Dutch Bros Inc.

A securities class action has been filed against Dutch Bros Inc. (BROS) on behalf of persons and entities that purchased or otherwise acquired Dutch Bros securities between March 1, 2022 through May 11, 2022.  This case has been filed in the USDC – S.D.N.Y.

Dutch Bros operates and franchises drive-thru coffee shops. The Company also sells and distributes coffee and coffee-related products and accessories. The Company claimed that as of March 31, 2022, it had 572 shops in operation in 12 U.S. states, of which 310 were Company-operated and 262 were franchised.

Plaintiff alleges that Defendants made materially false and misleading statements throughout the Class Period. Specifically, Plaintiff alleges that Defendants failed to disclose that (1) the Company was experiencing increased costs and expenses, including on dairy; and (2) as a result, the Company was experiencing increased margin pressure and decreased profitability in the first quarter of 2022.

On March 1, 2022, two-thirds of the way through the Company’s first quarter of 2022, Dutch Bros held a conference call to discuss its fourth quarter and full year 2021 results. On the call, Defendants made numerous statements reassuring investors that the Company’s first quarter 2022 results would be positive, and in particular that the Company’s margins were healthy. Defendant Jonathan Ricci, the Company’s Chief Executive Officer, stated that while Dutch Bros is “not immune to margin pressures,” the Company was “managing it appropriately” and that “we are feeling good as we enter ’22 with the trajectory of our margins, given everything going on.” Defendant Charles L. Jemley, the Company’s Chief Financial Officer, stated that “we’re just not feeling compression in margins.”

However, on May 11, 2022, after the market closed, the Company issued a press release announcing poor financial results for the first quarter of 2022. Therein, the Company reported a net loss of $16.3 million, compared to a net loss of $4.8 million for the first quarter of 2021. The Company also reported an adjusted net loss of $2.5 million (a loss of $0.02 per share), which fell below the Street’s estimated earnings of $0.01 per share.

On this news, Dutch Bros’ share price fell $9.26, or 26.9%, to close at $25.11 per share on May 12, 2022.