphasis on culture and customer service. Dutch Bros. is on track to open 130 new locations by the end of the year.
Methodology
Azira generated a human movement data reports around Estimated Visitors for Dutch Bros. Coffee locations in Oregon and California, with a focus on Oregon markets Portland, Grant’s Pass, and Eugene, and California markets Sacramento, Fresno, and Redding for January 1 – August 31, 2022 compared to the same dates in 2021.
