Observations Re: Development Progression, & The Competition

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Observations Re: Development Progression, & The Competition

C O M PA N Y N O T E

J u n e 2 2 , 2 0 2 6

Dutch Bros, Inc. (BROS) Neutral

CONCLUSION PRICE: US$70.72

In this note, we’ve done a “deep dive” into recent unit development trends in the Limited TARGET: US$68.00

Service Beverage category, with a specific focus on emerging brands Dutch Bros (BROS, Our $68 price target is based on a 15-year DCF

Neutral) and 7 Brew (Private, Not Covered). Our motivating factor here was discovering analysis. We assume a WACC of 8.50%; and a

that in 2025 7 Brew opened more stores and added more system sales $’s than Dutch perpetuity growth rate of 3.0%.

Bros did, which naturally leads one to wonder how this might evolve in the years to come.

Brian Mullan, CFAFor the BROS equity, we think that this dynamic has quickly moved front and center from Sr. Research Analyst, Piper Sandler & Co.

an Investment Community debate perspective; and that this relatively newfound focus on 212 284-9488, brian.mullan@psc.com

one specific competitor, rather than the topic of “competition” more broadly, will likely only Allison Arfstrom

increase in magnitude over time. Research Analyst, Piper Sandler & Co.

212 284-9385, allison.arfstrom@psc.com

• What’s In This Note? We’ve focused on two primary factors in this note. The first Changes Previous Current

is geography, and the second is visitation trends per store. Regarding the first, we’ve Rating — Neutral

mapped out the country and identified five different “categories” of states, with each Price Tgt US$61.00 US$68.00

category sharing specific commonalities regarding the number of Dutch Bros and 7 Brew FY26E Rev (mil) US$2,069.4 US$2,078.9

units in each set of states.