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Fast-growing Dutch Bros (NYSE: BROS) is touted as the third-largest coffee chain in the U.S. behind Starbucks (NASDAQ: SBUX) and Dunkin Brands but is really a very distant third to its rivals. Where Starbucks has over 15,700 locations and Dunkin more than 8,500, Dutch Bros has just 641.
To help achieve its goal of reaching 800 locations by next year and expand across the country afterward, Dutch Bros is employing a strategy known as “fortressing,” a term popularized by pizza chain Domino’s (NYSE: DPZ) that essentially means flooding a given market with more stores.
Domino’s first introduced the practice as far back as 2010 but really picked up the pace in 2018 as sales began to slow. Since then, revenue has grown from $3.4 billion to $4.3 billion, an 8% compound annual growth rate, while net income is up 12% annually over that same period.