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BROS Stock Slips 26% in a Month: Should Investors Buy the Dip or Wait?
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Key Takeaways
BROS stock fell 25.9% in a month, underperforming the sector and broader market gains.
Rising coffee costs, waning pricing benefits, and preopening expenses are pressuring margins.
Loyalty gains, mobile ordering, and a food pilot program are likely to support Dutch Bros' growth.
Shares of Dutch Bros Inc. (BROS - Free Report) have declined 25.9% in the past month compared with the Zacks Retail – Restaurants industry’s 3.5% decline. Over the same timeframe, the stock has underperformed the Zacks Retail-Wholesale sector’s decline of 3.4% and the S&P 500’s growth of 4.1%.
Investor sentiment surrounding Dutch Bros appears to have weakened due to rising cost pressures, diminishing pricing advantages, and the challenges of rapid expansion. Management indicated that coffee costs are expected to rise in the coming months, while ongoing tariff uncertainties could further pressure margins. With past price increases no longer providing the same lift and sales mix turning slightly negative, investors may be recalibrating BROS’ growth potential.
At the same time, the company’s aggressive store expansion is leading to higher occupancy and preopening expenses, and one-time costs from its headquarters relocation are adding to overall spending. Against a backdrop of cautious consumer behavior, these factors have likely prompted investors to reassess the near-term outlook, contributing to the recent pullback in Dutch Bros’ share price.
BROS One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, BROS stock is currently trading below its 50-day moving average, signaling a bearish trend.
BROS Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
Given the significant pullback in BROS’ shares currently, investors may be tempted to snap up the stock. But is this the right time to buy BROS? Let’s find out.
What’s Weighing on BROS Stock?
Dutch Bros, operating alongside industry peers like Starbucks Corporation (SBUX - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Sweetgreen, Inc. (SG - Free Report) , is grappling with mounting tariff and commodity-related pressures. With nearly half of its coffee supply sourced from Brazil, the company is particularly exposed to global fluctuations in coffee prices and potential tariff changes. Although favorable dairy pricing provided temporary relief in the second quarter, management has warned that rising coffee costs will likely accelerate in the latter half of 2025, tightening margins further.
The company now anticipates beverage, food, and packaging expenses to increase to roughly 26% of company-operated revenues in the back half of the year. Considering that coffee alone represents about 10% of Dutch Bros’ total cost base, even minor shifts in commodity pricing can significantly erode profitability. Despite having locked in most coffee prices for 2025, investors remain cautious about cost volatility that could extend into 2026.
At the same time, Dutch Bros’ aggressive expansion plans are straining short-term profitability. The company aims to open at least 160 new shops this year — equivalent to around 16% system-wide growth — but the rapid pace of openings comes with added expenses. The company expects preopening expenses to climb in the second half as development accelerates.
Another key issue dampening investor sentiment is the waning impact of previous price increases. After several quarters in which pricing supported comparable sales, management noted that net price contribution had declined by about 60 basis points year over year in the second quarter, with sales mix also turning slightly negative due to smaller-ticket items. The company emphasizes monitoring the competitive landscape and a cautious consumer spending environment.
Can Dutch Bros Turn Things Around?
Despite near-term margin challenges, Dutch Bros’ long-term fundamentals remain strong. The company continues to fire on all cylinders in driving transactions, expanding digital engagement, and testing new growth initiatives.
The Dutch Rewards loyalty program, accounting for 72% of total system transactions in the second quarter, remains a key growth lever. Enhanced segmentation and personalized offers are improving customer engagement and visit frequency. Likewise, mobile ordering (which comprised 11.5% of system sales in the second quarter) is gaining traction, particularly in newer markets where adoption rates are double the company average.
Another potential catalyst is the expansion of its food pilot program. Rolled out across 64 company-operated shops in Arizona, Kansas, Missouri and Oklahoma, the pilot has generated ticket and transaction lift without compromising throughput. Management plans to expand the program in 2025, with a broader rollout expected in 2026, potentially capturing incremental sales in the high-frequency morning daypart.
Operationally, Dutch Bros continues to refine labor deployment and throughput optimization. Enhanced speed dashboards and shop-level KPIs are helping improve service times and efficiency. Meanwhile, system AUVs in the second quarter came in at $2.05 million, underscoring strong unit economics.
Financially, the company is on a solid footing, with $694 million in liquidity, including $254 million in cash and a $440 million undrawn revolver, following a successful refinancing of its $650 million credit facility. This robust liquidity position provides ample flexibility to sustain expansion and absorb near-term cost volatility.
BROS Stock Valuation Insights
Over the past 60 days, the Zacks Consensus Estimate for BROS’ 2025 earnings per share (EPS) has remained unchanged at 68 cents. Over the same time frame, estimates for industry players, including Chipotle, have remained unchanged at $1.21, while estimates for Starbucks and Sweetgreen have declined 2.7% and 9.2% respectively.
BROS Earnings Estimate Trend
Image Source: Zacks Investment Research
BROS stock is currently trading at a premium. Dutch Bros is currently trading at a forward 12-month price-to-sales (P/S) ratio of 4.15, well above the industry average of 3.47. Other industry players, such as Chipotle, Starbucks and Sweetgreen, have P/S ratios of 4.13, 2.37 and 1.12, respectively.
Image Source: Zacks Investment Research
Our Thoughts on BROS Stock
Dutch Bros’ long-term growth story remains intact, supported by strong transaction trends, disciplined expansion, and growing digital engagement through Dutch Rewards and mobile ordering. The company’s food pilot program and throughput initiatives position it to unlock additional daypart and operational efficiencies over time.
However, near-term headwinds from rising coffee costs, moderating pricing benefits, and higher preopening expenses could pressure margins. At a premium valuation, much of the optimism surrounding Dutch Bros’ aggressive growth strategy may already be reflected in the stock.
Key factors to watch include the pace of the food program’s expansion, sustained adoption of its order-ahead platform, and management’s ability to maintain cost discipline amid commodity and tariff volatility. We recommend waiting for clearer signs of margin stabilization before initiating new positions. For existing shareholders, maintaining exposure appears reasonable given Dutch Bros’ robust liquidity, brand momentum and long-term unit growth potential.
Image: Bigstock
BROS Stock Slips 26% in a Month: Should Investors Buy the Dip or Wait?
Key Takeaways
Shares of Dutch Bros Inc. (BROS - Free Report) have declined 25.9% in the past month compared with the Zacks Retail – Restaurants industry’s 3.5% decline. Over the same timeframe, the stock has underperformed the Zacks Retail-Wholesale sector’s decline of 3.4% and the S&P 500’s growth of 4.1%.
Investor sentiment surrounding Dutch Bros appears to have weakened due to rising cost pressures, diminishing pricing advantages, and the challenges of rapid expansion. Management indicated that coffee costs are expected to rise in the coming months, while ongoing tariff uncertainties could further pressure margins. With past price increases no longer providing the same lift and sales mix turning slightly negative, investors may be recalibrating BROS’ growth potential.
At the same time, the company’s aggressive store expansion is leading to higher occupancy and preopening expenses, and one-time costs from its headquarters relocation are adding to overall spending. Against a backdrop of cautious consumer behavior, these factors have likely prompted investors to reassess the near-term outlook, contributing to the recent pullback in Dutch Bros’ share price.
BROS One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, BROS stock is currently trading below its 50-day moving average, signaling a bearish trend.
BROS Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
Given the significant pullback in BROS’ shares currently, investors may be tempted to snap up the stock. But is this the right time to buy BROS? Let’s find out.
What’s Weighing on BROS Stock?
Dutch Bros, operating alongside industry peers like Starbucks Corporation (SBUX - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Sweetgreen, Inc. (SG - Free Report) , is grappling with mounting tariff and commodity-related pressures. With nearly half of its coffee supply sourced from Brazil, the company is particularly exposed to global fluctuations in coffee prices and potential tariff changes. Although favorable dairy pricing provided temporary relief in the second quarter, management has warned that rising coffee costs will likely accelerate in the latter half of 2025, tightening margins further.
The company now anticipates beverage, food, and packaging expenses to increase to roughly 26% of company-operated revenues in the back half of the year. Considering that coffee alone represents about 10% of Dutch Bros’ total cost base, even minor shifts in commodity pricing can significantly erode profitability. Despite having locked in most coffee prices for 2025, investors remain cautious about cost volatility that could extend into 2026.
At the same time, Dutch Bros’ aggressive expansion plans are straining short-term profitability. The company aims to open at least 160 new shops this year — equivalent to around 16% system-wide growth — but the rapid pace of openings comes with added expenses. The company expects preopening expenses to climb in the second half as development accelerates.
Another key issue dampening investor sentiment is the waning impact of previous price increases. After several quarters in which pricing supported comparable sales, management noted that net price contribution had declined by about 60 basis points year over year in the second quarter, with sales mix also turning slightly negative due to smaller-ticket items. The company emphasizes monitoring the competitive landscape and a cautious consumer spending environment.
Can Dutch Bros Turn Things Around?
Despite near-term margin challenges, Dutch Bros’ long-term fundamentals remain strong. The company continues to fire on all cylinders in driving transactions, expanding digital engagement, and testing new growth initiatives.
The Dutch Rewards loyalty program, accounting for 72% of total system transactions in the second quarter, remains a key growth lever. Enhanced segmentation and personalized offers are improving customer engagement and visit frequency. Likewise, mobile ordering (which comprised 11.5% of system sales in the second quarter) is gaining traction, particularly in newer markets where adoption rates are double the company average.
Another potential catalyst is the expansion of its food pilot program. Rolled out across 64 company-operated shops in Arizona, Kansas, Missouri and Oklahoma, the pilot has generated ticket and transaction lift without compromising throughput. Management plans to expand the program in 2025, with a broader rollout expected in 2026, potentially capturing incremental sales in the high-frequency morning daypart.
Operationally, Dutch Bros continues to refine labor deployment and throughput optimization. Enhanced speed dashboards and shop-level KPIs are helping improve service times and efficiency. Meanwhile, system AUVs in the second quarter came in at $2.05 million, underscoring strong unit economics.
Financially, the company is on a solid footing, with $694 million in liquidity, including $254 million in cash and a $440 million undrawn revolver, following a successful refinancing of its $650 million credit facility. This robust liquidity position provides ample flexibility to sustain expansion and absorb near-term cost volatility.
BROS Stock Valuation Insights
Over the past 60 days, the Zacks Consensus Estimate for BROS’ 2025 earnings per share (EPS) has remained unchanged at 68 cents. Over the same time frame, estimates for industry players, including Chipotle, have remained unchanged at $1.21, while estimates for Starbucks and Sweetgreen have declined 2.7% and 9.2% respectively.
BROS Earnings Estimate Trend
Image Source: Zacks Investment Research
BROS stock is currently trading at a premium. Dutch Bros is currently trading at a forward 12-month price-to-sales (P/S) ratio of 4.15, well above the industry average of 3.47. Other industry players, such as Chipotle, Starbucks and Sweetgreen, have P/S ratios of 4.13, 2.37 and 1.12, respectively.
Image Source: Zacks Investment Research
Our Thoughts on BROS Stock
Dutch Bros’ long-term growth story remains intact, supported by strong transaction trends, disciplined expansion, and growing digital engagement through Dutch Rewards and mobile ordering. The company’s food pilot program and throughput initiatives position it to unlock additional daypart and operational efficiencies over time.
However, near-term headwinds from rising coffee costs, moderating pricing benefits, and higher preopening expenses could pressure margins. At a premium valuation, much of the optimism surrounding Dutch Bros’ aggressive growth strategy may already be reflected in the stock.
Key factors to watch include the pace of the food program’s expansion, sustained adoption of its order-ahead platform, and management’s ability to maintain cost discipline amid commodity and tariff volatility. We recommend waiting for clearer signs of margin stabilization before initiating new positions. For existing shareholders, maintaining exposure appears reasonable given Dutch Bros’ robust liquidity, brand momentum and long-term unit growth potential.
BROS currently carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.