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Dutch Bros Coffee IPO brings out Oregon’s newest billionaire

Dutch Bros Co-Founder and Chairman of the Board Travis Boersma.

Dutch Bros.

Biotech and sports companies dominate the listings this week, but Oregon-based coffee chain Dutch Bros stands out. The company was founded in 1992 by two brothers who left the dairy industry to sell hand-cart coffee (equipped with a single espresso machine and stereo) in the small town of Grants Pass. It has now grown to more than 470 stores – known for its drive-through-only format – across 11 states. The family business, still run by one of the brothers, chairman Travis Boersma, went public on Wednesday with an IPO on the New York Stock Exchange that grossed nearly $ 500 million and made Boesma a billionaire.

“This is an incredible day for Dutch Bros, a total brainstorm,” Boersma, 50, told Forbes on Wednesday. “When my brother and I started this company almost 30 years ago, we never imagined we’d be here today. Now I’m focusing on giving our people more opportunities – that’s the core of why we went public “The company has almost 17,000 employees.

The blockbuster IPO makes it the largest in Oregon history: Dutch Bros raised about $ 484 million, far more than the $ 146 million and $ 169 million that Oregon heavyweights Nike and Columbia Sportswear in 1980 or Boersma owns about 41% of the newly listed company, a stake worth 2.5 billion US dollars. Dutch Bros’ shares closed at $ 36.92 on the first day of trading, 61% above the opening price of $ 23. The co-founder also bought an airplane from Dutch Bros in July for $ 900,000 and sold a portion of the stock in the IPO, which grossed approximately $ 69 million after capital gains taxes, bringing his estimated net worth at $ 2.6 billion increased. Thanks to multiple anti-takeover provisions and a multi-tier share structure, Boersma will retain 74% of the company’s voting shares.

Dutch Bros is relatively tiny compared to coffee chains like Starbucks and Peet’s. The company posted a net loss of nearly $ 62 million on sales of $ 327 million last year, with sales increasing 60% in 2020 as the chain added 71 new locations, all of which are owned by the company was. Dutch Bros ceased franchising in 2017, but 56% of Dutch Bros locations are still owned by franchisees – many of them with longstanding ties to the company thanks to the 2008 decision to limit franchises only to people within the “Dutch Bros.” Systems “for sale. All of the 179 newly opened stores since 2018 are operated by shop managers who are supported from within.

Publicly traded coffee companies have been a mixed picture since the Covid-19 pandemic began: JDE Peet’s, which owns coffee trader Peet’s Coffee, went public on the Amsterdam Stock Exchange in June 2020 and has seen a 12% decline since it started trading. On the other hand, the formerly listed Dunkin ‘Brands was bought by restaurant investment firm Inspire Brands for $ 11.3 billion in October 2020. In comparison, Starbucks, as a small regional company bought by the later billionaire Howard Schultz, is still way ahead: The giant achieved sales of 23.5 billion US dollars in more than 32,000 stores in the current fiscal year 2020. through September, and the stock is up 15% since early 2021.

Travis Boersma will ring the opening bell on the New York Stock Exchange on September 15, 2021, the day Dutch Bros went public.

Dutch Bros.

Nevertheless, Dutch Bros relies on an aggressive expansion strategy and brand loyalty from its customers in order to ensure steady growth as a listed company. The chain continued its expansion eastwards with new stores in Texas and Oklahoma this year, with the goal of eventually reaching 4,000 locations across the U.S. from the wildfires that devastated Oregon in 2020. Dutch Bros has also developed a unique culture since its inception – touted as “Dutch Luv” – calling its baristas “Broistas” and offering a secret menu of signature drinks ranging from the “Hot Annihilator” (to espresso and chocolate macadamia nut Syrup brew) to energy drinks “Blue Rebel”.

Travis and Dane Boersma started Dutch Bros with a handcart on the railroad tracks in Grants Pass, Oregon in 1992 after leaving the dairy industry that had employed their Dutch family two generations before them. “Changes to the [dairy] Industry made our outlook pretty bleak. So we used this reality as motivation to try something new, ”Boersma said in a statement in the company’s offer prospectus. “Dane and I shared a desire to do something extraordinary together. We bought a double espresso machine, turned on the stereo, threw open the barn doors, and started experimenting with coffee beans. “

The brothers added four more carts over the years and by 1994 they had bought their first drive-through location and with the opening of their first franchise location in 2000. The tragedy occurred in 2004 when Dane was diagnosed with ALS , a deadly neurodegenerative disease also known as Lou Gehrig’s disease. The diagnosis sparked a charity campaign called “Drink One For Dane” to raise funds for the Muscular Dystrophy Association, which supports ALS research. While Dane died of complications from ALS in 2009, the company claims it has raised more than $ 10.3 million for ALS patients and research to date.

Dutch Bros continued to grow under Travis’ leadership, and the company first took outside investments in September 2018, receiving an undisclosed amount from San Francisco-based private equity firm TSG Consumer Partners. TSG is the second largest shareholder in Dutch Bros with a stake of around 31% valued at nearly $ 1.9 billion. Boersma stepped down as CEO in February to serve as Executive Chairman, and was replaced at the helm by Joth Ricci, who joined Dutch Bros in 2019 and previously served as President of Portland-based artisanal coffee brand Stumptown Coffee Roasters from 2013-2017, four Months before going public, Dutch Bros took out a $ 200 million loan from JPMorgan Chase to be repaid with the proceeds from its listing.

The memories of that first car with his brother still drive Travis Boersma’s vision for the company today, almost three decades and hundreds of new coffeeshops later. “[Dane’s death] has not diminished the incredible inspiration that I draw from my brother in order to continue and fulfill the dream we had in 1992, ”he said in the prospectus. “We’re on a rocket ship and I wouldn’t want it any other way. “

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