BROS: BROS to acquire 29 unit franchisee

Research evidence excerpt

BROS: BROS to acquire 29 unit franchisee

EQUITY RESEARCH QUICK TAKE

RBC Capital Markets, LLC

Logan Reich, CFA (Analyst)

Emir Akdogan (Senior Associate)

May 12, 2026

Dutch Bros, Inc.

BROS to acquire 29 unit franchisee

NYSE: BROS | USD 50.68 | Outperform | Price Target USD 75.00

Sentiment: Neutral

Event: BROS announced today after market close the company agreed to acquire Phoenix East Valley franchise, which operates 29

units. The PR noted the selling franchisee intends to retire after ~20 years as a Dutch Bros franchise operator. The deal is expected to

close in 3Q and the current 2026 guidance does not contemplate the impact of the pending acquisition. Terms were not disclosed.

Our view: The acquisition aligns with the company's strategy to be primarily a company-operated concept and given the

franchisee's retirement as a likely catalyst of the deal, we don't view this as an indication that the company will actively pursue

further franchisee acquisitions. While terms of the deal weren't disclosed and it's not apples to apples, it's worth noting for context

that the company acquired Clutch Coffee Bar's 20 locations for ~$20m in Q1. As of the end of Q1, the company had $263.5m of

cash on the balance sheet and is FCF positive, so we don't think the expenditure will impact company-owned development. That

said, given the competitive overhang as large global brands add new specialty beverages and rapid growth of similar concepts (our

checks suggest 7 Brew could add 4-500 units in '26 & exit the year at 1,000+), we think BROS getting more aggressive on new unit

development would be well-received by investors. We acknowledge new opening execution is critical, but speed to market likely

becomes increasingly important in the next couple years.