Picture a whole bunch of Wall Street suits sitting in town cars, lined up outside a coffee shack.
Shares in Southern Oregon drive-thru chain Dutch Bros jumped more than 30% on Thursday, adding to a nearly 60% leap following the company’s initial public offering one day earlier. It was the biggest stock debut in state history and the first Oregon IPO to raise more than $100 million since 2004.
Dutch Bros raised more than $550 million. Its shares closed Thursday at $48, more than double the $23 offering price in Wednesday’s IPO.
Investors appear sold on the company’s irreverent brand and reputation for outgoing customer service. Based in the small Josephine County town of Grants Pass, Dutch Bros now has a market capitalization of roughly $7.9 billion – $1.2 billion more than Columbia Sportswear, one of Oregon’s most established businesses.
It’s far from certain that investors will see long-term gains on their Dutch Bros bet, though. The chain hopes to grow from its current tally of roughly 480 coffee stands to hit 4,000 in the years to come.
But while Dutch Bros’ revenue grew by 27% last year, the company generated just $5.7 million in profits on $327 million in sales. The coffee chain is spending heavily to finance its growth.
In Dutch Bros’ favor, the stock’s phenomenal reception on Wall Street will make it easier to raise money for future growth.
Founded in 1992, Dutch Bros (pronounced “bros,” not “brothers”) has built a devoted following among customers who call themselves the “Dutch Mafia.” The company has a long menu of frozen concoctions, cold brews and energy drinks that broaden its appeal far beyond the basic Americano.
Nearly a quarter of its sales come from Dutch Bros’ line of Blue Rebel energy drinks. Smoothies and blended drinks are the second-largest accounting for nearly a fifth of its sales. Hot coffee represents just 16% of Dutch Bros’ business, according to filings associated with its IPO.
Co-founder and Chairman Travis Boersma, 50, is suddenly one of Oregon’s wealthiest residents. He owns 43% of Dutch Bros’ stock, worth approximately $3.4 billion at Thursday’s closing price, and controls 74% of the voting shares through an unusual corporate structure.
On Wednesday, Boersma told The Oregonian/OregonLive that the IPO was one step on the way to Dutch Bros’ fulfilling a vision to take its brand national.
It “really is one of those American dream kind of situations,” Boersma said. “It puts us in a really special place to be able to executive a game plan and a strategy that is really excited.”