(Bloomberg) — When third-generation dairy farmers Dane and Travis Boersma were looking for something to do outside of the family business, they decided to try coffee. Not only could they earn some money, they could hang out with friends and listen to music.
They pooled their savings to buy a coffee cart and espresso machine and began selling in the early 1990s in downtown Grants Pass, Oregon. Soon they had five carts.
After losing his older brother Dane in 2009 to amyotrophic lateral sclerosis – also known as Lou Gehrig’s disease – Travis continued to build the company. Dutch Bros Inc. now has 471 stores in the western US with sales of more than $400 million per year.
The company will begin trading on the New York Stock Exchange on Wednesday under ticker BROS, valued at $3.8 billion at the offer price of $23. Boersma, 50, is the company’s largest shareholder with a $1 stake. 6 billion, according to the Bloomberg Billionaires Index.
Dutch Bros declined to comment on the size of Boersma’s stake.
With competitors such as Starbucks Corp, Dunkin’ and Peet’s Coffee & Tea Inc. the coffee market in the US seems difficult to break into. Still, Dutch Bros has carved out a niche with a culture it calls ‘Dutch Luv’. In the company’s stores—all drive-thru—the “broistas” sell more cold than hot drinks, such as the chocolate-macadamia-flavored “Annihilator” and the “9-1-1,” which combines six shots of espresso with half and half and Irish cream syrup.
The company had net income of $6.3 million on revenue of $404.5 million for the 12 months ended June 30, compared to $186 million in revenue in 2018.
Employee satisfaction and progress are a major focus of the company, according to the prospectus. Annual employee turnover among Dutch Bros employees is 40%, compared to the industry average of over 100%, according to Bloomberg Intelligence analyst Michael Halen.
“It’s very difficult to hire people in the restaurant industry right now,” Halen said because of the tight job market. “Retaining your employees helps enormously.”
It also makes for a better customer experience. “You have experienced employees who are committed to the brand and have made a career out of it,” he said.
Boersma stepped down as chief executive officer in February, when Joth Ricci, former chief executive of the beverage industry, took over the position. Boersma remains executive chairman.
Private equity group TSG Consumer Partners originally invested in Dutch Bros in 2018 and will continue to own more than 65 million shares after the IPO, making it the second largest shareholder after Boersma.
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