Good morning, everyone. Welcome to the TD Cowen Future of the Consumer Conference. I'm Andrew Charles, co-head of TD Cowen's restaurant analyst team. Really excited to be joined today and kick off the day Dutch Bros. So for those not familiar, Dutch Bros. is the third largest US coffee shop with nearly 900 locations across 17 states. The company is differentiated by a wide array of cold beverages beyond coffee, including the Blue Rebel energy drinks, freezes, frost, lemonades, and teas, as well as a drive-thru only format with a walk-up window. Representing the company are CEO Christine Barone and new CFO Joshua Guenser, who will both begin with a quick presentation. Awesome. Thanks for joining us today. Okay, so just wanted to share a little bit about who Dutch Bros. is, for those of you who aren't familiar. So we've been around for 30+ years. We have awesome people systems. We're really known for our service and our culture and the connection that we have at our window with our customers. We also have amazing growth, so, great four-wall economics, amazing returns in our shops, and a huge potential to really keep growing, as we go. So we're looking to add, you know, to be at 4,000+ shops in the next 10-15 years. We just finished Q1, and so wanted to share a couple of highlights from Q1. So we're now coast to coast. We opened our first shops in Florida in Q1. We now have three shops in Florida and finished Q1 with 876 shops across the country. We've had now 11 consecutive quarters of opening 30+ shops. We opened 45 of those shops in Q1. We also hit a record in our system AUV for those shops open 15 months+ of $2 million in AUV. We really are a beverage business. We have a couple of pastries, but 97% of the business is a beverage business, and as Andrew shared, it's across our energy drinks, it's across coffee drinks. We have teas, lemonades, all different types of offerings for our customers. We also had really awesome same-shop sales growth in Q1, so ended the quarter with 10% same-shop sales in Q1 and then saw 39% revenue growth across the quarter with really great margin leverage as well. So as we grow, we're able to leverage our SG&A. We've also, as we've come out of the pandemic, really recovered those shop-level margins and saw just amazing EBITDA growth, adjusted EBITDA growth in that Q1 of this year. And so then talking a little bit more about, then if you look, look at what drove that quarter, we're really been focused over the last year in putting a lot of things in place to really help sustain our same-shop sales growth. So a couple of those pillars are, one, leaning into innovation. So we have a young customer base and looking at what are they drinking? What are those things that are gonna drive them to come into Dutch Bros.? And so we launched Protein Coffee, which is a proprietary high-protein milk that we launched in all of our shops that can be added to any beverage. And so launched that, really saw some nice repeat from customers on the Protein Coffee, and then we followed that up with a launch in March of Poppin' Boba. So we had Strawberry Boba and Vanilla Honey Boba, one for the coffee drinks and then one for our energy drinks, those Rebel drinks that we have. It did so well that we actually ran out at the end of the quarter and are bringing back in supply, but decided to we've kept both Protein Coffee on the menu, and we've kept the Strawberry Boba on the menu as we go through the year. We've also made a lot of enhancements to our rewards program. So in March of 2023, we regeared our rewards program so that we could do a mix of base rewards and then also offer additional rewards to really drive traffic and trial of new categories, bring our customers in, in new day parts, things like that. That's been really successful in that transformation of the program. And then finally, paid advertising. So we've really gotten to the scale where, we believe paid advertising, is making a difference for us, and so we have rapidly grown into new markets. Even though we're a 30-year-old brand, we're a 3-year-old brand, in many of our newer markets. And so we've seen an opportunity to really build brand awareness as we, as we continue to grow and have seen some very nice success in our new markets with that paid advertising. And then wanted to share also a couple of other priorities we have for the year. So we've been, we have a lot of learnings. We've added 500, system shops in the last five years. So as you can imagine, just a lot of learnings from what works really well for Dutch Bros. How can we better predict kind of the sales that we're gonna have when we enter a new market? And have done a lot of work on the real estate portfolio and the real estate process, adding a market planning function and those types of things, in order to continue to grow in a very smart way. And then finally, we're adding mobile order and pay. We expect that we will have that capability in the majority of shops by the end of the year. We are testing in a number of shops right now and are in the process of rolling out a new app that has that functionality really across our systems so that we can bring shops online for mobile order... We've also had some great growth in our executive team. So, we've brought on board a number of industry executives who have kind of seen the scale and growth as to where we're going to be. So, Josh and I had the privilege of working together at another coffee company many years ago, and are together again. We brought on Sumi at the beginning of the year, who was with Nike and with Starbucks, and so has a great history in really growing brands that customers love and that our baristas will love as well. We brought on Tana Davila as CMO last June, and so a lot of the changes that I just discussed in marketing have been through her. And then, finally, we brought on Jess Elmquist as our Chief People Officer, and have had just nice transitions. So a number of folks who've been with the company with Christine and Brian, 30+ years, who are still with us and helping everyone transition and come on board. So with that, I'll turn it over to Andrew to start asking us some questions. Awesome. Well, great, great presentation, Christine. Thanks for the overview. Maybe, maybe we can start just by digging into the same-store sales of about 10% up in the Q1. Obviously, just a stunning number in a very tough restaurant backdrop. So the playbook is clearly resonating, and I'm just curious if you could help rank order what you believe is behind 1Q's success between the LTOs- Mm-hmm ... the increased marketing, and the smarter Dutch Rewards loyalty offers. Yeah, I think as we look at them, they really all contributed to the quarter. I do think having innovation that hits right on is something that's very important to our customer base, and they get excited when there's new products, and we share those with them. But I definitely feel, you know, the rewards piece as well, that significant changes we've been there. We've been able. You know, we have a lot of data now coming in from the rewards, and so understanding that if you're likely to come on a Tuesday afternoon, when else might you be likely to come, and what other types of drink offers should we share with you? So we're really at the very beginning of understanding all of that data and being able to provide offers that are super relevant to our customers. And then I think the paid advertising is most relevant really in our new markets, and that what we find is our customers are actually using us in very similar ways as in our mature markets, but at those new markets, we just don't have the same brand awareness. So people might be driving by, they see the windmill, but they don't know quite who we are, and so getting to that trial is really important. So we've been using paid advertising in a richer way, showing more video content, things like that, so that our prospective customers can really get a feel for what Dutch Bros. is before they come in. And then I think finally, you know, there's all those layers on top, but I think at the core, and especially right now with, with where the customer is, it's about our service. And I think that customers are really looking for value, and that doesn't just mean price, that means, "What am I getting, when I come to you?" And, and I think it's more important than ever, the connection that our baristas have with our customers, and so I would say, you know, fundamentally, that's always what drives the most success for us. That's great. I want to expand a little bit on marketing. Most of the audience, unfortunately, does not live near Dutch Bros. Mm. Maybe just, in fact, show of hands, how many people in the room have visited Dutch Bros. before? It's a pretty solid number for New York. I'm glad to see that. We got some friendlies here. We got some, yeah, exactly, perspectives. Exactly. Yeah. There you go. So, you know, the advertising strategy you've done is- Mm ... is really about deploying away from retargeting, you know, customers, really to build, really around brand awareness and building that. Can you expand more on just the avenues you're using around marketing, you know, how you're finding what you're finding to be most successful in building awareness of the brand? Yeah, so, in building awareness, I think, you know, what, what's always most successful for a retail brand that has shops is actually putting in more shops. And so I think the more often someone drives by you, that's actually your best marketing, and so... And then, you know, serving customers really well because the place where we really want a customer from is, if you love us, and then you go and share with a friend and say, "You've got to go Dutch Bros. it's such an amazing place." So I think we always fundamentally know that that, again, is, is where that strength comes from. And then what are we seeing working? I think, you know, in new markets, we're seeing the richness of doing a little more video content, really thinking through what is that customer journey, where are people coming from, what's that first occasion that they might join you for? And so just being really thoughtful about that. I think that understanding where people live, how they use us, and so who to target, we're just continuing to get tighter on that to know who our potential customers are. Great. You know, one thing I wanted to talk about is that, you know, perhaps the biggest pushback that we're getting is that the brand's success in recent months is a function of your largest coffee shop competitor reporting some sharp declines in traffic. How do you help assuage concerns around this, that this is truly organic, what you guys are seeing? ... Yeah, I think that we, we're in a place of very high growth, as a brand. And so I think, you know, one of the things that we saw going through last year from a traffic perspective, as we add new shops, people do switch to new shops that are closer to their home, if we build a new shop. And so I think a lot of, if you actually look back at our history and track record, that what I'm looking for is the majority of our growth is driven by adding new shops. And so what we want to do as we add new shops is we certainly don't want to lose customers, but we're absolutely fine if they go to a shop that we've built and switch from one of our shops to another shop. And so I think that, you know, one of the things that we saw that really drove Q1 was that in some of these new markets where the paid advertising is really starting to work, just saw the impact of adding new shops, transferring some customers to those new shops, but then filling in very quickly to that existing shop that had some of that sales transfer. So I think starting to really understand those dynamics and how that works and how quickly we can kind of fill those lines back in was one of the dynamics there. And then I would say, you know, for us in Q1, too, we also note that we were comping over a lighter Q1 from the prior year. And so sometimes when you have an easier lap, that is something that helps you out a little bit. Okay. Definitely want to talk about mobile order, given the excitement around that. I mean, how do you frame the long-term opportunity you have with mobile order? You know, the analog investors are looking at is mobile order and pay is roughly 30% of transactions at Starbucks. You know, if we think long term, you know, how big do you think this could become? Yeah, so we don't have data yet to know. That's what we're doing to test, to really understand how big this can be. I think what really matters is not what percent it is overall, but what is incremental, and how do you drive stickiness with mobile order? So, you know, what we're looking for is when we have our app, we get feedback from our customers. The number one functionality that our customers were asking for was, "Can I mobile order?" And I think that we do have... If you haven't been to a Dutch Bros., and you end up going, you will see that we serve folks very quickly, but we often do have long lines to get people through. I think what that does is, if you're in a rush and going between places, you have to be very thoughtful about having enough time to stop at a Dutch Bros., and in some cases. So with that, we do think mobile order can help kind of provide that surety to you as you want that occasion. So, you know, I think as we look at it, we have this young customer base that is really used to running their life this way, and so we also think there's, you know, a number of people out there who really, really want this functionality. And I think as you're getting familiar with a new brand, being able to customize your drink, understand all the different options we have. We have really a huge amount of syrups and sauces. We've got a lot of sugar-free options, so really tons of ways that you can customize your drink. So I think, you know, being early on in our brand development in so many states, to have this option on your phone where you can really explore the brand before you get into the line, is something that I think is also a really big deal for us. Excellent. Yeah, just on incrementality, I know that you don't have any... You only have a handful of stores today, so it's too early to say, you know, where incrementality is. But how do you think about it as you map it out around what you'd like to see with incrementality? You know, do you have a level that you say, "Hey, we think it could be at least this," or a rule of thumb that, you know, from your past experiences that this is what you saw in past lives? We'd love to think more about how you frame that up. Yeah, I mean, I think that from when we look across the industry and look at usage and, you know, look at how it just is so much easier for you to order, and the minute you can take something out and you've done it once, it's likely that you'll do it again. And so from an incrementality standpoint, again, we don't really know exactly what to expect. I think one of the important things is today, without any mobile order functionality, 66% of our transactions, a customer is pulling up a QR code, and sharing that they're part of the Rewards Program. And so we have incredibly high usage already, of our app within our customers. That, to me, would signal that, you know, this could certainly be something that could be incremental, but we don't know yet. Got it. Okay, and then just help me understand. I mean, you guys have incredibly productive boxes. I mean, for roughly 900 sq ft to do $2 million of volume is simply amazing on a per sq ft basis. So, I guess just help me understand operation logistically, how this is going to work. I mean, is it... You know, you have the escape lane, so it's easy to service customers there. I say easy and probably, but obviously in reality, it's not. You have the walk-up windows as well, but there's limited parking around that. How is this functioning, and how are you guys testing this around the operations? Yeah, so, the way that our shops are laid out is we have that 900-1,000 sq ft box. We do have some older models, if you've been to Southern Oregon, that are much smaller than that. But the typical box has a walk-up window, so you can park and walk up and order today, or you can go through our drive-thru. And the majority of our new shops have what Andrew was sharing, is an escape lane. And so what that means is we'll have, like, a double drive-thru, and we come to your car and ask for your order, and when it's ready early, we'll actually run drinks out. And then if we run your drink out, you can kind of escape out of the escape lane, and keep going. And so from a mobile order perspective, I actually think the shop is set up in a really nice way, and we're working with all of our shops to understand what the best setup is for them from a mobile order perspective. So for some of them that have really busy drive-throughs and lots of parking field, it makes sense to really direct most of the mobile order traffic to that walk-up window, which is relatively underutilized in many of our shops. And then in some of the shops, where it's just kind of a constant flow and just taking some of that time out of the order time, we can direct folks directly to the drive-through lane, and then the runner will walk up to you and say, "Hey, did you mobile order, or you want to order with me? And if you mobile ordered, we'll just note that you're there." But we're really set up operationally in a very nice way to already have mobile order. We have kitchen display systems that we've been using for a couple of years, and so right now, when a beverage comes in, it's actually already being mobile ordered. It's just the Broista is out there with an iPad mobile ordering for you. And so from an operations and an engine standpoint, it's really, really similar to what we already have today. And then I think the most important thing for us is our differentiator is that service. It's that way that you feel when you Dutch Bros. and so the biggest thing we're working on operationally is to ensure that we still have all of that same connection, even though it's a mobile order. What is that going to feel like? Well, when you come up to the walk-up window, we're gonna have a conversation with you, grab your drink, for you. When you pull into the drive-through lane, we're gonna have that same conversation with you. For us, that is the biggest thing we're making sure that we get all the way right, is that service experience and ensuring that our Broistas really love the experience as well, and it's not taking away from kind of how they feel about coming to work every day. Excellent. Christine, looking ahead, as you guys do site planning for the store openings for 2026 and 2027, are you adjusting the prototype at all, that maybe there's a second window needed for mobile order, maybe you need a larger pad to incorporate the demand? Is that starting to enter the equation more for site selection? So I think the discussions that we have on site selection, and Josh can add anything here, is knowing that we'll have mobile order with the shops that are coming, being really thoughtful about kind of in and out parking and ensuring that's there. We do have a place in the building for a second window, and so that's part of the discussions, but again, we're very early in the operational testing at this point to really understand what makes most sense. Yeah. I mean, the only thing I'd add is I think to Christine's point, the box is built in a way where we have ample capacity to be able to even modify the existing footprint if we needed to. Where we're spending most of our time now is thinking through access points in and out, where lines might queue up, and then how we might get people to be able to park more easily to be able to access our windows. I think the other thing to recognize is that even though it's a small box of 900-1,000 sq ft, it's all production, and so there's no lobby, there's no, you know, customer area in that 900. So it's actually, you know, and it, it's a relatively generous area compared to back rooms of some other places. Great. Also wanted to ask, too, just on the capacity point, just to help illustrate, you know, the opportunity you guys have, how... You know, with, with the system average of $2 million volumes, when you guys look at the top decile, quartile, however you look at the top performers- Mm-hmm. What are those running usually with, you know, within AUVs? We do have, you know, I would say a handful of shops doing over $5 million in AUV, and, you know, with a small beverage ticket, that's a lot of customers that we're able to get through, and so I think when you look at kind of what we're... And that, that's with really the same setup. All we've done is added an extra espresso station to those shops, so an extra bar area. But really, we are able to flex the volume quite a bit in the existing shops. I'd like to point out there's plenty of capacity within that engine- Mm-hmm. to be able to produce, produce lots of volume. Excellent. Okay, just in terms of long-term drivers, I did want to hit on food as well. You know, Christine, just given your background in food from your time at Starbucks, you know, I'm curious, just as obviously, mobile order is going to be the biggest medium-term priority, but longer term, certainly, it, it's out there. I'm sure it's something you've given thought to. So I'm curious, you know, in your head, how you kind of envision this, you know, what you imagine a food offering ultimately looks like- Mm Dutch Bros. beyond the current Muffin Top offering. Yeah. So I think as we look at that, we are super focused on, you know, what we have right in front of us right now. I think getting mobile order right, we believe, is a big opportunity, and so we've been, we've been very focused on that. One of the things we've looked at is really mapping out, you know, how do customers use us? What do our different day parts look like? What are the occasions that we're naturally a great fit for, and what are some of the occasions that, you know, that, that we may not compete at the same level in or something like that? And I think when you look at that, we don't have immediate plans to roll out food, but we do believe that we're likely missing a beverage occasion in the morning, and I think that if we were to look at food, it would really be because we were missing a beverage occasion. So not just to drive food attach, but to say, "Hey, is there food that would be important at a certain part of the day that actually drives another beverage occasion for us?" And so we have really nice even volumes throughout the day, which is great from an operations standpoint, and unlike others out there, don't have that real... The morning is kind of the biggest day part, and so looking at kind of opportunities there is something that we'll continue to do. The Protein Coffee, I think, was a nice foray into that, and you know, when people are on the go, having a beverage that can fulfill your protein needs as well, was also a really nice rollout for us. Great plug for the Protein Coffee. Well done. It's what I drink every morning. There you go. Okay, we only have a few minutes left, so let me just jump around. I want to talk about development. You know, the two options for development that you guys have are ground lease and build to suit. You know, in recent years, you've been leaning more on ground leases, but, you know, build to suit seems like a big opportunity. So help us understand, how big of a shift are you anticipating in terms of the mix of new shops that are built to suit over the medium term? And, Josh, you can just help chime in maybe, too, just comparing the investment costs and margin profile differences between the two methods. Yeah. Yeah, I mean, certainly, as we've talked about, we've been migrating it, migrating our overall pipeline to be more build-to-suit. The way I'd think about it is that especially in this environment, there are build-to-suit leases and arrangements that we're getting into where we're having to contribute capital. So as we think about it, we're looking at driving our overall average cost of capital down as we're building our shops. And we expect that to trend and migrate on a, you know, with focus and attention, but it's gonna take some time to build, just given the length of our pipeline. So we would expect to see that start shifting in 2025. Just to answer your question then on average build costs, for a full ground lease, it's gonna be about $1.9 million, as we've communicated previously, and for a build to suit, it'd be closer to the $700,000 build cost. Very good. Okay, I want to also touch on AB 1228, given the California exposure. You know, it's been in place for about two months now. Have you noticed any change in the market, whether that's on the labor side, other than the higher wages, the consumer response to elevated pricing across the industry? Yeah. So I think we've really just shared kind of Q1 so far to date. We did share that, you know, as we went into April with some supply chain challenges on boba at the end of the month and just comping over a harder time, that we did see some deceleration in comp overall. But, you know, as far as California goes, it's still a really great market for us. You know, we did have some strong labor increases in that market. I think it was about a 25% increase in our overall labor cost across that market. We did take a little bit of price in response to that, and you know, and again, are just still you know, early, somewhat early in the quarter, and certainly what we've shared publicly. Fair enough. Josh, wanted to pick your brain just on turning free cash flow positive. Seems like it's something on the horizon. Do you have a better sense as you step into the role? I mean, we think of it as more of a 2026 dynamic, but just given the factor around the CapEx perhaps being a high-water mark in 2023- 2024, is there opportunity to get there sooner rather than later? I mean, would love, love to hear your, your observations on it. Yeah, it's a great question. We're not yet commenting on when we think that might be. The way I think about it, though, is as we continue to drive growth in our unit volumes, that certainly helps that time horizon, as well as driving down the overall cost of capital, so we're both focused on driving both of those. And that'll take some time to shift, but we're- Mm ... we're not commenting yet on when that might be. Gotcha. Okay. And then, maybe just on CapEx, you know, are we right in thinking that 2023 probably was the high-water mark there as you're exploring more new formats, you know, to go to? Or, you know, can you expect that CapEx will continue to kind of hover around these levels, perhaps build from here? Yeah, so high-water mark in terms of total CapEx- Yeah ... we've communicated our CapEx spend for this year is anticipated in $280 -$320 million. We are, as we talked about, too, shifting away from that ground lease, so we'd expect that to be relatively higher this year than we would see going into 2025. Gotcha. Yeah, I do think I would just add that, you know, shifting a pipeline, like, there's marketing initiatives we can put out there that we can see almost an immediate impact from. Shifting a real estate pipeline takes time. I mean, we still have leases that were signed a number of years ago, and when we were deep in the depths of COVID, signing ground leases where we could really control the timing of the construction and everything like that made a lot of sense in where we were. And so I think I would just add that shifting a pipeline just takes a little bit longer. Very good. And then, you know, you're pursuing on this growth path, you know, across the Sun Belt. You know, you've talked about how you're going into more white space, less infilling that you'll come back to later. You know, Florida is a new market for you guys. We're outside Orlando. You know, what are some of the other new destinations you guys are looking at, you know, in the near to medium term? Yeah, so as we look across the country, I think there's a ton of opportunity still for us, and what we're balancing is, you know, the having a level of density. So I think compared to many other concepts, you're still gonna see a huge amount of infill Dutch Bros. and so when we're saying infill, it's more like, oh, we might be two and a half miles instead of one mile. And so it. There's still we believe that we can put things very close together and then continue to add as we really build up that brand strength. I think one of the adjustments we're making is putting, you know, a shop here and then another mile and then another mile, all within the span of three months. That might be a little bit quick for a shop to really realize and see its full potential from a customer perspective. So we believe there's a lot of opportunity. I mean, Florida, we are absolutely just getting started. If you look in Texas, where we have almost 200 shops and had none a little over 3 years ago, there's still huge opportunities. Like, if you look at where we are in Houston and Dallas, we're really around kind of the rings around the city and the further out suburbs, and so we've started to open a few shops a little bit closer in, but huge potential still, even in all of our existing markets. Phoenix, which is one of our biggest markets, highest brand awareness, again, huge potential still in all of these markets. In California, we've had some really successful openings this year, and we'll continue to look for real estate there. So, I think that as you look, there's still a lot to go, even within our existing markets. And then we're right now in 17 states, so still have a lot of states to go as well. Excellent. With that, Christine and Josh, thank you so much for joining us today. Really appreciate it.