Dutch Bros stock drops 25%, expansion plans continue

The stock market has experienced a recent decline, affecting many growth stocks. One stock that may be worth considering is Dutch Bros, a coffeehouse chain. The company's shares are down 25% from their highest point, which could be an opportunity for investors. Dutch Bros is focused on expanding its store locations. The company ends 2024 with 982 locations, mostly in the western United States. They plan to open around 160 new stores in 2025, which would be about 16% growth. Dutch Bros has a simpler store model with limited costs, which supports this expansion. While growth is crucial, it needs to be handled carefully. Dutch Bros seems to be managing this well by using its own cash flow for new locations. They have also seen strong sales growth in existing stores, with a 6.9% rise last quarter. Mobile ordering has been rolled out in most stores, although only a small percentage of sales come from it. Another potential area for growth is food sales, which currently account for only 2% of Dutch Bros' revenue. This is much lower than competitors like Starbucks. The company is testing new food options, but they want to ensure these do not interfere with their main focus on beverages. Currently, Dutch Bros stock is priced at 4.9 times estimated sales for 2025. This is higher than Starbucks' ratio, but Dutch Bros offers greater growth potential in the long run. For investors interested in growth opportunities, this might be a good time to consider buying Dutch Bros stock.