Dutch Bros vs Starbucks: Analyzing Growth Potential

Recently, both Starbucks Corp. and Dutch Bros Inc. saw their stock prices pressured due to rising coffee prices. Starbucks has experienced a decrease of over 4% in the past 30 days, while Dutch Bros saw a larger drop of over 12%.

The possibility of tariffs and concerns about a potential recession are also affecting these stocks, leading investors to question whether they are approaching fair value or if they are simply falling knives. Both companies showcase strong fundamentals, but the desire for growth raises the question: should investors consider investing in either?

Diverse Paths to Growth

Analyzing Starbucks

$98.11 +2.07 (+2.16%)

As of 03/14/2025 04:00 PM Eastern

52-Week Range

$71.55 - $117.46

Dividend Yield

2.49%

P/E Ratio

31.65

Price Target

$105.75

Starbucks, a leader in the coffee retail market, boasts nearly 17,000 stores across the United States as of February 2025. The company has transformed how many consumers perceive coffee, shifting it from a basic beverage to a premium experience.

This leadership reflects in its financial performance. In 2024, Starbucks generated $3.10 in earnings per share on a total revenue of $36.1 billion, which represents a decline year-over-year. This downturn has prompted a major transformation led by Brian Nichol, the former CEO of Chipotle Mexican Grill.

Looking at Dutch Bros

$62.40 +2.79 (+4.68%)

As of 03/14/2025 03:59 PM Eastern

Dutch Bros has emerged as a newer player in the coffee industry. The company became publicly traded in 2021 and has cultivated a loyal customer base that appreciates its unique drinks and community-oriented approach.

With a smaller footprint, Dutch Bros reached its 1,000th location in Orlando, Florida, in February 2025. The BROS stock performed admirably in 2024 and has continued a positive trend in 2025, with an 11% increase for the year and an impressive 92.6% rise over the past 12 months.

The Rising Cost of Coffee

Consumers have recently noticed increasing prices for their daily coffee. Since November 2024, Arabica coffee prices have surged over 70%, culminating in a peak in February that marked the highest values since 1977.

The reaction could be interpreted as a direct result of tariff concerns, particularly following threats of a 25% tariff that could significantly impact U.S. coffee imports. However, the uncertainty surrounding these tariffs has contributed more to volatility than the tariffs themselves.

Additionally, adverse weather conditions, particularly the “black frost” affecting Brazil, have further complicated coffee production. This frost occurs amid severe drought conditions, severely reducing coffee plant productivity and impacting supply.

For Dutch Bros, coffee is sourced from Brazil, Colombia, and El Salvador for their 100% Arabic beans. In comparison, Starbucks has a broader sourcing strategy, gathering coffee from over 30 countries. Despite its diversity, Starbucks’s dependence on coffee—reportedly purchasing around 3% of the world’s total supply—means it isn’t immune to rising prices.

Choosing Between the Two

Both stocks currently trade at high valuations, making a choice challenging. Dutch Bros trades at a staggering forward P/E ratio of over 111, while Starbucks appears more affordable at a 35x forward P/E ratio.

This situation indicates that investors are willing to pay a premium for growth potential, with both companies remaining above their 200-day moving averages despite recent stock declines.

For growth-focused investors, concerns regarding valuations may need to be overlooked. A potential dip below the 200-day average for BROS stock might create a buying opportunity, especially as it enjoys earnings growth and market expansion with a degree of immunity to coffee price changes.

Considering Dutch Bros as an Investment

Before investing in Dutch Bros, it’s essential to evaluate expert opinions. Analysts at MarketBeat monitor top-rated analysts who consistently recommend stocks to their clients. Currently, while Dutch Bros carries a buy rating among many analysts, other stocks appear to have stronger potential according to top-rated expert recommendations.

Understanding market dynamics is key, especially with both Starbucks and Dutch Bros navigating through a challenging landscape influenced by fluctuating coffee prices and broader economic conditions. Investors should weigh these factors carefully before making investment decisions.

Starbucks, DutchBros, Stocks, Growth, Investment