Dutch Bros Navigates Margin Pressure Amid Aggressive Expansion and Coffee Price Volatility

Dutch Bros (NYSE: BROS) is facing a dual challenge of rising raw material costs and increased operational expenses as it accelerates its national footprint. The company's shares have declined 14% in 2026 as investors weigh immediate margin compression against long-term scalability. The pressure stems from a strategic shift in leasing and the volatility of the coffee market. Management has indicated that the transition to build-to-suit arrangements is driving up occupancy costs, while spikes in arabica coffee prices are impacting the bottom line. For the current full year, the company expects a 60-basis-point drag on adjusted EBITDA margins. The first quarter saw a more acute 200-basis-point headwind primarily attributed to elevated coffee costs. Despite this, Dutch Bros ended 2025 with 1,136 shops and plans to add at least 181 net new locations in 2026. While coffee represents only about 10% of the cost of goods sold, the volatility remains a point of focus for traders. However, sell-side analysts project a compound annual revenue growth rate of 25% and a 27% increase in adjusted earnings per share over the next three years, supported by a long-term vision of reaching 7,000 U.S. stores.