Dutch Bros Shares Get Hammered After Coffee Chain Says Sales Will Be Flat in 2022

The stock, symbol “BROS,” tumbled below its $23 September IPO price.

The nitro-infused cold brew business is getting tougher, and inflation is to blame.

Shares of Dutch Bros plunged 37% in after-hours trading Wednesday, when the Grants Pass-based coffee chain said sales at existing stores, a key metric for restaurant stocks, will be “flat to slightly negative” in the second quarter ending June 30, and “approximately flat” for all of 2022 as higher prices for gas and other goods soak up coffee-drinkers’ disposable income.

The slump wiped an estimated $825 million off the net worth of Travis Boersma, the onetime dairy farmer who became a billionaire last September when Dutch Bros sold shares to the public and saw them rocket in the largest initial public offering in Oregon history.

Inflation also eroded profit in the first quarter as milk prices jumped and Dutch Bros had to pay higher wages. The company lost $16.3 million, triple the $4.8 million it lost in the first quarter of 2021.

Investors often expect fast-growing chains like Dutch Bros to lose money while they spend on new stores. The company opened 34 new shops in the first quarter, its second-highest total for a single quarter, and it expects to open 130 more this year. It had a total of 572 stores as of March 31.

But flat sales at existing stores and higher costs spooked investors.

“We were not immune to the record inflation that surpassed our expectations and pressured margins in our company-operated shops,” Dutch Bros CEO Joth Ricci said in a statement. ”While we believe these margin impacts may be short-term, we have opted to take a more conservative stance regarding adjusted EBITDA for 2022 as we monitor our pricing and the escalating cost environment.”

EBITDA, which stands for “earnings before interest, taxes, depreciation and amortization,” is a profitability measure that’s often used as an alternative to net income.

Travis Boersma founded Dutch Bros with his brother Dane. They came from a long line of dairy farmers and decided to branch out into coffee by opening a cart in downtown Grants Pass in the early 1990s. Dane died from Lou Gehrig’s Disease in 2009, and Travis pressed on with the company.

Even after today’s decline, Boersma remains a billionaire. Filings with the Securities and Exchange Commission show that he and “affiliated entities” own 64,724,563 class A shares in Dutch Bros. At $21.51 a share, where they traded late Wednesday, his holdings are worth $1.39 billion.