Dutch Bros Inc 10-K for FY2021

Dutch Bros Inc. (BROS)

10-K 2022-03-11 For: 2021-12-31

Added on April 10, 2026

About this 10-K

Dutch Bros Inc filed this 10-K on March 11, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $497.88M; up 52.1% from $327.41M a year earlier
Net loss: $12.91M; compared with net income of $0 a year earlier
Diluted EPS: -$0.28

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Title of Each Class	Trading Symbol	Name of Exchange on which Registered
Class A Common Stock, par value $0.00001 per share	BROS	The New York Stock Exchange


Class A common stock			34,555,822
Class B common stock			64,699,136
Class C common stock			49,006,210
Class D common stock			15,441,243


		Page

Glossary		1
Forward-Looking Statements		2

PART I



ITEM 1.	Business	3
ITEM 1A.	Risk Factors	14
ITEM 1B.	Unresolved Staff Comments	57
ITEM 2.	Properties	57
ITEM 3.	Legal Proceedings	58
ITEM 4.	Mine Safety Disclosures	58

PART II



ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	59
ITEM 6.	[Reserved]	60
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	61
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	75
ITEM 8.	Financial Statements and Supplementary Data	77
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	116
ITEM 9A.	Controls and Procedures	116
ITEM 9B.	Other Information	117
ITEM 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	117

PART III



ITEM 10.	Directors, Executive Officers and Corporate Governance	118
ITEM 11.	Executive Compensation	118
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	118
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	118
ITEM 14.	Principal Accountant Fees and Services	118

PART IV



ITEM 15.	Exhibits and Financial Statement Schedules	119
ITEM 16.	Form 10-K Summary	121

SIGNATURES		122



Iced Tiger’s Blood Lemonade	Birthday Cake Frost	Blended Aftershock Rebel	Golden Eagle Freeze


Growth Summary (CAGRs)		Growth Summary (CAGRs)
Company-operated	51.5%	Company-operated	63.2%
Total	20.6%	Total	44.5%


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Continue to Attract and Develop Great People, Who are our Growth Capital


Increase Brand Awareness and Encourage Deeper Customer Engagement


Invest in and Use Digital Technology to Improve the Customer Experience


Travis Boersma, 51			Co-Founder and Executive Chairman of the Board


Jonathan “Joth” Ricci, 53			President and Chief Executive Officer


	September 15, 2021		September 30, 2021		October 31, 2021		November 30, 2021		December 31, 2021
Dutch Bros Inc.	$	100.00	$	118.10	$	207.85	$	144.06	$	138.79
S&P 500 Index	$	100.00	$	96.14	$	102.78	$	101.93	$	106.37
S&P 500 Consumer Discretionary Index	$	100.00	$	97.34	$	107.96	$	110.01	$	109.67


	Year Ended December 31,
(in thousands)		2021		2020		2019
REVENUES
Company-operated shops		$	403,746	$	244,514	$	151,543
Franchising and other		94,130		82,899		86,825
Total revenues		497,876		327,413		238,368

COSTS AND EXPENSES


Cost of sales		346,113		211,659		142,307




Selling, general and administrative		265,035		105,087		65,764
Total costs and expenses		611,148		316,746		208,071

INCOME (LOSS) FROM OPERATIONS		(113,272)		10,667		30,297

OTHER INCOME (EXPENSE)
Interest expense, net		(7,093)		(3,736)		(2,346)
Other income (expense), net		(1,240)		(363)		524
Total other expense		(8,333)		(4,099)		(1,822)

INCOME (LOSS) BEFORE INCOME TAXES		(121,605)		6,568		28,475
Income tax expense (benefit)		(1,628)		843		89
NET INCOME (LOSS)		(119,977)		5,725		28,386
Less: Net income (loss) attributable to Dutch Bros OpCo prior to the Reorganization Transactions		(68,602)		5,725		28,386
Less: Net loss attributable to non-controlling interests		(38,461)		—		—
NET LOSS ATTRIBUTABLE TO DUTCH BROS INC.		$	(12,914)	$	—	$	—


	Year Ended December 31,
(in thousands, except shop count data)		2021			2020			2019
Shop count, beginning of period
Company-operated		182			118			90
Franchised		259			252			238
		441			370			328
Company-operated new openings		82			59			27
Franchised new openings		16			13			15
Acquisition of franchise shops		7			5			1
Closures 1		(1)			(1)			—
Shop count, end of period
Company-operated		271			182			118
Franchised		267			259			252
Total shop count		538			441			370

Average unit volume (AUV) 2		$	1,850		$	1,679		$	1,635
Company-operated shops		$	1,752		$	1,524		$	1,460

Same shop sales growth 3 5		8.4		%	2.0		%	2.0		%
Company-operated shops		9.0		%	0.8		%	2.3		%

Company-operated shop revenues		$	403,746		$	244,514		$	151,543
Company-operated shop gross profit		$	85,183		$	60,368		$	26,299
Company-operated shop contribution 4		$	101,474		$	70,105		$	33,795
Company-operated shop gross profit as a % of company-operated shop revenue		21.1		%	24.7		%	17.4%
Company-operated shop contribution as a % of company-operated shop revenue 4		25.1		%	28.7		%	22.3%

Net income (loss)		$	(119,977)		$	5,725		$	28,386
Adjusted EBITDA 4		$	82,086		$	69,764		$	48,715
Net income (loss) as % of revenue		(24.1)		%	1.7		%	11.9		%
Adjusted EBITDA as % of revenue 4		16.5		%	21.3		%	20.4		%

Systemwide sales 4 5		$	913,822		$	687,238		$	566,642
Dutch Rewards member registrations 6		3,202			8			N/A



Hot Annihilator	Iced Caramelizer	Iced Electric Berry Rebel


Open New Shops Wherever People Want Great Beverages


Expand Margins Through Operating Leverage


Brian Maxwell, 50			Chief Operating Officer


	Material Cash Requirements
(in thousands)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Operating lease obligations 1	$	184,590	$	12,398	$	23,701	$	22,717	$	125,774
Capital lease obligations 1 5	130,379		8,824		17,415		18,155		85,985
Purchase obligations 3	82,979		73,283		9,036		660		—
Debt obligations 2 5	65,000		65,000		—		—		—

Liabilities under tax receivable agreement 4 5	109,733		450		15,034		15,087		79,162
Total	$	572,681	$	159,955	$	65,186	$	56,619	$	290,921


Audited Consolidated Financial Statements of Dutch Bros Inc. and Subsidiaries						Page
Report of Independent Registered Public Accounting Firm						78
Consolidated Balance Sheets						79
Consolidated Statements of Operations						81
Consolidated Statements of Stockholders’/Members’ Equity						82
Consolidated Statements of Cash Flows						84
Notes to Consolidated Financial Statements						86


	As of December 31,
(in thousands, except per share amounts)	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	18,506	$	31,640
Accounts receivable, net	10,644		10,837
Inventories, net	23,345		15,580
Prepaid expenses and other current assets	8,796		5,015
Total current assets	61,291		63,072
Property and equipment, net	301,998		165,423
Intangibles, net	11,103		11,323
Goodwill	18,715		18,075
Deferred income tax assets, net	159,031		193
Other long-term assets	1,562		1,573
Total assets	$	553,700	$	259,659
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	20,440	$	16,092
Accrued liabilities	24,513		10,036
Other current liabilities	6,471		1,429
Deferred revenue	22,807		11,192
Line of credit	64,104		15,000
Current portion of tax receivable agreements liability	450		—
Current portion of capital lease obligations	3,389		2,331
Current portion of long-term debt	103		3,788
Total current liabilities	142,277		59,868
Deferred revenue, net of current portion	5,030		4,746
Tax receivable agreements liability, net of current portion	109,283		—
Capital lease obligations, net of current portion	79,588		49,637
Long-term debt, net of current portion	3,503		24,367
Profits interest liability	—		41,845
Deferred rent	3,153		2,740
Other long-term liabilities	680		466
Total liabilities	343,514		183,669
Commitments and contingencies (Note 16)
Temporary equity:
Redeemable common units - 4,990 common units issued and outstanding as of December 31, 2020	—		1,535,772
Permanent equity (deficit):
Members’ deficit - 5,010 common units issued and outstanding as of December 31, 2020	—		(1,459,782)


Preferred stock, $0.00001 par value per share - 20,000 shares authorized; 0 shares issued and outstanding as of December 31, 2021	—		—
Class A common stock, $0.00001 par value per share - 400,000 shares authorized; 34,433 shares issued and outstanding as of December 31, 2021	—		—
Class B common stock, $0.00001 par value per share - 144,000 shares authorized; 64,699 shares issued and outstanding as of December 31, 2021	1		—
Class C common stock, $0.00001 par value per share - 105,000 shares authorized; 49,006 shares issued and outstanding as of December 31, 2021	1		—
Class D common stock, $0.00001 par value per share - 42,000 shares authorized; 15,441 shares issued and outstanding as of December 31, 2021	—		—
Additional paid in capital	106,410		—

Retained earnings (accumulated deficit)	(12,914)		—
Total stockholders' equity attributable to Dutch Bros Inc. / members’ equity	93,498		75,990
Non-controlling interests	116,688		—
Total equity	210,186		75,990
Total liabilities and equity	$	553,700	$	259,659


	Dutch Mafia LLC (Prior to Reorganization Transactions)		Dutch Bros Inc. Stockholders’ Equity
			Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock
(in thousands)	Total Members’ Equity		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Additional Paid-in-Capital		Retained Earnings (Deficit)		Non-Controlling Interests		Total Equity







Balance, December 31, 2020	$	75,990	—	$	—	—	$	—	—	$	—	—	$	—	$	—	$	—	$	—	$	75,990
Net loss prior to the Reorganization Transactions	(68,602)		—	—		—	—		—	—		—	—		—		—		—		(68,602)
Reclass of profits interest liability to equity	76,596		—	—		—	—		—	—		—	—		—		—		—		76,596
Member distributions	(213,308)		—	—		—	—		—	—		—	—		—		—		—		(213,308)
Equity-based compensation recognized prior to the Reorganization Transactions	78,579		—	—		—	—		—	—		—	—		—		—		—		78,579
Effect of the Reorganization Transactions and initial public offering on non-controlling interests	50,745		9,877	—		71,408	1		54,068	1		17,036	—		(196,515)		—		145,768		—
Issuance of Class A common stock sold in initial public offering, net of offering costs	—		24,211	—		—	—		—	—		—	—		520,804		—		—		520,804
Purchase of OpCo common units in connection with the initial public offering	—		—	—		(6,709)	—		(5,062)	—		—	—		(239,622)		—		(13,648)		(253,270)
Impact of Tax Receivable Agreements	—		—	—		—	—		—	—		—	—		46,446		—		—		46,446
Net loss subsequent to the Reorganization Transactions	—		—	—		—	—		—	—		—	—		—		(12,914)		(38,461)		(51,375)
Equity-based compensation recognized subsequent to the Reorganization Transactions	—		—	—		—	—		—	—		—	—		12,663		—		31,390		44,053
Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax	—		345	—		—	—		—	—		—	—		(3,258)		—		(8,075)		(11,333)
Effect of exchange of OpCo common units	—		—	—		—	—		—	—		—	—		286		—		(286)		—
Repurchase and retirement of Class D common stock	—		—	—		—	—		—	—		(1,595)	—		(34,394)		—		—		(34,394)
Balance, December 31, 2021	$	—	34,433	$	—	64,699	$	1	49,006	$	1	15,441	$	—	$	106,410	$	(12,914)	$	116,688	$	210,186


(in thousands)	Temporary Equity: Redeemable Common Units		Permanent Equity: Members’ Deficit		Total Members’ Equity
Balance, December 31, 2018	$	534,878	$	(476,345)	$	58,533
Adoption of ASU 2014-09, as amended	—		(2,279)		(2,279)
Distribution to members	—		(6,625)		(6,625)
Increase in redemption value of common units	402,843		(402,843)		—
Net income	—		28,386		28,386
Balance, December 31, 2019	937,721		(859,706)		78,015
Distributions to members	—		(7,750)		(7,750)
Increase in redemption value of common units	598,051		(598,051)		—
Net income	—		5,725		5,725
Balance, December 31, 2020	$	1,535,772	$	(1,459,782)	$	75,990


Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	7,350	$	3,829	$	2,415
Income taxes paid	886		338		103
Supplemental disclosure of noncash investing and financing activities
Additions of property with capital leases and financing obligations	$	35,169	$	31,291	$	13,797
Additions of property and equipment accrued in accounts payable	6,452		3,518		4,329
Deferred offering costs accrued	250		—		—


Note						Page
NOTE 1 — Organization and Nature of Operations						87
NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies						88
NOTE 3 — Revenue Recognition						97
NOTE 4 — Shop Acquisitions						98
NOTE 5 — Inventories						99
NOTE 6 — Property and Equipment						99
NOTE 7 — Intangible Assets and Goodwill						100
NOTE 8 — Leases						101
NOTE 9 — Debt						102
NOTE 10 — Tax Receivable Agreements						103
NOTE 11 — Income Taxes						104
NOTE 12 — Equity and Stock-Based Compensation						106
NOTE 13 — Employee Benefit Plans						109
NOTE 14 — Non-Controlling Interests						110
NOTE 15 — Loss Per Share						111
NOTE 16 — Commitments and Contingencies						112
NOTE 17 — Related Party Transactions						113
NOTE 18 — Segment Reporting						113
NOTE 19 — Subsequent Events						114



Vehicles			5 - 10 years
Equipment and fixtures			3 - 7 years
Leasehold improvements			5 - 9 years (lesser of the lease terms or useful lives)
Buildings			10 - 20 years


(in thousands)
2022	$	452
2023	396
2024	338
2025	284
2026	240
Thereafter	850
Total	$	2,560


	Year Ended December 31,
(in thousands; unaudited)	2021		2020
Revenue	$	501,324	$	335,881
Net income (loss)	$	(120,867)	$	6,500


				As of December 31,
(in thousands)	Useful Life (Years)			2021		2020
Software	3			$	7,132	$	2,995

Equipment and fixtures	3	—	7	57,952		36,454
Leasehold improvements	5	—	9	20,744		15,228
Buildings	10	—	20	168,395		112,106
Land	N/A			5,242		4,211
Aircraft 1	N/A			9,531		13,751
Construction-in-progress 2	N/A			88,050		15,437
Property and equipment, gross				357,046		200,182
Less: accumulated depreciation				(55,048)		(34,759)
Property and equipment, net				$	301,998	$	165,423


		As of December 31,
(in thousands)	Weighted-average amortization period (in years)	2021		2020
Reacquired franchise rights	4.0	$	25,314	$	22,000
Less: accumulated amortization		(14,211)		(10,677)
Intangibles, net		$	11,103	$	11,323


(in thousands)
2022	$	3,393
2023	3,054
2024	2,187
2025	1,232
2026	580
Thereafter	657
Total	$	11,103


(in thousands)
Balance, December 31, 2019	$	16,531
Business combinations	1,544
Balance, December 31, 2020	$	18,075
Business combinations	640
Balance, December 31, 2021	$	18,715


(in thousands)	Capital		Operating
2022	$	8,824	$	12,398
2023	8,672		12,002
2024	8,743		11,699
2025	8,926		11,420
2026	9,229		11,297
Thereafter	85,985		125,774
Total	$	130,379	$	184,590
Less: imputed interest	(47,402)
Present value of minimum capital lease payments	82,977
Less: current portion	(3,389)
Capital lease obligations, net of current portion	$	79,588


(in thousands, except per share amounts)
Class of Stock	Authorized Shares	Par Value Per Share
Preferred stock	20,000	$0.00001
Class A common stock	400,000	$0.00001
Class B common stock	144,000	$0.00001
Class C common stock	105,000	$0.00001
Class D common stock	42,000	$0.00001


(in thousands, except per share amounts)	Restricted Stock Awards	Weighted-average grant date fair value per share
Balance, December 31, 2020	—	$	—
Effect of Reorganization Transactions and IPO	9,834	23.00

Vested	(5,834)	23.00

Balance, December 31, 2021	4,000	$	23.00


(in thousands, except per share amounts)	Restricted Stock Units	Weighted-average grant date fair value per share
Balance, December 31, 2020	—	$	—
Effect of Reorganization Transactions and IPO	1,189	43.55

Vested	(593)	43.55

Balance, December 31, 2021	596	$	43.55


(in thousands)
2022	$	39,381
2023	39,261
2024	660



Total unrecognized stock-based compensation expense	$	79,302