Founded in 1992, Dutch Bros. Coffee had expanded throughout seven western states and employed over 3,500 people by 2014. That year, total sales were expected to exceed $200 million. The business was thriving but Travis Boersma, co-founder, and CEO of Dutch Bros. Coffee worried that too much growth too fast could compromise the company culture and product quality. Not sustaining growth, however, could lead the best employees to become disillusioned—or leave. Travis wondered how Dutch Bros. could continue to provide advancement opportunities to high-performing employees while growing at a sustainable rate.
Joshua D. Margolis; Christine Snively
Harvard Business Review (415010-PDF-ENG)
April 03, 2015
Case questions answered:
The company worked with a small number of investors who provided financial backing to some franchisees. One option was to expand this effort. A second option was for Dutch Bros. Coffee to open more company-owned stores. “Dane and I wrestled with franchise versus company-owned stores since day one. It was a focal point of ours and a conversation that continued to linger,” Travis commented. A third option was for the company itself to provide capital — as an investor or lender — to launch franchises.
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Dutch Bros. Coffee: A Compelling Future Case Answers
Overview – Dutch Bros. Coffee
Founded in 1992, Dutch Bros. Coffee had expanded throughout seven western states and, together with franchise-owned stores, employed over 3,500 people by 2014, with roughly 2,900 of them front-line baristas. That year, total sales were expected to exceed $200 million.
Dutch Bros. team planned to revisit the merits of a point-of-sale system at all of their coffee stands. The company tracked product inventory and conducted cup counts but did not track the exact number of beverages it sold.
The business was thriving (see Exhibit 1), but Travis Boersma, co-founder and CEO of Dutch Bros. Coffee, worried that too much growth too fast could compromise the company culture and product quality. Not sustaining growth, however, could lead the best employees to become disillusioned—or leave. Travis wondered how Dutch Bros. could continue to provide advancement opportunities to high-performing employees while growing at a sustainable rate.
Travis planned to address the growing consumer requests for “white coffee,” an under-roasted coffee high in caffeine that had become popular in eastern Washington and Idaho. Travis considered the financial and logistical challenges of offering white coffee at some coffee stands, such as additional labor and packaging costs.
Challenges and Recommendations
Should we implement POS?
- We should not implement it.
The team behind Dutch Bros. Coffee planned to revisit the merits of a point-of-sale system at all of their coffee stands. The company. tracked product inventory and conducted cup counts but did not track the exact number of beverages it sold.
Experience: The company’s philosophy is “We trust our people, and we don’t collect data on our customers.” Dutch Bros. did a heavy dive into point-of-sale tracking five years ago, but it didn’t flow right.
Speed: If POS takes away from our service speed and culture, it isn’t worth it.
Relationship: We believed our method allowed the barista the freedom to be on their game, to give away a Kicker to someone having a bad day. We didn’t like the idea of a system where the barista’s eye was on a screen instead of on a customer. The relationship with the customer is more important for long-term success.
Lose preferences: One pilot test revealed that in just 48 hours of using a pad-driven POS system, a long-term barista had forgotten a regular customer’s favorite drink.
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