'Dutch Bros', a Coffee Chain Emerging as the Next Starbucks
Employee rating on company review site is 4.0, higher than Starbucks (3.9)
Focusing on 'how money is made' beyond just making money... proven by industry's lowest turnover rate
There are no declining industries, only declining companies.
- Tadashi Yanai, Chairman of Uniqlo
In 2020, the IBK Economic Research Institute released a study on the impact of the pandemic on Korea's small and medium-sized enterprises. According to the survey, 82% of 1,000 SMEs with fewer than 300 employees responded that they had suffered damage on the sales side due to COVID-19. For now, taking on debt and holding on while only hoping for the end of the pandemic. This seemed to be the sole survival strategy and methodology of the era.
On May 9, 2023, when the threat of the pandemic had somewhat subsided, one franchise café company released IR materials.
"In the first quarter, we opened 45 shops for the first time since starting the company, and revenue increased by about 30%. Labor efficiency and the ratio of G&A (Selling, General & Administrative Expenses) also improved considerably, creating meaningful operating profit. I am proud of the way our team responded swiftly and decisively to the economic environment. This was proven by our expansion in shop scale and our strengthened profitability."
This company is Dutch Bros, the next Starbucks, which achieved an IPO listing amid the pandemic in 2021 and has since shown astonishing growth. This franchise café brand is focusing, beyond making money, on "how you make money." And this process is leading to the industry's lowest turnover rate, one of the indicators of a healthy corporate culture.
[Dutch Bros store view ⓒdutchbroscoffee instagram]
Dutch Bros Doesn't Sell Coffee. It Sells Love.
[The atmosphere of receiving a Dutch Bros drink at the drive-through; depending on the situation, all the staff sometimes come out ©dutchbroscoffee Instagram]
If customers who visit a shop love the staff, how much does the scarcity of those staff rise? Starbucks, which accounts for more than 50% of the Korean café market's sales, maximizes the offline experience to create a value that differentiates it from other shops—namely, scarcity.
Dutch Bros, which has operated all of its shops in a drive-through format since 1992, signaled continuous growth through its IPO even when the global F&B market was reeling from the pandemic. And at the drive-through shops the brand has insisted on, an event occurred that made the impact of the Dutch Bros brand visible. A single photo became known—of all the staff at a shop coming out to pray for a customer who had lost her husband.
In this way, Dutch Bros became a brand that gives a special resonance in a world where the effort to chase operating profit amid infinite competition is taken for granted.
It did not give resonance only to consumers. On the U.S. site "Indeed," similar to Korea's Jobplanet, Dutch Bros' employee rating in reviews is 4.0, higher than Starbucks' 3.9. You can see reviews such as a fun environment, great colleagues, an enjoyable and exciting workplace, and super fun. It can be interpreted to mean that while customers who receive love rather than coffee are happy, the side selling the love is quite happy, too.
A Three-Year Promise to Run a Local Shop, and a Turnover Rate of About 0% Brought by a Sustainability Policy
[Dutch Bros' secret menu is its friendly staff ⓒdutchbroscoffee instagram]
Until its IPO, Dutch Bros operated only through directly run shops. But afterward it began creating franchise shops, and franchise shops now account for about 3% of all shops.
Dutch Bros has a special policy for selecting franchise-shop owners: it gives the opportunity only to employees who have worked at Dutch Bros for at least three years. It regards three years as the minimum period needed to embody Dutch Bros' culture, its attitude toward customers, and its relationships with colleagues.
Is it a reward for three years of effort? The head office bears most of the costs for opening a shop, from site selection to construction to interior work. This is a different approach from the usual franchise-opening process, in which one starts operating the brand while taking on a debt that cannot be ignored. Employees can start their own business at low cost, and Dutch Bros can entrust a shop with confidence to a proven person, so management risk is clearly reduced. A structure is created in which neither side has anything to lose. With this sustainability policy, new employees come to Dutch Bros dreaming of their own shop and work passionately. Dutch Bros employees' turnover rate is 66%, more than half lower than the industry average (144%), and the turnover rate at the regional-operator level is close to 0%. According to Dutch Bros, there are currently more than 200 regional-operator candidates, and it stated that, with their capabilities, it expects to be able to open about 1,000 more shops. This brightens the future outlook for the Dutch Bros brand.
Support for ALS Patients That Began with a Founder's Death, Reaching 2.5 Million Dollars in Donations Before Long
[Donations to end ALS have surpassed $2.5 million ⓒdutchbroscoffee instagram]
In 2005, while Dutch Bros was undergoing astonishing growth, one of its founders, Dane Boersma, was diagnosed with Lou Gehrig's disease (hereafter ALS). ALS is a degenerative disease that affects nerve cells in the spinal cord and brain, and a person who contracts it gradually loses motor function and the ability to move freely. Dane Boersma fought ALS symptoms for more than five years before passing away.
Dane Boersma's death had a profound influence on Dutch Bros' community spirit and culture. A key factor in Dutch Bros' success was his passion, and his devotion to developing himself as an entrepreneur and leader influenced the company's culture as a whole.
Dutch Bros colleagues, who held his spirit in high regard, have carried on donation events under the slogan #EndALS, and recently shared the news that they had reached donations amounting to 2.5 million dollars.
[A view of a Dutch Bros shop, sharing the specialness of a place where emotions are shared ©dutchbroscoffee Instagram]
In an era when the faces at the counter are being replaced by kiosks, Dutch Bros is, paradoxically, drawing a picture of success by emphasizing the power of people and of love. Even if the resources that go into labor can be replaced, the joy of the exchange shared between people cannot be replaced.
by Editor N