Dutch Bros Franchise in 2024: Costs, Fee & FDD

Dutch Bros franchise is a coffee chain that donates profits in honor of the co-founder Dane who passed away due to ALS. Read more here.

Last updated 23 Jul 2024 Time 10 min read
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Dutch Bros Coffee is a renowned drive-thru coffee chain founded in 1992 by brothers Dane and Travis Boersma in Grants Pass, Oregon. What began as a modest pushcart operation has grown into a significant player in the specialty coffee industry. The brand is known for its vibrant culture, exceptional customer service, and a deep commitment to philanthropy. The Boersma brothers envisioned creating a company that not only served excellent coffee but also fostered a sense of community, a vision that has clearly resonated with customers and franchisees alike.

At its core, Dutch Bros offers a wide range of coffee beverages, from classic espresso-based drinks to their famous flavored coffees, smoothies, and energy drinks called “Dutch Bros Blue Rebel.” They also offer teas, hot cocoa, and a variety of baked goods and snacks. The brand’s quirky, upbeat personality is reflected in its menu, which often features fun, unique drink names and seasonal specials. Dutch Bros primarily caters to a younger demographic, particularly millennials and Gen Z, who appreciate the brand’s lively atmosphere and customizable drink options.

Today, Dutch Bros has expanded to over 500 locations across 12 states in the U.S., with a particularly strong presence on the West Coast. The franchise continues to grow rapidly, drawing in a diverse and loyal customer base. On average, Dutch Bros serves thousands of customers daily, and its reputation for fast, friendly service ensures high customer satisfaction. The brand’s presence is a testament to its effective business model and the strong community ties it fosters in each location.

Dutch Bros offers a comprehensive support system for its franchisees, including extensive training programs that cover everything from operations and management to customer service and community engagement. New franchisees benefit from a thorough onboarding process and ongoing support to ensure their success. Additionally, Dutch Bros is known for its “broista” culture, emphasizing the importance of team cohesion and a positive work environment. This strong support network, combined with the brand’s dynamic marketing strategies and community involvement initiatives, makes Dutch Bros a compelling choice for potential franchisees.

Why did Dutch Bros stop franchising?

Dutch Bros made the strategic decision to stop offering new franchise opportunities in 2017. This shift was driven by several key factors aimed at maintaining the brand’s quality, consistency, and culture as it continued to grow rapidly.

One of the primary reasons for this change was to ensure a high level of operational control and consistency across all locations. As the company expanded, it became increasingly important to maintain the unique culture and customer experience that Dutch Bros is known for. By focusing on company-owned stores and limiting the number of franchisees, Dutch Bros could better manage and uphold its standards.

Another factor was the desire to streamline operations and focus on strategic growth in key markets. By scaling back on franchising, Dutch Bros could concentrate resources on expanding in areas where it already had a strong presence, thereby enhancing brand recognition and market penetration.

Moreover, this move allowed Dutch Bros to invest more in its existing franchisees, providing them with enhanced support and resources. By not taking on new franchisees, the company could dedicate more attention to helping its current partners succeed, fostering stronger, more profitable relationships.

Overall, the decision to halt new franchising was part of Dutch Bros’ long-term strategy to ensure sustainable growth while preserving the unique elements that have made it a beloved brand in the coffee industry.

Dutch Bros Franchise Insights

Dutch Bros Coffee stands out for its vibrant company culture, often described as fun-loving and community-oriented, which is a significant draw for both employees and customers.

The company has a robust charitable initiative, Dutch Bros Foundation, which donates millions annually to local communities, emphasizing the brand’s commitment to giving back.

Dutch Bros’ unique “broista” training program ensures all employees are well-versed in customer service and coffee crafting, guaranteeing a consistently excellent experience across all locations.

Despite halting new franchises, Dutch Bros continues to expand rapidly with company-owned stores, maintaining control over quality and operational standards.

The brand’s signature Dutch Bros Blue Rebel energy drink has cultivated a dedicated fan base, adding a unique product that differentiates them from other coffee chains.

Dutch Bros Franchise Key indicators

Founded

2002


Total U.S. locations

876


Stopped offering new franchises

2017

 

How much does it cost to open a Dutch Bros franchise?

Understanding the potential investment size and capital requirements is crucial when considering opening a Dutch Bros franchise. While it is no longer possible to become a new franchisee of Dutch Bros, you can still see the costs to open up a new Dutch Bros location. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.

Min & Max Investment

Opening a Dutch Bros franchise involves several key costs. As Dutch Bros no longer produces an up to date Franchise Disclosure Document (FDD), we can estimate the costs for a Dutch Bros based on their most recent FDD. The costs to open up a new Dutch Bros location are estimated to be between $150,000 to $600,000. The lower costs are expected for small existing location conversions and the higher costs are expected for new and larger locations.

Required Capital

  • Liquid capital and net worth requirements To open a Dutch Bros franchise, the financial requirements were quite substantial. Prospective franchisees needed to have a minimum of $150,000 in liquid capital and a total initial investment ranging from approximately $150,000 to $500,000. The franchise fee was set at $30,000, and applicants were required to have a net worth of at least $500,000​.
  • Background experience Additionally, Dutch Bros had stringent requirements for potential franchisees to ensure they were well-versed in the company culture and operations. Aspiring franchise owners were typically required to work within the company for a minimum of three years, with at least one year in a managerial position, before being considered for a franchise opportunity​.

These requirements aimed to maintain the high standards of quality and service that Dutch Bros is known for, ensuring that franchisees were deeply committed and experienced in the brand’s operations and values​.

How much does a Dutch Bros franchise owner make?

Calculating the salary of a Dutch Bros franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Dutch Bros franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.

Dutch Bros Revenue & Gross Sales

In 2024, Dutch Bros franchises achieved an average gross sales of $2,000,000, reflecting a sizeable 10% increase from the previous year. This strong financial performance underscores the brand’s robust consumer demand and potential for lucrative returns for franchisees.

Which key factors impact the average revenue performance of Dutch Bros franchisees?

Several factors likely contributed to the 10% growth in Dutch Bros’ U.S. location average gross sales revenue from 2023 to 2024. One significant factor is the strategic expansion into high-demand markets, particularly in densely populated urban areas and regions with a growing coffee culture. Additionally, Dutch Bros has invested heavily in digital marketing and loyalty programs, enhancing customer engagement and retention. The introduction of new and seasonal products has also likely boosted sales by attracting both new customers and repeat business from existing fans. Furthermore, improvements in operational efficiencies, such as faster service times and better inventory management, have optimized store performance. Lastly, the company’s strong community engagement and philanthropic initiatives continue to strengthen its brand loyalty and local support​

Dutch Bros Franchise Operational Costs

When considering opening a Dutch Bros franchise, it’s essential to account for several key ongoing operational costs. These include:

  • Royalty Fees Dutch Bros charges a royalty fee of 5% of net sales or a minimum monthly fee of $1,300, whichever is greater​.
  • Rent Depending on the location, rent can range from $2,000 to $12,500 per month​.
  • Employee Salaries Payroll is a significant ongoing expense, including wages, benefits, and training costs for staff.
  • Utilities Costs for electricity, water, and other utilities necessary for running the drive-thru and coffee-making equipment.
  • Inventory Regular purchasing of coffee beans, syrups, cups, lids, and other supplies needed to maintain product offerings​.
  • Marketing and Advertising Local marketing efforts, promotional activities, and contributions to corporate marketing campaigns.
  • Equipment Maintenance Ongoing maintenance and occasional replacement of coffee machines, POS systems, and other equipment.
  • Insurance Policies for general liability, property, and workers’ compensation insurance​.

These operational costs are crucial for maintaining smooth business operations and ensuring the high standards associated with the Dutch Bros brand.

Dutch Bros Franchise Fees

Owning a Dutch Bros franchise is different from owning an independent, non-franchised business. All franchises tend to charge ongoing fees that franchisees are required to pay to operate. Dutch Bros requires their franchisees to pay the below fees:

  • Royalty Fee This is a monthly fee paid to Dutch Bros, typically calculated as a percentage of gross sales. For Dutch Bros, this fee is usually 5% of the restaurant’s monthly gross sales.
  • Advertising and Marketing Fees Franchisees are required to contribute to both national and local advertising funds. The national advertising contribution is generally around 2% of gross sales.
  • Additional Fees There are additional fees for training programs, technology, and other items provided by Dutch Bros that may be applied

These ongoing fees are essential to consider when planning the financial aspects of owning and operating a Dutch Bros franchise. They cover the costs of brand support, advertising, and ongoing operational assistance provided by Dutch Bros.

Dutch Bros Franchise Earnings

The earnings of a Dutch Bros franchise owner can vary significantly based on a variety of factors including location, sales volume, operational efficiency, and cost management. However, on average, Dutch Bros franchise owners can expect to earn a significant income.

Dutch Bros franchisees have an average gross sales of $2,000,000. Based off of the average gross sales, we can estimate a Dutch Bros franchisee makes $240,000 in estimated earnings (EBITDA) per year, assuming that the franchisee is an owner-operator in the location. This means that you can consider the salary of a Dutch Bros franchise owner to be roughly $240,000 before interest, taxes, depreciation, and amortization (EBITDA).

If the franchisee is semi-absentee, then earnings will be significantly lower based off of the costs of having a hired manager.

How to open a Dutch Bros franchise

Dutch Bros no longer allows new franchisees, having halted new franchise opportunities in 2017. Before this policy change, Dutch Bros required any potential franchisee to work within the company for at least three years, with at least one year in a managerial position. This rigorous requirement ensured that prospective franchisees were well-versed in the company’s operations, culture, and customer service standards, thus maintaining the high quality and consistency that Dutch Bros is known for​.

 

FAQs

Who owns Dutch Bros franchise?

  • Dutch Bros is owned by Dutch Bros Inc., a publicly traded company. The company was co-founded by brothers Dane and Travis Boersma in 1992. Travis Boersma remains involved as the executive chairman, and the company went public on the New York Stock Exchange under the ticker symbol "BROS" in September 2021​shareholders.
  • Yes, Dutch Bros operates as a franchise. However, since 2017, Dutch Bros has limited new franchise opportunities, preferring to expand through company-owned stores and offering new franchise locations only to existing franchisees and employees​.
  • Dutch Bros stopped offering new franchise opportunities in 2017 to ensure consistent quality and maintain the unique culture of the brand. The company found that limiting new franchises and focusing on company-owned stores allowed them to better control operational standards and preserve their brand identity. This strategy also enabled them to provide more support to existing franchisees, ensuring they upheld the high standards expected from Dutch Bros locations​.
  • Dutch Bros' biggest competitors include major coffee chains like Starbucks and Dunkin'. These companies are well-established in the coffee industry and have extensive networks of locations across the United States and globally.
  • Good franchise alternatives to Dutch Bros include:
  • Starbucks: A leading global coffeehouse chain known for its high-quality coffee and extensive menu.
  • Dunkin': Known for its coffee and baked goods, offering a robust franchise system.
  • The Human Bean: Another drive-thru coffee franchise with a focus on quality coffee and quick service.
  • Scooter's Coffee: A drive-thru coffee franchise that offers a variety of coffee drinks and pastries, similar to Dutch Bros in its service model​.
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