Top Coffee Stock to Buy: Dutch Bros vs. Starbucks

Top Coffee Stock to Buy: Dutch Bros vs. Starbucks

Dutch Bros (NYSE: BROS) has seen a remarkable 87% surge in share value over the past three months, capturing the attention of investors. Starbucks (NASDAQ: SBUX) is also on an upward trajectory, with renewed enthusiasm following the appointment of a top restaurant executive to lead the business. But between these two coffee giants, which stock presents the best investment opportunity right now?

Dutch Bros: Betting on Growth

Dutch Bros has built a strong reputation for excellent customer service and a highly customizable menu, primarily through its drive-thru store model. Its rapid expansion is a major factor driving investor interest.

In the third quarter of 2024, Dutch Bros reported $338 million in revenue, reflecting a 160% increase from the same period three years prior. This impressive growth is fueled by an aggressive store expansion strategy, with the company now operating 1,000 locations—double its footprint from Q3 2021. Over the next 10 to 15 years, management envisions growing to 4,000 locations, a move that could significantly boost revenue.

Currently present in 18 states, Dutch Bros still has substantial room for expansion in the U.S. and beyond. The market appreciates its growth potential, as reflected in the stock’s recent surge. However, this enthusiasm has driven the stock’s price-to-sales (P/S) ratio to 4.9, the highest it has been in three years.

For growth-oriented investors, Dutch Bros presents a compelling opportunity, though its long-term success is not guaranteed. As a relatively small company, it has yet to establish durable competitive advantages that would ensure sustained profitability.

 Starbucks: A Turnaround Play

While Dutch Bros is enjoying investor excitement, Starbucks remains the dominant force in the coffee industry. The company operates 17,049 stores in the U.S. and 40,576 worldwide, generating $9.4 billion in revenue in its latest fiscal quarter—28 times more than Dutch Bros.

Despite its scale, Starbucks has faced challenges in driving foot traffic. Same-store sales (SSS), a key industry metric, declined for the fourth consecutive quarter in fiscal Q1 2025, which ended on December 29, 2024. To address these issues, Starbucks has brought in Brian Niccol, former CEO of Chipotle Mexican Grill, who led Chipotle’s impressive turnaround. He has already begun implementing strategies to enhance the customer experience and revitalize the brand.

Starbucks maintains several competitive advantages that Dutch Bros lacks. Its global brand recognition, customer loyalty, and massive scale provide significant leverage. The company’s strong brand positioning allows it to command premium pricing, while its size enables cost efficiencies in marketing, digital upgrades, and supply chain management.

While Dutch Bros offers exciting growth potential, Starbucks appears to be the safer long-term investment. Its deep economic moat and global dominance provide stability, making it a less risky bet. Additionally, Starbucks’ P/S ratio of 3.4 is 31% lower than that of Dutch Bros, making it the more attractively valued option.

 The Verdict

For investors seeking stability and a well-established brand, Starbucks presents a compelling opportunity. However, those willing to take on additional risk in exchange for high growth potential may find Dutch Bros an appealing investment.

Ultimately, the best choice depends on an investor’s risk tolerance and investment strategy.

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Coffee is more than just a drink; it's a global phenomenon that transcends borders and cultures. From its mythical origins to its aromatic presence in cafes around the world, coffee has a way of bringing people together in a shared experience of bold flavors and rich history.

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With each sip, coffee takes you on a journey through time and space, awakening your senses and invigorating your spirit. It's not just a beverage; it's a passport to different lands and traditions, a key to unlocking new perspectives and connections.

How can you embrace the coffee adventure?

Step out of your comfort zone and explore the diverse world of coffee. Try different brewing methods, sample beans from various regions, and immerse yourself in the rituals and stories that accompany each cup. Challenge your taste buds and expand your horizons with each new blend.

Why should you join the coffee revolution?

Coffee is more than just a drink; it's a lifestyle, a culture, a way of life. By embracing the coffee adventure, you open yourself up to a world of possibilities and experiences. You become part of a global community united by a love for the bold and the flavorful, the adventurous and the inspiring.

So, are you ready to embark on this coffee journey? Grab your mug, take a sip, and let the rich aroma of coffee transport you to new heights of taste and discovery. The world of coffee awaits, full of bold flavors and exciting experiences. Cheers to the coffee adventure!

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The Aromatic Journey of Coffee: From Bean to Brew
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The Brew Theory of Pour Over Coffee

Why is it so tricky to brew a great pour over coffee? After all, at its heart, making a pour over is a simple process—pouring hot water over ground coffee dissolves flavor and aromatic compounds in the beans. The challenge lies in dissolving only the right kinds of compounds in coffee—and in the right proportion. To make a perfect pour over coffee is to find a coffee’s “sweet spot,” a balance of the extraction percentage and strength level we consider most delicious.

Coffee Strength and Extraction

When it comes to understanding strength and extraction, we find it helpful to compare coffee to a spice cupboard. Much in the same way spices are stowed away in a cupboard, an array of delicious flavors—aka volatile and soluble compounds—are locked inside roasted coffee beans. To be exact, coffee contains on average 30 percent soluble compounds and 70 percent insoluble compounds. But like any cook’s cupboard, it also contains a handful of flavors we don’t want—or want only in limited quantities—particularly bitter compounds that impart flavors of ash, tobacco, or carbon. What’s so fun about making a pour over coffee is how much control it gives you in pulling out exactly the right flavors at exactly the right ratio. It’s the Michelin-starred chef of coffee brew methods.

Coffee Strength

The concentration or intensity of flavor in a cup is what we refer to as coffee strength. On the palate, a coffee’s strength registers on a spectrum between watery and dense. In scientific terms, it can be measured by the percentage of dissolved coffee to water, a measurement we call the total dissolved solubles, or TDS.

For example, a well-made espresso has a TDS of between 9 and 20 percent coffee to water. By comparison, the more mellow pour over coffee has a much lower TDS of between 1 and 2 percent coffee to 98 to 99 percent water.

Strength is largely influenced by the amount of coffee you brew. In barista terms, this is referred to as the brew ratio or coffee dose. In lay terms, the more coffee you brew, the stronger the cup. At Blue Bottle, to set accurate brew ratios, we use gram scales to measure both our coffee and our water.

And we set individual brew ratios for all our coffees: We prefer our blends slightly stronger, to stand up to milk, so we generally brew them at 30 grams coffee per 350 grams water. We prefer our single origins more nuanced and expressive, so we “turn down the volume” a bit and keep their brew ratio slightly lower, at 22 to 24 grams coffee per 350 grams water.

If this seems like a lot to remember, a good way to assess a coffee’s strength is to judge its body. That is, the weight and feel of the coffee on your tongue. Does the coffee feel light like skim milk or heavy like whipping cream?

Coffee Extraction

Picture a cup of tea: Steep it too little and it will taste like water. Steep it too much and you have tar. Coffee behaves much the same way. Extraction is a measure of the quality of the solubles in coffee, which emerge at different rates the longer you brew. Those rates are influenced by time, temperature, and ratio of ground coffee to water. An underextracted coffee tastes sour. An overextracted cup is overwhelmed with bitter, even burnt flavors.

Ground coffee contains at most about 30 percent soluble compounds; the remaining 70 percent are fiber and other compounds that water cannot penetrate. But if you dissolve all 30 percent, your cup will not taste good. In a properly extracted cup of coffee, only between 18 and 22 percent of the coffee’s solubles have dissolved.

In pour over coffee, extraction is shaped by pour rate and pour patterns. It’s also impacted by grind size. Grind your beans too fine and the water will pass too slowly through the coffee, extracting too many bitter compounds. Grind them too coarse and the water will rush past the best flavor compounds, leaving you with a coffee that tastes only sour, not sweet or radiant. Grind your beans just right, and the optimal flavor compounds will dissolve in the water, leaving the undesirable flavors behind.

If this all seems like a lot to remember, a good way to assess extraction is by the coffee’s finish. Once you’ve finished a cup of coffee, pay attention to whether or not you can still experience its flavors. We often describe finish in terms of duration, how long the taste lingers, and texture, the feel of it in your mouth. Is the finish fleeting or does it linger? Does it feel smooth or rough?

Finding a Pour Over Coffee’s Sweet Spot

The trick to any method of coffee brewing is to hit the sweet spot—to balance a coffee’s strength and extraction percentage to achieve one delicious cup.

Now that you have an understanding of brew theory and the concepts of strength and extraction, we recommend you practice making a pour over coffee, perhaps altering the coffee-to-water ratio to see how flavors can either become more distinct (with more more water) or more opaque and textured, as happens with the addition of more coffee grounds. Notice if you have a preferred strength. Do your preferences depend on the kind of coffee you’re making, whether a lighthearted single origin or a hefty blend?

Play with the extraction quality, too, by honing your pour over coffee skills, from dialing in the grind to pour technique. Somewhere in this quest you’ll start to notice that your coffee becomes more resonant, with every aspect of it coming into clearer focus. Like notes played on a tuned-up piano, individual flavors start to ring, until the entire coffee, from its mouthfeel to its finish, hums like a chord progression.

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