Dutch Bros Coffee IPO Brews Oregon’s Newest Billionaire

This week’s public offerings are dominated by biotech and sports companies, but the Oregon-based coffee shop Dutch Bros stands out. In 1992, two brothers abandoned their jobs in the dairy sector to sell coffee from a pushcart (complete with a single espresso machine and a stereo) in Grants Pass, Oregon. It presently has over 470 locations throughout 11 states, many of which are noted for its drive-through only model. The family-run business, still directed by one of the brothers, executive chairman Travis Boersma, went public on the New York Stock Exchange on Wednesday, raising roughly $500 million and making Boersma a billionaire.

“On Wednesday, Boersma, 50, told Forbes, “This is a wonderful day for Dutch Bros, a real mind blow.” “We never anticipated we’d be here today when my brother and I launched this company about 30 years ago. Right now, I’m focused on expanding our people’s opportunities—why that’s we went public in the first place.” Nearly 17,000 people work for the company.

Dutch Bros raised around $484 million in its IPO, significantly more than the $146 million and $169 million raised by Oregon heavyweights Nike and Columbia Sportswear in 1980 and 1998, adjusted for inflation. Boersma owns a $2.5 billion investment in the newly public corporation, accounting for nearly 41% of the company. On the first day of trading, Dutch Bros shares closed at $36.92, up 61 percent from the opening price of $23. In July, the cofounder bought a jet for $900,000 from Dutch Bros and sold a portion of his stock in the IPO, which netted him around $69 million after capital gains taxes, raising his estimated nett worth to $2.6 billion. Boersma will keep 74 percent of the voting shares thanks to multiple “anti-takeover” clauses and a multi-tiered share structure.

When compared to coffee chains like Starbucks and Peet’s, Dutch Bros is a slacker. Last year, the company lost roughly $62 million on $327 million in sales, but sales are expected to increase by 60% in 2020 when the chain adds 71 new corporate-owned sites. Despite the fact that Dutch Bros halted franchising in 2017, franchisees still own 56 percent of the business’s sites, many of whom have long relationships to the company thanks to a 2008 decision to sell franchises solely to those who were already part of the “Dutch Bros system.” All 179 new stores that have opened since 2018 are run by shop managers who have been promoted from inside.

Since the start of the Covid-19 pandemic, publicly traded coffee firms have been a mixed bag: JDE Peet’s, which owns the coffee store Peet’s Coffee, went public on the Amsterdam stock exchange in June 2020 and has had its shares drop by 12% since then. Inspire Brands, a restaurant investment group, bought formerly public Dunkin’ Brands for $11.3 billion in October 2020, at $106.50 per share, a 7% premium to the company’s stock price at the time the deal was announced. In comparison, Starbucks, which Howard Schultz, who eventually became a millionaire, bought when it was a small regional company, is still far ahead of the pack: The retailer made $23.5 billion in sales from more than 32,000 locations in the fiscal year that ended in September, and its stock has risen 15% since the start of 2021.

Read more • forbes.com

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