'Practicing' selling coffee, an American farmer suddenly became a billionaire

In the 1990s, the Boersma brothers accumulated their savings to buy a coffee cart and espresso machine. They started selling in downtown Grants Pass (Oregon). Not long after that, they owned up to 5 coffee trolleys.

'Practicing' selling coffee, an American farmer suddenly became a billionaire
'Practicing' selling coffee, an American farmer suddenly became a billionaire

Dane and Travis Boersma are the family's third generation dairy farmers. When they were looking for a job other than the family business, they decided to give coffee a try. The two brothers then not only made a fortune, they were able to hang out with friends and attend concerts.

After his brother Dane died of amyotrophic lateral sclerosis, Travis continued the business. Currently, the Dutch Bros Inc. brand. operates 471 stores across the western United States with over $400 million in annual revenue.

Shares of this company began trading on September 15 on the NYSE under the ticker BROS. The share price jumped 48% from its asking price to $34.01, bringing Dutch Bros' valuation to $5.6 billion. Travis (50 years old) is currently the largest shareholder with a stake worth $2.3 billion, but details of his holding are unknown at this time.

With strong competitors like Starbucks, Dunkin' and Peet's Coffee & Tea, the US coffee market seems like a difficult business to enter. However, Dutch Bros created its own "niche" market with a culture called "Dutch Luv". At the stores - all of which operate on a drive-by basis, they mostly sell cold drinks.

The company's net profit was $6.3 million on revenue of $404.5 million in the 12 months to June 30, while 2018 revenue was $186 million.

According to the prospectus, employee satisfaction and advancement opportunities are the main focus of the company. Dutch Bros' employee turnover rate is 40%, while the industry average is more than 100%, according to Bloomberg Intelligence analyst Michael Halen.

Halen commented: "The F&B industry is currently having great difficulty in recruiting because of the shortage of the labor market. Employee retention is an effective strategy."

This also enhances the customer experience. "Dutch Bros has experienced employees who are willing to stick with the brand and make a career out of it," Halen said.

In February, Travis stepped down as CEO of the company but remained as executive chairman. Private equity group TSG Consumer Partners initially invested in Dutch Bros in 2018 and now owns 65 million shares after the IPO, becoming the second largest shareholder after Travis.

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