Copyright The Street
For many people, coffee isn’t just a habit; it’s a necessity. Some call it a morning ritual, and others see it as an addiction. Either way, millions of Americans consume a cup at least once a day, whether to help them wake up in the morning or power through an afternoon slump. For decades, coffee giants like Starbucks and Dunkin’ have dominated the market. However, a newer contender has emerged as one to watch, and it is now aiming to capture a bigger piece of the market. Founded in 1992 as a humble pushcart on the side of the road in Oregon, Dutch Bros has grown into a rapidly expanding coffee chain with a loyal fan base. After introducing the brand outside its home base in 2021, the company has expanded into 24 states and surpassed 1,000 shops nationwide. Known primarily for its coffee beverages and colorful energy drinks, Dutch Bros has recently ventured into new territory. In late 2024, the company launched a hot breakfast pilot program at select locations, later expanding into more locations throughout 2025. According to Dutch Bros, the demand for breakfast items has been strong. Customers who stop in for their morning coffee also want food alongside it, and the numbers back up its claims. Early results show an estimated 4% comparable sales lift in shops offering hot food, with around a quarter of that growth coming from increased transactions. That momentum helped drive a 4.7% year-over-year rise in transactions during the third quarter of fiscal 2025, marking the fifth consecutive year of transaction growth. Total revenue also climbed 24%, with same-store sales up 5.7%. Dutch Bros expands its breakfast menu Building on that success, Dutch Bros (BROS) is expanding its breakfast offerings to more locations, aiming to become a one-stop shop. By the end of the third quarter, breakfast was available in 160 shops, and the company plans to extend it to 25% of its locations by the year’s end, with a full nationwide rollout expected by the end of 2026. “Our food program rollout is designed to strengthen our beverage offering by driving breakfast and morning daypart occasions, a time of the day where we have tremendous opportunity,” said Dutch Bros CEO Christine Barone in an earnings call. Dutch Bros believes adding breakfast will not only boost sales, but also attract new customers and enhance brand visibility. Dutch Bros’ strategic expansion plan While competitors such as Starbucks (SBUX) and Dunkin’ have offered food for decades, Dutch Bros has yet to fully enter the space across its entire footprint. One factor holding the company back is that around 285 units, primarily some of its older shops, lack the required space for food preparation. However, the company is actively revamping existing stores and building new ones to accommodate the menu expansion. Fast-casual chain Portillo’s recently slowed its restaurant expansion and ended its breakfast pilot after rolling it out across more Chicago locations, finding that morning preparation times interfered with its core operations. “There’s plenty of restaurant companies out there that have tried to expand to breakfast, and it hasn’t worked,” said Portillo’s CEO Michael Osanloo in an earnings call. More Food Business Strategy: Starbucks closes more stores in a key market This iconic breakfast chain quietly nearly doubles some prices Chick-fil-A unveils first-ever innovation to accelerate global growth Dutch Bros aims to avoid disruptions by analyzing food cycle times. This will ensure breakfast preparation remains faster than average drink-making times, preventing service from slowing down. Meanwhile, the company continues to accelerate its national growth, planning to open 175 new shops in 2026 and reach 2,029 locations by 2029. “Our pipeline, which has now reached record levels, has approved shops at a pace of 30-plus potential sites per month over the last six months,” said Barone. “I’ve never been more confident in our ability to execute on our ambitious growth plans.” Dutch Bros outpaces the competition Although Dutch Bros is significantly smaller than Starbucks, which has over 16,800 U.S. locations, and Dunkin’, with nearly 10,000 stores, it’s steadily gaining ground and chipping away at the coffee giants’ market share. Industry data shows that coffee chains grew 1.4% in foot traffic year over year in the third quarter of 2025, even as total quick-service restaurant visits fell 2.7%, according to Placer.ai. “The quick-service restaurant category has seen mixed results this past quarter, as softer consumer spending continues to pressure much of the sector. Yet the coffee subcategory continues to thrive, with much of its success coming from smaller brands,” said Former Chef and Placer.ai writer Bracha Arnold. While Starbucks and Dunkin’ saw persistent declines in visits, down 1.7% and 0.7%, respectively, Dutch Bros outperformed both chains, with visits up 8.8%, a sign of steady demand amid rapid expansion. “Starbucks isn’t just facing short-term pain,” Sidhant Prusty told Coffee Intelligence in 2025. “It’s confronting a deeper misreading of consumer sentiment. While operational efficiency and digital convenience have improved, they’ve come at the cost of the in-store experience that once defined the brand.” Experts say the key to Dutch Bros and what sets it apart from its competitors lies in its people-first culture. “What truly sets Dutch Bros apart is its people-first culture. Its “broistas” — the upbeat employees who run the drive-thrus — are central to the company’s brand identity, said Motley Fool Stock Market Analyst Lawrence Nga in a 2025 statement. “They’re trained not only to move cars quickly, but to build small moments of connection with every customer.”
