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Starbucks vs. Dutch Bros: Which Coffee Stock is a Better Buy Now?
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Key Takeaways
Starbucks is facing margin pressure from higher labor, training, and event-related costs.
Dutch Bros is scaling nationally with 160 planned 2025 openings and a 2,000-shop target by 2029.
BROS' 2025 EPS growth of 34.7% contrasts with SBUXs projected 33.2% earnings decline.
The coffee retail sector is undergoing a period of transition as consumers demand speed, personalization and new beverage innovations. In this environment, Starbucks Corporation (SBUX - Free Report) and Dutch Bros Inc. (BROS - Free Report) are pursuing sharply different strategies to capture customer loyalty and shareholder value. While Starbucks is focused on a multiyear turnaround to restore U.S. momentum, Dutch Bros is in high-growth mode, scaling its brand nationally with rapid shop expansion.
For investors seeking exposure to the structural growth of the U.S. beverage market, the key question is: Which of these coffee stocks offers the more compelling risk-reward profile right now? Let’s break down the fundamentals, growth outlook, and valuation to determine the better buy.
The Case for SBUX
Starbucks is pursuing a multiyear turnaround centered on restoring U.S. momentum and elevating the customer experience. The company is executing on its “Back to Starbucks” strategy, which emphasizes operational discipline, consistent service standards, and a pipeline of beverage and food innovation.
Key initiatives include the Green Apron Service and SmartQ technology, designed to improve throughput, accuracy, and customer connection across its coffeehouses. At the store level, Starbucks is also piloting new formats with lower build costs, refreshed seating, and enhanced digital integration to strengthen its coffeehouse positioning.
Despite these efforts, Starbucks continues to face margin pressure as heavy operating investments weigh on profitability. In the third quarter of fiscal 2025, non-GAAP operating margin contracted 660 basis points year over year to 10.1%, driven by higher labor hours, expanded training, and costs tied to the Leadership Experience 2025 event. Management has cautioned that these headwinds will extend into 2026, raising uncertainty over the timing of margin recovery.
Traffic challenges also persisted during the quarter. Global comparable sales declined 2%, reflecting a 2% drop in transactions. North America comps were down 2%, including a 3% fall in U.S. transactions as the company lapped last year’s heavy promotions. Japan also posted negative comps, pressured by softer consumer sentiment and tough comparisons against last year’s limited-time offers. Looking ahead, management maintained a cautious tone, citing an uncertain consumer environment.
Structural hurdles in the United States add to the complexity. Supply chain inefficiencies, elevated store-level turnover, and higher operating costs continue to weigh on execution. Additionally, the company has slowed new builds and pivoted to more cost-efficient formats, underscoring ongoing strain on unit economics.
The Case for BROS
Dutch Bros is building structural momentum through a combination of aggressive shop expansion, transaction-driven growth and disciplined unit economics. The company continues to scale its footprint rapidly, with over 1,000 shops now open and a target of 160 new openings in 2025. For the long term, management aims to more than double its presence to over 2,000 locations by 2029. This expansion strategy is unlocking economies of scale and driving stronger revenue flow-through, while maintaining a focus on high-traffic drive-thru formats that minimize costs and maximize speed.
At the commercial level, Dutch Bros is leveraging its youth-oriented brand and differentiated menu to capture a loyal and growing customer base. Beverage innovation, including customizable energy drinks, cold brews, and seasonal offerings, is central to its strategy, while a fun, community-driven culture resonates strongly with younger demographics. The company’s Dutch Rewards program, which now drives over 70% of transactions, enhances engagement, supports pricing flexibility, and increases repeat visits, helping to stabilize sales even in competitive markets.
The company is also strengthening its digital and operational infrastructure to improve throughput and efficiency. Order-ahead capabilities, line-busting systems, and throughput optimization tools are driving faster service times, while a food pilot program has shown early promise in boosting average ticket size and broadening daypart appeal. Together, these initiatives are helping Dutch Bros capture greater wallet share and build incremental revenue opportunities.
Operationally, Dutch Bros remains focused on balancing growth with profitability. Adjusted EBITDA rose 37% year over year in the second quarter of 2025, underscoring its ability to scale efficiently while absorbing new-unit costs. With rising brand awareness, a strong pipeline of franchisee and company-operated builds, and consistent same-shop sales growth, the company is entering a phase of sustainable expansion and margin improvement.
How Does Zacks Consensus Estimate Compare for SBUX & BROS?
The Zacks Consensus Estimate for Starbucks’ fiscal 2025 sales suggests a year-over-year increase of 2.4% while earnings per share (EPS) indicate a decline of 33.2%. In the past 60 days, earnings estimates for fiscal 2025 have declined 12%.
SBUX Earnings Estimate Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Dutch Bros’ 2025 sales and EPS suggests year-over-year increases of 25.1% and 34.7%, respectively. In the past 60 days, earnings estimates for 2025 have increased 11.9%.
BROS Earnings Estimate Trend
Image Source: Zacks Investment Research
Price Performance & Valuation of SBUX & BROS
Starbucks stock has gained 0.7% in the past three months compared with the industry’s fall of 3.1% and the S&P 500’s growth of 10.3%. Meanwhile, Dutch Bros’ shares have surged 2.2% in the same time.
SBUX & BROS Stock Three-Month Price Performance
Image Source: Zacks Investment Research
Starbucks is trading at a forward 12-month price-to-sales (P/S) multiple of 2.52X, below the industry average of 3.78X over the last year. BROS’ forward 12-month P/S multiple sits at 6.44X over the same time frame.
Image Source: Zacks Investment Research
End Notes
Dutch Bros stands out as the stronger choice over Starbucks at this stage, supported by its rapid store expansion, youth-oriented brand appeal, and disciplined execution in driving transactions and operational efficiency. Its focus on beverage innovation, loyalty engagement, and scalable drive-thru formats is fueling structural growth across an expanding portfolio.
With stronger earnings momentum, upward estimate revisions, and a visible path toward margin improvement, Dutch Bros is positioning itself as an emerging growth leader in the U.S. beverage market. Starbucks, despite its unmatched global scale and enduring brand strength, faces near-term challenges from margin pressures, soft traffic trends, and downward earnings revisions.
Given this divergence, Dutch Bros appears better positioned to deliver sustainable shareholder value in the evolving specialty coffee sector. BROS currently carries a Zacks Rank #2 (Buy), while SBUX has a Zacks Rank #4 (Sell).
Image: Bigstock
Starbucks vs. Dutch Bros: Which Coffee Stock is a Better Buy Now?
Key Takeaways
The coffee retail sector is undergoing a period of transition as consumers demand speed, personalization and new beverage innovations. In this environment, Starbucks Corporation (SBUX - Free Report) and Dutch Bros Inc. (BROS - Free Report) are pursuing sharply different strategies to capture customer loyalty and shareholder value. While Starbucks is focused on a multiyear turnaround to restore U.S. momentum, Dutch Bros is in high-growth mode, scaling its brand nationally with rapid shop expansion.
For investors seeking exposure to the structural growth of the U.S. beverage market, the key question is: Which of these coffee stocks offers the more compelling risk-reward profile right now? Let’s break down the fundamentals, growth outlook, and valuation to determine the better buy.
The Case for SBUX
Starbucks is pursuing a multiyear turnaround centered on restoring U.S. momentum and elevating the customer experience. The company is executing on its “Back to Starbucks” strategy, which emphasizes operational discipline, consistent service standards, and a pipeline of beverage and food innovation.
Key initiatives include the Green Apron Service and SmartQ technology, designed to improve throughput, accuracy, and customer connection across its coffeehouses. At the store level, Starbucks is also piloting new formats with lower build costs, refreshed seating, and enhanced digital integration to strengthen its coffeehouse positioning.
Despite these efforts, Starbucks continues to face margin pressure as heavy operating investments weigh on profitability. In the third quarter of fiscal 2025, non-GAAP operating margin contracted 660 basis points year over year to 10.1%, driven by higher labor hours, expanded training, and costs tied to the Leadership Experience 2025 event. Management has cautioned that these headwinds will extend into 2026, raising uncertainty over the timing of margin recovery.
Traffic challenges also persisted during the quarter. Global comparable sales declined 2%, reflecting a 2% drop in transactions. North America comps were down 2%, including a 3% fall in U.S. transactions as the company lapped last year’s heavy promotions. Japan also posted negative comps, pressured by softer consumer sentiment and tough comparisons against last year’s limited-time offers. Looking ahead, management maintained a cautious tone, citing an uncertain consumer environment.
Structural hurdles in the United States add to the complexity. Supply chain inefficiencies, elevated store-level turnover, and higher operating costs continue to weigh on execution. Additionally, the company has slowed new builds and pivoted to more cost-efficient formats, underscoring ongoing strain on unit economics.
The Case for BROS
Dutch Bros is building structural momentum through a combination of aggressive shop expansion, transaction-driven growth and disciplined unit economics. The company continues to scale its footprint rapidly, with over 1,000 shops now open and a target of 160 new openings in 2025. For the long term, management aims to more than double its presence to over 2,000 locations by 2029. This expansion strategy is unlocking economies of scale and driving stronger revenue flow-through, while maintaining a focus on high-traffic drive-thru formats that minimize costs and maximize speed.
At the commercial level, Dutch Bros is leveraging its youth-oriented brand and differentiated menu to capture a loyal and growing customer base. Beverage innovation, including customizable energy drinks, cold brews, and seasonal offerings, is central to its strategy, while a fun, community-driven culture resonates strongly with younger demographics. The company’s Dutch Rewards program, which now drives over 70% of transactions, enhances engagement, supports pricing flexibility, and increases repeat visits, helping to stabilize sales even in competitive markets.
The company is also strengthening its digital and operational infrastructure to improve throughput and efficiency. Order-ahead capabilities, line-busting systems, and throughput optimization tools are driving faster service times, while a food pilot program has shown early promise in boosting average ticket size and broadening daypart appeal. Together, these initiatives are helping Dutch Bros capture greater wallet share and build incremental revenue opportunities.
Operationally, Dutch Bros remains focused on balancing growth with profitability. Adjusted EBITDA rose 37% year over year in the second quarter of 2025, underscoring its ability to scale efficiently while absorbing new-unit costs. With rising brand awareness, a strong pipeline of franchisee and company-operated builds, and consistent same-shop sales growth, the company is entering a phase of sustainable expansion and margin improvement.
How Does Zacks Consensus Estimate Compare for SBUX & BROS?
The Zacks Consensus Estimate for Starbucks’ fiscal 2025 sales suggests a year-over-year increase of 2.4% while earnings per share (EPS) indicate a decline of 33.2%. In the past 60 days, earnings estimates for fiscal 2025 have declined 12%.
SBUX Earnings Estimate Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Dutch Bros’ 2025 sales and EPS suggests year-over-year increases of 25.1% and 34.7%, respectively. In the past 60 days, earnings estimates for 2025 have increased 11.9%.
BROS Earnings Estimate Trend
Image Source: Zacks Investment Research
Price Performance & Valuation of SBUX & BROS
Starbucks stock has gained 0.7% in the past three months compared with the industry’s fall of 3.1% and the S&P 500’s growth of 10.3%. Meanwhile, Dutch Bros’ shares have surged 2.2% in the same time.
SBUX & BROS Stock Three-Month Price Performance
Image Source: Zacks Investment Research
Starbucks is trading at a forward 12-month price-to-sales (P/S) multiple of 2.52X, below the industry average of 3.78X over the last year. BROS’ forward 12-month P/S multiple sits at 6.44X over the same time frame.
Image Source: Zacks Investment Research
End Notes
Dutch Bros stands out as the stronger choice over Starbucks at this stage, supported by its rapid store expansion, youth-oriented brand appeal, and disciplined execution in driving transactions and operational efficiency. Its focus on beverage innovation, loyalty engagement, and scalable drive-thru formats is fueling structural growth across an expanding portfolio.
With stronger earnings momentum, upward estimate revisions, and a visible path toward margin improvement, Dutch Bros is positioning itself as an emerging growth leader in the U.S. beverage market. Starbucks, despite its unmatched global scale and enduring brand strength, faces near-term challenges from margin pressures, soft traffic trends, and downward earnings revisions.
Given this divergence, Dutch Bros appears better positioned to deliver sustainable shareholder value in the evolving specialty coffee sector. BROS currently carries a Zacks Rank #2 (Buy), while SBUX has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.