How Much Is a Dutch Bros Franchise: Cost + Fees
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Summary:
Dutch Bros Coffee is a coffee chain with many unique characteristics to its name. They used to allow existing employees to open franchises but recently changed their business model. All Dutch Bros stores are now company-owned. It’s still a great company to be a part of, not to mention their drinks are fantastic.
Previously, not just anyone could open a Dutch Bros Coffee franchise. Now, no one can open a new Dutch Bros except for the company itself. Dutch Bros recently bought out all of the existing franchisees. The company was always known for buying out franchises that weren’t operating to their high standard. Chances are they decided that all locations were better operated under one company umbrella. Regardless of ownership, Dutch Bros has been serving quality caffeinated beverages since 1992 and will continue to do so. Keep reading to learn all about Dutch Bros in the past, present, and future.
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What is a Dutch Bros franchise?
Dutch Bros Coffee is a solely drive-through coffee chain defined by its hard-to-miss buildings, delicious coffee, and friendly employees. Up until recently, both company-owned outlets and franchises operated in the Western United States. Unfortunately, Dutch Bros doesn’t offer franchises anymore. According to their website, all locations are now company-owned. However, existing loyal employees have the opportunity to operate Dutch Bros locations.
History of Dutch Bros Coffee
Dutch Bros humbly began in 1992 in Grants Pass, Oregon. It started as an espresso machine on a cart by the train tracks. Two brothers of Dutch descent, Dane and Travis Boersma, would make coffee for their community for free. They became so popular that they opened their first franchise location in 2000. They have since expanded to over 470 stores in 11 states.
What makes Dutch Bros special
If you’ve ever visited a Dutch Bros shop, you have gotten a taste of what makes it so special. “We may sell coffee,” the company says, “but we’re in the relationship business.” Their focus on customer experience and serving people is evident throughout the business. The “broista” at the window always greets you with a smile and a friendly conversation.
The company does a lot to give back. Their efforts include the following charities:
- Dutch Luv: Dutch Bros channels a portion of profits to fight food insecurity in February.
- Drink One for Dane: The company raises money for the Muscular Dystrophy Association in honor of their cofounder who was diagnosed with ALS.
- Buck for Kids Day: Dutch Bros supports local organizations that benefit children. Their drive-through locations donate $1 from every drink to a children’s non-profit on one day in September.
Philanthropy is just one aspect of Dutch Bros community engagement. In the words of their Our Impact page:
Dutch Bros is taking meaningful and measurable action in philanthropy; sustainability; and diversity, equity and inclusion to drive us toward our vision of making a massive difference, one cup at a time.”
Commitment to these values and giving back isn’t what makes Dutch Bros special in the minds of most customers, though. That would be the great coffee and other drinks. And those drinks are not the same as what you find at the usual coffee shop. Dutch Bros drinks range from coffees to freezes to sodas to energy drinks to teas. They have a menu of uniquely-named classic drinks with seasonal drinks that cycle through. The coffee shop also famously sells muffin tops!
How to open a Dutch Bros franchise
When they sold franchises, Dutch Bros was unique in that they only allowed franchise opportunities to existing Dutch Bros employees. This ensured that those who opened franchises were familiar with and committed to the operations and values of the business. They still follow similar principles in exclusively offering regional operator positions to existing outstanding employees.
While Dutch Bros no longer offers franchise opportunities, looking back at how it was done could give you a better understanding of franchising. This understanding could be useful if you pursue an opportunity with another company, if Dutch Bros brings back franchises someday, or if you decide to get on the regional-operator career track at Dutch Bros.
So, let’s imagine you’ve traveled back in time to before Dutch Bros ended their franchise program. Here’s the process you now need to follow to open a Dutch Bros franchise so you can get bought out when the company buys up all the franchises. Good luck!
Quick overview: steps to your franchise
Nothing shows you’re serious about franchising like traveling back in time to take advantage of this Dutch Bros opportunity. Taking care not to corrupt the timeline while doing so, here are the basic steps you need to follow:
- Get integrated into the company
- Raise funds
- Analyze your skills and market conditions
- Apply to open a Dutch Bros Coffee franchise
- Get approved and open
Let’s look at each of these steps in detail.
1. Get integrated into the company
To be eligible to open a Dutch Bros franchise, you must have worked at the company for three years at a franchise location. You must serve at least one of those three years in a manager position.
2. Raise funds
You will need to raise a lot of funds to start your franchise. Dutch Bros requires you to have a minimum of $150,000 of liquid capital to open a franchise. You should also take into account — for your own sake — the other startup costs that come with opening a business. Building and real estate, equipment and signs, licenses and permits, uniforms, insurance, and more will require more capital out of your pocket. Make sure you have enough money available to comfortably cover these costs. You may be able to get a business loan to start a franchise.
3. Analyze your skills and market conditions
Have you opened a business before? You won’t be surprised to learn it’s a lot of work. Although not required, previous business experience can help a lot in opening a successful Dutch Bros franchise. Additionally, you should do some market research on your desired franchise location. Make sure that there is demand and easy access for a new Dutch Bros.
4. Apply to open a Dutch Bros Coffee franchise
Once you’ve gathered funds and made sure that opening a new franchise is a good idea for you, you can apply! The application process happens internally. Once you’ve submitted your application, the franchise team will review it.
5. Get approved and open
The Dutch Bros team conducts a series of background checks, financial reviews, and other analyses to determine if you are a good fit to open a new franchise. If all goes well and you meet all of their requirements, they will approve your application. Then, you are finally ready to open your Dutch Bros.
Pro tip — When securing funding for a business, loans often come with collateral. This can be daunting, but there are a few ways to get a business loan without collateral. It just so happens that starting a franchise may allow you to get a loan without collateral!
How much is a Dutch Bros franchise?
Dutch Bros franchises used to be available only for existing employees. Now, they are available for no one. Because only existing Dutch Bros employees could open a franchise, the cost was somewhat of a mystery. The Costs of opening any franchise include the initial investment and recurring maintenance and operations costs.
Dutch Bros franchise cost
While the exact cost of a Dutch Bros franchise is not known, experts estimate that Dutch Bros franchise owners invested $150,000 to $500,000 of liquid capital to open a franchise. At a minimum, the company required $150,000 of liquid capital for the initial investment. In addition to this liquid capital, Dutch Bros charged a $30,000 franchise fee.
Recurring costs of a Dutch Bros franchise
After opening costs, franchise owners could expect recurring expenses to keep the business running. Dutch Bros charged an ongoing royalty fee for all franchises. The fee was either 5% of gross sales or $1,300 every month, whichever was greater.
Dutch Bros financial metrics
Dutch Bros Coffee is a successful coffee business mostly in the Western United States. It has consistently grown in size and sales. Here are some key metrics that represent the overall financial success of Dutch Bros Coffee.
Dutch Bros revenue
Dutch Bros Coffee reached gross sales of $479.9 million in 2021. This was a 52.1% increase from 2020. The estimated sales for individual stores in 2021 were approximately $1.5 million.
Dutch Bros profit margins
Many factors dictate the profit margin of a coffee shop. Competition, location, size, and quality of services are some of the factors that can increase or decrease the profit margins of a Dutch Bros. Dutch Bros Coffee has a 20% average profit margin across locations. This means that each store may make an average of about $380,000 in profits per year.
How much does a Dutch Bros store owner make?
Previously, when Dutch Bros allowed franchising, a franchise owner could make anywhere from $150,000 to $300,000 per year. The closest you can get to a franchise owner now is a regional operator. Regional operators can make from $65,000 to $90,000 per year according to indeed.com data.
Alternative franchise opportunities
Active coffee-franchise opportunities
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Opening a franchise business can be hard work, fun, and rewarding.
While you aren’t able to open a Dutch Bros franchise anymore, there are other coffee franchise opportunities out there for you with other companies!
Here are some you might be interested in.
FAQ
How much does a Dutch Bros franchise owner make?
A Dutch Bros franchise owner used to make an average of around $200,000 per year.
Can I buy a Dutch Brothers franchise?
Unfortunately, you can no longer buy a Dutch Brothers franchise. The company bought out all franchise owners and is now 100% company-owned. As an outstanding loyal employee, you may be eligible for a regional operator position.
How much does it cost to own a Dutch Bros franchise?
Starting a Dutch Bros franchise used to cost $150,000 to $500,000 plus ongoing franchise fees and operational costs.
Is Dutch Bros a profitable company?
Dutch Bros is a profitable company. It takes in an average of 20% of gross sales as profit.
Key takeaways
- Dutch Bros Coffee is a unique coffee chain started by brothers Dane and Travis Boersma in Oregon. The company has over 470 stores in 11 states.
- Dutch Bros continues to thrive and grow year after year as a profitable company. They operate on a strong value system and deliciously fun drinks.
- Dutch Bros offered franchising opportunities to its existing employees up until recently, when they bought out all franchised locations.
- Opening a franchise used to cost $150,000–$500,000 for the initial investment. You can’t buy a Dutch Bros franchise anymore, but you can apply to become a regional operator.
Continuing pursuit of your franchise-ownership dream
If you still want to open a franchise with another company, learn how to get approved for a business loan. It may be difficult to get a business loan with bad credit, but it’s possible. Check out these comprehensive business loan reviews from SuperMoney to find the best one for you.
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