The Third-Largest Coffee Chain in the U.S. Barely Sells Coffee

"Dutch Bros now ranks as America's third-largest coffee chain behind Starbucks and Dunkin', with 1,140 locations and $1.6 billion in business. Energy drinks alone account for 25% of sales, while traditional hot coffee barely registers. 'The market is moving that way, and that is the core to what we do,' CMO Tana Davila told The Wall Street Journal."

"Dutch Bros built its business around what Gen Z actually wants: Instagram-worthy cold drinks they can customize with 40-plus flavors, boba toppings, and protein add-ons. While Starbucks fights for morning commuters, Dutch Bros owns the afternoon energy-drink crowd that older chains have ignored."

Dutch Bros, founded by two dairy farmers in 1992, revolutionized the beverage industry by shifting focus away from traditional coffee toward customizable cold drinks and energy beverages. The chain serves approximately 90% cold drinks, with energy drinks accounting for 25% of sales while hot coffee barely registers. This strategy propelled Dutch Bros to become America's third-largest coffee chain with 1,140 locations and $1.6 billion in annual business, trailing only Starbucks and Dunkin'. The company targets Gen Z consumers seeking Instagram-worthy beverages with extensive customization options including 40-plus flavors, boba toppings, and protein add-ons. While established chains compete for morning commuters, Dutch Bros dominates the afternoon energy-drink segment that larger competitors have largely overlooked.

Read at Entrepreneur