As shares of Starbucks struggle, Dutch Bros has emerged as a strong contender in the coffee market, with its stock rising over 35% in the past year. Dutch Bros' unique concept, with small drive-thru locations and a focus on coffee-based drinks, energy drinks, and other beverages, has resonated with customers, driving same-store sales up 10% last quarter. In contrast, Starbucks saw a 4% decline in same-store sales. Dutch Bros' overall sales climbed nearly 40% year over year, with adjusted EBITDA soaring 120%. The company has a long runway for expansion, with plans to open over 4,000 locations in the next 10-15 years. With the introduction of a mobile ordering app and a strong growth trajectory, Dutch Bros looks like a solid investment option for the long term. However, its valuation is more expensive than Starbucks, and the company's ability to generate free cash flow is a concern. Despite this, Dutch Bros' unique concept and growth potential make it an attractive option for investors.
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