Grants Pass company to open its 75th coffee stand; eyes move east of the Rockies

When Dutch Bros. Coffee founders Travis and Dane Boersma saw the potential of their growing coffee drive-up set-up a few years back, they did the logical thing and hit the brakes.

Rather than ruin a good thing by growing too fast, Dutch Bros.' brain trust plotted a judicious course before hitting the franchising road full-tilt two years ago.

Whether dealing with over-zealous entrepreneurs, planning restrictions or a warehouse fire, the Grants Pass company has taken things in stride. The caffeine-slurping empire, which now employs upwards of 700 mostly 20- to 25-year-olds, is due to open its 75th store next month just off the freeway in Sutherlin.

We know our drive-through franchising concept, says Dave Morris, who oversees the opening of new stores. It's simple and it works well.

Entrepreneurs who know a golden goose when they see one came knocking when franchising began, Morris says. Dutch Bros. received an average of 10 calls a day from prospective operators. While the Boersmas and their management team were more than willing to sign up qualified franchisees, they weren't about to sell the company's soul.
— We sat across the table from people up in Canada that wanted to give us millions of dollars and build hundreds of stores, Morris recalls We asked them how they were going to do it and they said they were going to hire a bunch of high school kids and let 'em go. It takes a little more to us than that.

The company's management counts its core values of speed, quality, customer service and having fun more precious than opening too many locations too fast.

They've turned aside investors wanting to buy a piece of the rock, but are more than open to worthy franchisees.

Phase II of Dutch Bros.' geographical expansion led to 24 launches, Morris says. The company's arrival in Chico, Calif., signaled its spread into Washington, and California. Phase III, which stretches east of the Rockies into Montana, Wyoming, Colorado, New Mexico and west Texas, is in its infancy.

The latest phase includes the development of hubs in places like Arizona to assure quality.

For a while, we held back, but now we've opened the reins and are letting everyone run, Morris says. We wanted to control growth and make sure our core values and concepts stayed intact. We wanted to tighten up our franchise agreements. We didn't want a guy selling hot-dogs at the window. That doesn't benefit our brand. We want to make sure our coffee quality and speed are the same in Chico and Redding as they are here.

The franchise fee is &

36;30,000, but realistically it costs a minimum of &

36;130,000 and can run up to a half-million dollars to start a Dutch Bros. operation.

For &

36;130,000, the company will build the drive-up, obtain a location and lease it back to the franchisee. It costs &

36;40,000 for equipment, and start-up costs eat up another &

36;40,000. He says the initial franchise that went up in Medford nearly a decade ago cost &


The other way to do it is for the owner to develop property, all the improvements and franchise fees and that can run up to &

36;500,000, Morris says. But all of our stores come out of the gates doing well.

Building codes have turned the once simple mobile kiosk-style locations into permanent structures with disabled-accessible toilets.

With land-use and planning questions at virtually every turn, Dutch Bros. hired Alan Harper away from Medford law firm Hornecker Cowling Hassen and Hesell earlier this year.

When you are looking primarily at food service retail drive-throughs, it almost always involves special use provisions, Harper says. You find a commercial location with access and think it's going to be quick and beautiful ' until you go through the bowels of municipal code.

Harper is going through such a process in Vacaville, Calif., between Sacramento and the San Francisso Bay Area, where a possible Dutch Bros. location is considered a conditional use, requiring a special use permit.

There is more oversight and more risk, Harper says. We don't know if we're going to do it, because the city is still looking at the impact of how many cars come on and off the road.

In other towns, such as Olympia, Wash., and Sisters, drive-through coffee stops are just plain prohibited.

We had a great relationship with a property in Olympia, Harper says. But we couldn't do anything and had to move on to the next one.

Sisters was a good location, the right size and everything looked good. But the only way you could have a drive through is if you had a sit-down restaurant with it. We evaluated it and decided not to.

Dutch Bros. puts quality first"
That's a lot of java So how big was the caffeine buzz at Dutch Bros. Coffee in 2004?

The Grants Pass company's 700-plus employees poured more than 11.5 million cups of coffee with gross sales of more than &

36;30 million.

Dutch Bros. went through more than &

36;2.64 million worth of milk, 500,000 pounds of beans, 300,000 bottles of syrup, 60,000 snickerdoodle cookies and 500,000 window stickers.
Company helps local Boys and Girls Clubs Dutch Bros. Coffee lends a hand to the Boys and Girls Club of the Rogue Valley during its annual Buck 4 Kids day this Friday at all Jackson and Josephine county locations.

Dutch Bros. will donate &

36;1 for every drink sold to the Boys and Girls Club, where more than 5,000 Rogue Valley children participate.

Funds raised will help support after-school and summer programs at the White City, Talent, Phoenix, Illinois Valley and Grants Pass Boys and Girls clubs.