0001866581-22-000054 | 10-Q | XBRL Viewer

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Revenue Recognition - Deferred revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Less: current portion	$ (23,828)	$ (22,807)
Deferred revenue, net of current portion	4,591	5,030
Customer advances and sales to distributors
Disaggregation of Revenue [Line Items]
Contract with customer, liability	2,437	2,512
Franchising
Disaggregation of Revenue [Line Items]
Contract with customer, liability	2,428	2,560
Customer advances and sales to distributors and franchise fee
Disaggregation of Revenue [Line Items]
Contract with customer, liability	4,865	5,072
Less: current portion	(2,869)	(2,964)
Deferred revenue, net of current portion	$ 1,996	$ 2,108

Commitment and Contingencies	3 Months Ended
Commitment and Contingencies	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 14 — Commitments and Contingencies Purchase Obligations The Company enters into fixed-price and price-to-be fixed green coffee purchase commitments. For both fixed-price and price-to-be fixed purchase commitments, the Company expects to take delivery of green coffee and to utilize the coffee in a reasonable period of time in the ordinary course of business. Such contracts are used in the normal purchases of green coffee and not for speculative purposes. The Company does not enter into futures contracts or other derivative instruments related to its green coffee purchase commitments. Guarantees The Company periodically provides guarantees to franchisees for lease payments. Annually, the Company determines if a liability needs to be recorded related to these guarantees. As of March 31, 2022 and December 31, 2021, the Company had guaranteed approximately $1.7 million and $1.7 million, respectively, in franchisee lease payments and has not established a liability for these guarantees as any liability arising from the guarantees is not material to the condensed consolidated financial statements. Legal Proceedings The Company is a party to legal actions arising in the ordinary course of its business. These claims, legal proceedings and litigation principally arise from alleged casualty, employment, and other disputes. In determining loss contingencies, the Company considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recognized when it is considered probable that a liability has been incurred and when the amount of loss can be reasonably estimated. While any claim, proceeding or litigation has an element of uncertainty, the Company believes the outcome of any of these that are pending or threatened will not have a material adverse effect on its financial condition, results of operations, or cash flows.

Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2022

Schedule of related party transactions

The Company’s donations to Dutch Bros Foundation, a not-for-profit founded by the Company that provides philanthropy to coffee farmers and local communities and for which the Company’s Chief Executive Officer serves on the board of directors, were as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Donations to Dutch Bros Foundation	$	1,373	$	2,125

Intangible Assets and Goodwill - Summary of intangible assets amortization expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cost of sales
Finite-Lived Intangible Assets [Line Items]
Amortization expenses	$ 915	$ 788

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Provision for income taxes


	Three Months Ended March 31,
(in thousands)	2022			2021
Income tax expense (benefit)	$	(214)		$	43
Effective tax rate	1.3		%	(0.9)		%

Basis of Presentation and Summary of Significant Accounting Policies - Vendor incentives and advertising expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Accounting Policies [Abstract]
Incentives recognized in cost of goods sold	$ 9,006	$ 9,277
Advertising expense	$ 7,624	$ 5,917

Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

NOTE 7 — Intangible Assets and Goodwill

Intangible Assets

The details of the intangible assets are as follows:



(in thousands)	Weighted-average amortization period (in years)	March 31, 2022		December 31, 2021
Reacquired franchise rights	3.9	$	27,049	$	25,314
Less: accumulated amortization		(15,126)		(14,211)
Intangibles, net		$	11,923	$	11,103

Amortization expense included in the Company’s condensed consolidated statements of operations was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Cost of sales	$	915	$	788

The estimated future amortization expense of the reacquired franchise rights intangible assets for the five succeeding fiscal years and the aggregate thereafter as of March 31, 2022 are as follows:


(in thousands)
Remainder of 2022	$	3,119
2023	3,389
2024	2,469
2025	1,435
2026	681

Thereafter	830
Total	$	11,923

Goodwill

Goodwill is allocated entirely to the Company-operated shops segment. The carrying amount and activity of goodwill was as follows:


(in thousands)


Balance, December 31, 2021	$	18,715
Business combinations	2,914
Balance, March 31, 2022	$	21,629

No impairment charges were recognized for the three months ended March 31, 2022 and 2021.

Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10 — Income Taxes


	Three Months Ended March 31,
(in thousands)	2022			2021
Income tax expense (benefit)	$	(214)		$	43
Effective tax rate	1.3		%	(0.9)		%

Three Months Ended March 31, 2022 v 2021

The tax benefit was primarily driven by losses allocated from Dutch Bros OpCo to the Company, partially offset by state taxes and the tax expense of the corporate subsidiary.

The Company’s estimated annual effective tax rate is less than the statutory rate of 21%, primarily because the Company is not liable for income taxes on the portion of earnings that are attributable to non-controlling interests.

As a result of the Secondary Offering, the Company recorded an additional deferred tax asset, net of valuation allowance, of $63.8 million, which primarily consists of the Company’s outside basis differences in its limited liability company subsidiaries. As of March 31, 2022, the Company recognized deferred tax assets of approximately $223.4 million, net of a valuation allowance of approximately $1.5 million.

The Secondary Offering also resulted in the Company recording an additional TRA liability of $55.2 million. As of March 31, 2022, the Company had a liability of approximately $164.9 million related to its projected obligations under the TRAs in connection with the 2021 reorganization and exchange transactions, and the Secondary Offering. TRAs-related liabilities are classified as current or non-current based on the expected date of payment and are included in the Company’s consolidated balance sheets under the captions “Current portion of tax receivable agreements liability” and “Tax receivable agreements liability, net of current portion,” respectively. For additional information, refer to NOTE 1 — Organization and Background.For additional information related to the Secondary Offering, refer to NOTE 11 — Equity and Equity-Based Compensation.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Commitment and Contingencies (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Property Lease Guarantee
Other Commitments [Line Items]
Guarantor obligation in franchise lease payment	$ 1.7	$ 1.7

Loss Per Share - Antidilutive securities (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2022 shares
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total anti-dilutive securities (in shares)	3,279
Restricted stock units
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total anti-dilutive securities (in shares)	542
Class A common stock \| Restricted stock awards
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total anti-dilutive securities (in shares)	2,737

Debt

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt

NOTE 9 — Debt

Senior Secured Credit Facility

On February 28, 2022 (the Effective Date) the Company amended its credit facility entered into on May 12, 2021 with JPMorgan Chase, N.A. (the Senior Secured Credit Facility). The amended facility (the 2022 Credit Facility) has a total capacity of $500 million, consisting of a $250 million revolving credit facility, a delayed draw term loan facility of up to $150 million, and a term loan facility of up to $100 million. The revolving credit facility includes sub-limits for issuance of letters of credit and swing line loans of up to $50 million and $15 million, respectively. It also contains an option allowing the Company to increase the size of the 2022 Credit Facility by up to an additional $150 million, with the agreement of the committing lenders. The 2022 Credit Facility expires five years after the Effective Date.

Upon entering into the 2022 Credit Facility, in February 2022, the Company drew the full $100 million term loan facility and approximately $28 million in revolving loans, and the existing credit facility was repaid and terminated.

Interest on borrowings under the 2022 Credit Facility is based on (a) the Alternate Base Rate plus an applicable margin, or (b) the Adjusted Term SOFR Rate plus an applicable margin, and is payable in accordance with the selected interest rate period (at least quarterly) and upon maturity. Principal payments for the term loans are required on a quarterly basis in accordance with an amortization schedule and upon certain disposition of assets.

The Company is required to pay a commitment fee on a quarterly basis, at a per annum rate of between 0.20% and 0.45% (depending on the Company’s maximum net lease-adjusted total leverage ratio) based on the (i) average daily unused portion of the revolving credit facility, and (ii) the daily undrawn amount of the delayed draw term loan facility.

The 2022 Credit Facility contains financial covenants that require the Company to not exceed a maximum net lease-adjusted total leverage ratio and maintain a minimum fixed charge coverage ratio. The 2022 Credit Facility also contains certain negative covenants that, among other things, restrict the Company’s ability to incur additional debt, grant liens on assets, merge with or acquire other companies, make other investments, dispose of assets, and enter into sale and leaseback transactions and swap agreements. Obligations under the 2022 Credit Facility are guaranteed by Dutch Bros OpCo and its subsidiaries, and secured by a first priority perfected security interest in substantially all of the assets of the guarantors.

As of March 31, 2022, $100 million and approximately $28 million was outstanding on the term loan and revolving loans, respectively, and $222 million was available for borrowing on the revolving loans. The term loan bears interest at 2.54% and revolving loans bear interest at 2.66% as of March 31, 2022, and the Company was in compliance with its financial covenants as of that date.

Long-Term Debt

The Company’s long-term debt consisted of the following for the periods presented:



(in thousands)	March 31, 2022		December 31, 2021
Terms loan under credit facility	$	100,000	$	—
Finance lease obligation1	—		2,978
Unsecured note payable	602		628
Total debt	100,602		3,606
Less: loan origination fees	(1,329)		—
Less: current portion	(1,979)		(103)
Total long-term debt, net of current portion	$	97,294	$	3,503

_______________

1 Effective January 1, 2022, with our adoption of ASC 842 (Leases), this sales-leaseback transaction was remeasured and included in our lease obligations.

Future annual maturities of long-term debt as of March 31, 2022 are as follows:


(in thousands)
Remainder of 2022	$	1,953
2023	2,609
2024	4,491
2025	6,998
2026	13,256
Thereafter	71,295
Total	$	100,602

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

Debt - Maturity schedule (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Remainder of 2022	$ 1,953
2023	2,609
2024	4,491
2025	6,998
2026	13,256
Thereafter	71,295
Total debt	$ 100,602	$ 3,606

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Equity and Equity-Based Compensation - Schedule of recognition of stock based compensation expense (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Equity [Abstract]
2022	$ 31,457
2023	41,650
2024	3,056
2024	393
Total unrecognized stock-based compensation expense	$ 76,556

Debt (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of debt instruments

The Company’s long-term debt consisted of the following for the periods presented:



(in thousands)	March 31, 2022		December 31, 2021
Terms loan under credit facility	$	100,000	$	—
Finance lease obligation1	—		2,978
Unsecured note payable	602		628
Total debt	100,602		3,606
Less: loan origination fees	(1,329)		—
Less: current portion	(1,979)		(103)
Total long-term debt, net of current portion	$	97,294	$	3,503

_______________

1 Effective January 1, 2022, with our adoption of ASC 842 (Leases), this sales-leaseback transaction was remeasured and included in our lease obligations.

Schedule of maturities of long-term debt

Future annual maturities of long-term debt as of March 31, 2022 are as follows:


(in thousands)
Remainder of 2022	$	1,953
2023	2,609
2024	4,491
2025	6,998
2026	13,256
Thereafter	71,295
Total	$	100,602

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Financial Statements Presentation	Financial Statements Presentation The accompanying unaudited condensed consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. Therefore, the unaudited financial statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and on March 11, 2022.
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that it controls due to ownership of a majority voting interest or pursuant to accounting guidance for non-controlling interests. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates	Use of Estimates The presentation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions, primarily related to long-lived asset valuation, leases, deferred revenue, tax receivable agreements, income taxes, and equity-based compensation that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could differ from those estimates.
Reclassifications	Reclassifications The Company has reclassified certain amounts in prior-period financial statements to conform to the current period's presentation. On the condensed consolidated statements of cash flows, deferred income tax assets have been reclassified from other long-term assets.
Leases	LeasesThe Company adopted ASC Topic 842 (ASC 842), Leases, as amended, with an effective date of January 1, 2022.
Revenue Recognition	Revenue Recognition Consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives in accordance with Accounting Standard Codification (ASC) Topic 606, Revenue from Contracts with Customers. Loyalty and Gift Card Programs In February 2021, the Company transitioned from a traditional loyalty program to a digital loyalty program. Under the previous program, a customer earned a “Stamp” for each purchase at a Dutch Bros coffee shop. After accumulating a certain number of Stamps, the customer earned a reward that may be redeemed for free product that, regardless of where the related Stamps were earned, would have been honored at company-operated shops and franchised shop locations. The Company deferred revenue associated with the estimated selling price of Stamps earned by customers towards free product as each Stamp was earned, and a corresponding contract liability was established. The estimated selling price of each Stamp earned was based on the estimated value of the product for which the reward was expected to be redeemed, net of Stamps not expected to be redeemed, based on historical redemption patterns. Stamps did not expire. As a result of the COVID-19 pandemic beginning in March 2020, the Company discontinued new Stamps. The Company continued to redeem previously earned Stamps through March 2021. In February 2021, the Company developed a new loyalty program (Dutch Rewards) in which the customer earns rewards through use of the Company’s mobile app that can be redeemed for free drinks. Earned rewards expire six months after issuance, and points collected but not redeemed expire after six months. The Company defers revenue as rewards are earned under the new loyalty program. Deferred Revenue Deferred revenue primarily consists of the unredeemed gift card liability and unredeemed points from our Dutch Rewards loyalty program, as discussed above. Deferred revenue also includes customer advance payments and bean and beverage sales to distributors where the performance obligation has not yet been satisfied as control has not transferred to the customer.
Vendor Incentives	Vendor IncentivesThe Company has entered into food and beverage supply agreements with certain major vendors. Pursuant to the terms of these arrangements, rebates are provided to the Company from the vendors based upon the dollar value of purchases for company-operated shops and franchised shops. These incentives are recognized as earned throughout the year and are classified as a reduction of cost of sales in the accompanying consolidated statements of operations.
Advertising Expense	Advertising ExpenseAdvertising costs are expensed as they are incurred. Most franchise shops contribute to an advertising fund that the Company manages on behalf of the shops. Under the Company’s standard franchise agreement, the contributions received must be spent on marketing, creative efforts, media support, or other related purposes specified in the agreement. The expenditures are primarily amounts paid to third parties but may also include personnel expenses and allocated costs.
Recently Issued Accounting Standards and Recently Adopted Accounting Standards	Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13, as amended, replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For accounts receivable and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. ASU 2016-13, as amended, is effective for fiscal years beginning after December 15, 2022. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is evaluating the impact of this standard on its consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update provide specific guidance to address diversity in practice related to (1) recognition of an acquired contract liability, and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in ASU 2021-08 are applied on a prospective basis, and are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statementsRecently Adopted Accounting StandardsIn February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The pronouncement requires lessees to recognize a liability for lease obligations, which represent the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet, as well as new disclosure requirements. The Company adopted Topic 842 effective January 1, 2022 using the modified transition approach.

Intangible Assets and Goodwill - Schedule of amortization of reacquired franchise rights (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Remainder of 2022	$ 3,119
Intangibles, net	11,923	$ 11,103
Reacquired franchise rights
Finite-Lived Intangible Assets [Line Items]
2023	3,389
2024	2,469
2025	1,435
2026	681
Thereafter	830
Intangibles, net	$ 11,923

Leases - Schedule of minimum lease payments under previous guidance (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Capital Lease Obligations [Abstract]
2022	$ 8,824
2023	8,672
2024	8,743
2025	8,926
2026	9,229
Thereafter	85,985
Total	130,379
Capital Leases, Future Minimum Payments, Interest Included in Payments	(47,402)
Present value of minimum lease payments	82,977
Less: current portion	(3,389)
Lease liabilities, net of current portion	79,588
Operating Lease, Liability [Abstract]
2022	12,398
2023	12,002
2024	11,699
2025	11,420
2026	11,297
Thereafter	125,774
Total	$ 184,590

Intangible Assets and Goodwill (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

The details of the intangible assets are as follows:



(in thousands)	Weighted-average amortization period (in years)	March 31, 2022		December 31, 2021
Reacquired franchise rights	3.9	$	27,049	$	25,314
Less: accumulated amortization		(15,126)		(14,211)
Intangibles, net		$	11,923	$	11,103

Summary of intangible assets amortization expense

Amortization expense included in the Company’s condensed consolidated statements of operations was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Cost of sales	$	915	$	788

The estimated future amortization expense of the reacquired franchise rights intangible assets for the five succeeding fiscal years and the aggregate thereafter as of March 31, 2022 are as follows:


(in thousands)
Remainder of 2022	$	3,119
2023	3,389
2024	2,469
2025	1,435
2026	681

Thereafter	830
Total	$	11,923

Schedule of goodwill

The carrying amount and activity of goodwill was as follows:


(in thousands)


Balance, December 31, 2021	$	18,715
Business combinations	2,914
Balance, March 31, 2022	$	21,629

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, authorized (in Shares)	20,000,000	20,000,000
Preferred stock, outstanding ( in shares)	0	0
Preferred stock, issued (in shares)	20,000,000	0
Class A common stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, authorized ( in shares)	400,000,000	400,000,000
Common stock, issued (in shares)	39,557,000	34,433,000
Common stock, outstanding (in shares)	39,557,000	34,433,000
Class B common stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, authorized ( in shares)	144,000,000	144,000,000
Common stock, issued (in shares)	64,699,000	64,699,000
Common stock, outstanding (in shares)	64,699,000	64,699,000
Class C common stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, authorized ( in shares)	105,000,000	105,000,000
Common stock, issued (in shares)	45,386,000	49,006,000
Common stock, outstanding (in shares)	45,386,000	49,006,000
Class D common stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, authorized ( in shares)	42,000,000	42,000,000
Common stock, issued (in shares)	14,062,000	15,441,000
Common stock, outstanding (in shares)	14,062,000	15,441,000

Leases - Lease cost (Details) $ in Thousands	3 Months Ended
Leases - Lease cost (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Finance lease cost
Amortization of right-of-use assets	$ 2,194
Interest on lease liabilities	1,723
Total finance lease cost	3,917
Operating lease cost	3,847
Variable lease cost	493
Total lease cost	$ 8,257

Revenue Recognition - Amortization of franchise fees (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unearned franchise fees, amortization	$ 2,428
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unearned franchise fees, amortization	$ 330
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unearned franchise fees, amortization	$ 390
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unearned franchise fees, amortization	$ 332
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unearned franchise fees, amortization	$ 278
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Unearned franchise fees, amortization	$ 236
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period
Unearned franchise fees, amortization	$ 862

Segment Reporting (Details) $ in Thousands	3 Months Ended
Segment Reporting (Details) $ in Thousands	Mar. 31, 2022 USD ($) segment	Mar. 31, 2021 USD ($)
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Number of operating segments \| segment	2
Revenues:	$ 152,156	$ 98,785
Cost of sales:	121,167	66,508
Depreciation and amortization:	9,182	5,350
Selling, general and administrative	45,214	35,986
Interest expense, net	(2,489)	(1,017)
Other income (expense), net	221	(53)
Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(417)
Segment contribution:		400
Loss before income taxes		800
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	152,156	98,785
Cost of sales:	121,167	66,508
Segment contribution:	39,471	37,041
Depreciation and amortization:	8,482	4,764
Operating Segments \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(400)
Corporate, Non-Segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative	45,214	35,986
Interest expense, net	(2,489)	(1,017)
Other income (expense), net	221	(53)
Loss before income taxes	(16,493)	(4,779)
Corporate, Non-Segment \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative		(368)
Company-operated shops
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	130,187	77,917
Company-operated shops \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	130,187	77,917
Cost of sales:	113,548	60,339
Segment contribution:	23,779	20,849
Depreciation and amortization:	7,140	3,271
Company-operated shops \| Operating Segments \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(380)
Segment contribution:		380
Franchising and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	21,969	20,868
Franchising and other \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	21,969	20,868
Cost of sales:	7,619	6,169
Segment contribution:	15,692	16,192
Depreciation and amortization:	$ 1,342	1,493
Franchising and other \| Operating Segments \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(30)
Segment contribution:		$ 30

Loss Per Share - Reconciliation of numerator for earnings (loss) per share (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share [Abstract]
Net loss	$ (16,279)	$ (4,822)
Less: net loss attributable to non-controlling interests	(11,332)	0
Net loss attributable to Dutch Bros Inc.	$ (4,947)	$ 0

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Condensed Consolidated Statements of Stockholders'/Members' Equity - 3 months ended Mar. 31, 2021 - USD ($) $ in Thousands	Total	Member Units
Temporary Equity: Redeemable Common Units, Beginning Balance at Dec. 31, 2020	$ 1,535,772
Members' equity, beginning balance at Dec. 31, 2020	(1,458,285)	$ 77,487
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions paid to members	(3,618)	(3,618)
Increase in redemption value of common units	174,750
Increase in redemption value of redeemable common units	(174,750)	0
Net loss	(4,822)	(4,822)
Temporary Equity: Redeemable Common Units, Ending Balance at Mar. 31, 2021	1,710,522
Members' equity, ending balance at Mar. 31, 2021	$ (1,641,475)	$ 69,047

- Definition

Carrying amount, attributable to parent and noncontrolling interests, of an entity's issued and outstanding stock which is not included within permanent equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. Includes stock with a put option held by an ESOP and stock redeemable by a holder only in the event of a change in control of the issuer.

+ References + Details

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	NOTE 17 — Subsequent Events Interest Rate Swap Contract On April 1, 2022, the Company completed an interest rate swap transaction with JPMorgan Chase Bank, N.A. as administrative agent and other financial institutions as the lenders party thereto, with respect to $70 million of the term loan under the 2022 Credit Facility. The purpose of the floating-to-fixed interest rate swap transaction (the Interest Rate Swap) was to fix the term loan interest rate at 2.67%. The Interest Rate Swap has a maturity date of February 28, 2027. Property Sale On April 19, 2022, the Company sold the land and building at its Kansas City, Kansas shop location for approximately $2.6 million, net of closing costs. The Company will continue to operate at this location, and will leaseback the land and building.

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Schedule of immaterial correction of previously issued consolidated financial statements

The tables below reflect the sections of the Company’s condensed consolidated financial statements that were impacted by the error.

Condensed Consolidated Balance Sheets:


	December 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected




Current liabilities:
Accrued liabilities	$	24,513	$	(3,543)	$	20,970
Total current liabilities	142,277		(3,543)		138,734
Total liabilities	343,514		(3,543)		339,971

Stockholders’ equity:
Additional paid in capital	106,410		783		107,193
Accumulated deficit	(12,914)		235		(12,679)
Total stockholders’ equity attributable to Dutch Bros Inc.	93,498		1,018		94,516
Non-controlling interests	116,688		2,525		119,213
Total equity	$	210,186	$	3,543	$	213,729

Condensed Consolidated Statement of Operations:


	Three Months Ended March 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Costs and expenses
Cost of sales	$	66,925	$	(417)	$	66,508
Selling, general and administrative	36,354		(368)		35,986
Total costs and expenses	103,279		(785)		102,494
Loss from operations	(4,494)		785		(3,709)
Loss before income taxes	(5,564)		785		(4,779)

Net loss	$	(5,607)	$	785	$	(4,822)

Condensed Consolidated Statement of Changes in Members’ Equity:


	Three Months Ended March 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Permanent equity: members’ deficit
Balance, December 31, 2020	$	(1,459,782)	$	1,497	$	(1,458,285)


Net loss	(5,607)		785		(4,822)
Balance, March 31, 2021	$	(1,643,757)	$	2,282	$	(1,641,475)

Condensed Consolidated Statement of Cash Flows:


	Three Months Ended March 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Cash flows from operating activities:
Net loss	$	(5,607)	$	785	$	(4,822)


Changes in operating assets and liabilities, net of acquisitions
Accrued expenses	1,850		(785)		1,065

Schedule of advertising costs and vendor incentives

Vendor incentives recognized in cost of sales were as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021
Vendor incentives	$	9,006	$	9,277

Advertising expense was as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021
Advertising expense	$	7,624	$	5,917

Inventories

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

Inventories

NOTE 5 — Inventories

Inventories, net consist of the following:



(in thousands)	March 31, 2022		December 31, 2021
Raw materials	$	5,709	$	5,549
Finished goods	21,218		17,796
Total inventories	$	26,927	$	23,345

As of March 31, 2022 and 2021, reserves for inventories were $1,936 and $2,126, respectively.

Revenue Recognition - Disaggregation of revenue by major component (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Revenue by major component	$ 152,156	$ 98,785
Company-operated shops
Disaggregation of Revenue [Line Items]
Revenue by major component	130,187	77,917
Franchising
Disaggregation of Revenue [Line Items]
Revenue by major component	20,773	19,806
Other
Disaggregation of Revenue [Line Items]
Revenue by major component	$ 1,196	$ 1,062

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 26,754	$ 18,506
Accounts receivable, net	12,870	10,644
Inventories, net	26,927	23,345
Prepaid expenses and other current assets	5,892	8,796
Total current assets	72,443	61,291
Property and equipment, net	257,912	301,998
Finance lease right-of-use assets, net	141,874
Operating lease right-of-use assets, net	154,939
Intangibles, net	11,923	11,103
Goodwill	21,629	18,715
Deferred income tax assets, net	223,376	159,031
Other long-term assets	410	1,562
Total assets	884,506	553,700
Current liabilities:
Accounts payable	21,837	20,440
Accrued liabilities	19,571	20,970
Other current liabilities	6,291	6,471
Deferred revenue	23,828	22,807
Line of credit	25,527	64,104
Current portion of tax receivable agreements liability	450	450
Current portion of finance lease obligations	4,491
Current portion of finance lease obligations		3,389
Operating leases	8,698
Current portion of long-term debt	1,979	103
Total current liabilities	112,672	138,734
Long-term liabilities:
Deferred revenue, net of current portion	4,591	5,030
Tax receivable agreements liability, net of current portion	164,460	109,283
Finance lease obligations, net of current portion	142,884
Finance lease obligations, net of current portion		79,588
Lease liabilities, net of current portion	148,483
Long-term debt, net of current portion	97,294	3,503
Deferred rent	0	3,153
Other long-term liabilities	672	680
Total liabilities	671,056	339,971
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, $0.00001 par value per share - 20,000 shares authorized; zero shares issued and outstanding as of March 31, 2022 and December 31, 2021	0	0
Additional paid in capital	122,655	107,193
Accumulated deficit	(17,240)	(12,679)
Total stockholders' equity attributable to Dutch Bros Inc. / members’ equity	105,417	94,516
Non-controlling interests	108,033	119,213
Total equity	213,450	213,729
Total liabilities and equity	884,506	553,700
Class A common stock
Stockholders' equity:
Common stock	0	0
Class B common stock
Stockholders' equity:
Common stock	1	1
Class C common stock
Stockholders' equity:
Common stock	1	1
Class D common stock
Stockholders' equity:
Common stock	$ 0	$ 0

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Chief Executive Officer
Related Party Transaction [Line Items]
Donations to Dutch Bros Foundation	$ 1,373	$ 2,125

Leases - Summary of finance and operating lease right-of-use assets and lease liabilities (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Right-of-use assets
Finance lease right-of-use assets, net	$ 141,874
Operating lease right-of-use assets, net	154,939
Total right-of-use assets	296,813
Finance leases
Current portion of finance lease obligations	4,491
Finance lease obligations, net of current portion	142,884
Operating leases
Current portion of operating lease obligations	8,698
Operating lease obligations, net of current portion	148,483
Total lease liabilities	$ 304,556

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Summary of property and equipment, net

Property and equipment, net consists of the following:



(in thousands)	Useful Life (Years)			March 31, 2022		December 31, 2021
Software	3			$	7,213	$	7,132

Equipment and fixtures	3	—	7	68,214		57,952
Leasehold improvements	5	—	9	22,991		20,744
Buildings	10	—	20	100,509		168,395
Land	N/A			5,034		5,242
Aircraft 1	N/A			9,195		9,531
Construction-in-progress 2	N/A			94,809		88,050
Property and equipment, gross				307,965		357,046
Less: accumulated depreciation				(50,053)		(55,048)
Property and equipment, net				$	257,912	$	301,998

_______________

1 Aircraft are depreciated under the consumption method.

2 Construction-in-progress primarily consists of construction and equipment costs for new and existing shops.

Depreciation expense included in the Company’s condensed consolidated statements of operations was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Cost of sales	$	7,568	$	3,975
Selling, general and administrative expenses	699		587
Total depreciation expense	$	8,267	$	4,562

Inventories - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Inventory valuation reserves	$ 1,936	$ 2,126

Income Taxes - Narrative (Details) $ in Millions	3 Months Ended
Income Taxes - Narrative (Details) $ in Millions	Mar. 31, 2022 USD ($)
Valuation Allowance [Line Items]
U.S. federal statutory income tax rate	21.00%
Less: valuation allowance	$ 1.5
Net deferred tax assets	223.4
Tax receivable agreement, amount due	164.9
Secondary Offering
Valuation Allowance [Line Items]
Less: valuation allowance	63.8
Tax receivable agreement, amount due	$ 55.2

Non-Controlling Interests

3 Months Ended

Mar. 31, 2022

Noncontrolling Interest [Abstract]

Non-Controlling Interests

NOTE 12 — Non-Controlling Interests

The Company is the sole managing member of Dutch Bros OpCo, and, as a result, consolidates the financial results of Dutch Bros OpCo. The Company reports a non-controlling interest representing the economic interest in the Dutch Bros OpCo held by the other members of Dutch Bros OpCo. The Dutch Bros OpCo Agreement provides that holders of OpCo Units may, from time to time, require Dutch Bros OpCo to redeem all or a portion of its OpCo Units for newly-issued shares of Class A common shares on a one-for-one basis. In connection with any redemption or exchange, the Company will receive a corresponding number of OpCo Units, increasing the Company’s total ownership in Dutch Bros OpCo. Changes in the Company’s ownership in Dutch Bros OpCo, while the Company retains its controlling interest in Dutch Bros OpCo, will be accounted for as equity transactions. As such, future redemptions or direct exchanges of OpCo Units in Dutch Bros OpCo by the other members of Dutch Bros OpCo will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in-capital.

The following table summarizes the ownership interest in Dutch Bros OpCo:


	March 31, 2022
(in thousands)	OpCo Units	Ownership %
Class A common units held by Dutch Bros Inc.1	53,619	32.8	%
Class A common units held by non-controlling interest holders	110,085	67.2	%
Total Class A common units outstanding	163,703	100.0	%

_________________

1 Includes approximately 2.7 million common units related to unvested restricted stock awards held by former Profits Interest Units holders. These common units are excluded from non-controlling interest calculations.

The weighted-average ownership percentage for the applicable reporting period is used to attribute net income (loss) to Dutch Bros Inc. and the non-controlling interest holders. The non-controlling interest holders’ weighted-average ownership percentage for the three months ended March 31, 2022 was 70.1%.

The following table summarizes the effect of changes in ownership of Dutch Bros OpCo on the Company’s equity:


(in thousands)	Three Months Ended March 31, 2022
Net loss attributable to Dutch Bros Inc.	$	(4,947)
Transfers to non-controlling interests:

Increase in additional paid-in capital as a result of the acquisition of Dutch Bros OpCo common units	4,828
Change from net loss attributable to Dutch Bros Inc. and transfers from non-controlling interests	$	(119)

Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies

Financial Statements Presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. Therefore, the unaudited financial statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and on March 11, 2022.

Immaterial Correction of Previously Issued Consolidated Financial Statements

Subsequent to the issuance of the Company’s 2021 consolidated financial statements, management of the Company identified an error in application of Accounting Standards Codification (ASC) 710, Compensation-General, related to accrued sick leave pay. ASC 710-10-25-7 states that an employer is not required to accrue a liability for nonvesting accumulating rights to receive sick pay benefits. Historically, the Company accrued sick leave pay expense for each employee. As unused sick leave pay does not carry forward and is not paid out upon termination, the accrued liability should not have been recorded.

The Company has evaluated the effects of the corrections detailed in the table below on the previously issued consolidated financial statements, individually and in the aggregate, in accordance with the guidance in ASC 250, Accounting Changes and Error Corrections. The Company has concluded such corrections to be immaterial to its previously issued consolidated financial statements.

While management believes the effect of the error is immaterial to the Company’s previously issued consolidated financial statements as of December 31, 2021, and as of and for the three months ended March 31, 2021, the financial statement line items impacted by this error have been corrected. In addition, the immaterial error will be corrected prospectively in the Company’s subsequent quarterly and annual filings.

The tables below reflect the sections of the Company’s condensed consolidated financial statements that were impacted by the error.

Condensed Consolidated Balance Sheets:


	December 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected




Current liabilities:
Accrued liabilities	$	24,513	$	(3,543)	$	20,970
Total current liabilities	142,277		(3,543)		138,734
Total liabilities	343,514		(3,543)		339,971

Stockholders’ equity:
Additional paid in capital	106,410		783		107,193
Accumulated deficit	(12,914)		235		(12,679)
Total stockholders’ equity attributable to Dutch Bros Inc.	93,498		1,018		94,516
Non-controlling interests	116,688		2,525		119,213
Total equity	$	210,186	$	3,543	$	213,729

Condensed Consolidated Statement of Operations:


	Three Months Ended March 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Costs and expenses
Cost of sales	$	66,925	$	(417)	$	66,508
Selling, general and administrative	36,354		(368)		35,986
Total costs and expenses	103,279		(785)		102,494
Loss from operations	(4,494)		785		(3,709)
Loss before income taxes	(5,564)		785		(4,779)

Net loss	$	(5,607)	$	785	$	(4,822)

Condensed Consolidated Statement of Changes in Members’ Equity:


	Three Months Ended March 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Permanent equity: members’ deficit
Balance, December 31, 2020	$	(1,459,782)	$	1,497	$	(1,458,285)


Net loss	(5,607)		785		(4,822)
Balance, March 31, 2021	$	(1,643,757)	$	2,282	$	(1,641,475)

Condensed Consolidated Statement of Cash Flows:


	Three Months Ended March 31, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Cash flows from operating activities:
Net loss	$	(5,607)	$	785	$	(4,822)


Changes in operating assets and liabilities, net of acquisitions
Accrued expenses	1,850		(785)		1,065

Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that it controls due to ownership of a majority voting interest or pursuant to accounting guidance for non-controlling interests. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The presentation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions, primarily related to long-lived asset valuation, leases, deferred revenue, tax receivable agreements, income taxes, and equity-based compensation that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could differ from those estimates.

Reclassifications

The Company has reclassified certain amounts in prior-period financial statements to conform to the current period's presentation. On the condensed consolidated statements of cash flows, deferred income tax assets have been reclassified from other long-term assets.

Leases

The Company adopted ASC Topic 842 (ASC 842), Leases, as amended, with an effective date of January 1, 2022. Details of the adoption and the Company’s accounting policies related to leases are provided in NOTE 8 — Leases.

Revenue Recognition

Consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives in accordance with Accounting Standard Codification (ASC) Topic 606, Revenue from Contracts with Customers.

Loyalty and Gift Card Programs

In February 2021, the Company transitioned from a traditional loyalty program to a digital loyalty program. Under the previous program, a customer earned a “Stamp” for each purchase at a Dutch Bros coffee shop. After accumulating a certain number of Stamps, the customer earned a reward that may be redeemed for free product that, regardless of where the related Stamps were earned, would have been honored at company-operated shops and franchised shop locations. The Company deferred revenue associated with the estimated selling price of Stamps earned by customers towards free product as each Stamp was earned, and a corresponding contract liability was established. The estimated selling price of each Stamp earned was based on the estimated value of the product for which the reward was expected to be redeemed, net of Stamps not expected to be redeemed, based on historical redemption patterns. Stamps did not expire. As a result of the COVID-19 pandemic beginning in March 2020, the Company discontinued new Stamps. The Company continued to redeem previously earned Stamps through March 2021. In February 2021, the Company developed a new loyalty program (Dutch Rewards) in which the customer earns rewards through use of the Company’s mobile app that can be redeemed for free drinks. Earned rewards expire six months after issuance, and points collected but not redeemed expire after six months. The Company defers revenue as rewards are earned under the new loyalty program.

Deferred Revenue

Deferred revenue primarily consists of the unredeemed gift card liability and unredeemed points from our Dutch Rewards loyalty program, as discussed above. Deferred revenue also includes customer advance payments and bean and beverage sales to distributors where the performance obligation has not yet been satisfied as control has not transferred to the customer.

Vendor IncentivesThe Company has entered into food and beverage supply agreements with certain major vendors. Pursuant to the terms of these arrangements, rebates are provided to the Company from the vendors based upon the dollar value of purchases for company-operated shops and franchised shops. These incentives are recognized as earned throughout the year and are classified as a reduction of cost of sales in the accompanying consolidated statements of operations.

Advertising Expense

Advertising costs are expensed as they are incurred. Most franchise shops contribute to an advertising fund that the Company manages on behalf of the shops. Under the Company’s standard franchise agreement, the contributions received must be spent on marketing, creative efforts, media support, or other related purposes specified in the agreement. The expenditures are primarily amounts paid to third parties but may also include personnel expenses and allocated costs. Advertising expense was as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021
Advertising expense	$	7,624	$	5,917

Recently Issued Accounting Standards

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13, as amended, replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For accounts receivable and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. ASU 2016-13, as amended, is effective for fiscal years beginning after December 15, 2022. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is evaluating the impact of this standard on its consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update provide specific guidance to address diversity in practice related to (1) recognition of an acquired contract liability, and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in ASU 2021-08 are applied on a prospective basis, and are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this standard on its consolidated financial statements

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The pronouncement requires lessees to recognize a liability for lease obligations, which represent the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet, as well as new disclosure requirements. The Company adopted Topic 842 effective January 1, 2022 using the modified transition approach. For additional information, refer to NOTE 8 — Leases.

Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Financial information for reportable segments

Financial information for the Company’s reportable segments was as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021 ¹
Revenues:
Company-operated shops	$	130,187	$	77,917
Franchising and other	21,969		20,868
Total revenues	152,156		98,785
Cost of sales:
Company-operated shops	113,548		60,339
Franchising and other	7,619		6,169
Total cost of sales	121,167		66,508
Segment contribution:
Company-operated shops	23,779		20,849
Franchising and other	15,692		16,192
Total segment contribution	$	39,471	$	37,041
Depreciation and amortization:
Company-operated shops	7,140		3,271
Franchising and other	1,342		1,493
Total depreciation and amortization	8,482		4,764
Selling, general and administrative	(45,214)		(35,986)
Interest expense, net	(2,489)		(1,017)
Other income (expense), net	221		(53)
Loss before income taxes	$	(16,493)	$	(4,779)

_________________

1 The Company identified immaterial corrections related to the accrual of employee sick leave and the application of ASC 710, Compensation - General, which resulted in revisions to segments’ prior period reported amounts for the three months ended March 31, 2021. The impacted line items are presented below.

•Decrease in company-operated shops cost of sales (labor costs) of $0.38 million

•Decrease in franchising and other cost of sales of $0.03 million

•Decrease in total cost of sales of $0.4 million

•Increase in company-operated shops gross profit and segment contribution of $0.38 million

•Increase in franchising and other gross profit and segment contribution of $0.03 million

•Increase in total gross profit and segment contribution of $0.4 million

•Decrease in selling, general and administrative expenses of $0.4 million

•Decrease in loss before income taxes of $0.8 million

Shop Acquisitions

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Shop Acquisitions

NOTE 4 — Shop Acquisitions

During the three months ended March 31, 2022, the Company repurchased the franchise rights and assets of five shops from one franchisee in California. The following table summarizes the allocations of the purchase prices to the estimated fair values of assets acquired and liabilities assumed. The fair values for the 2022 acquisitions are considered preliminary and subject to change within the measurement period (up to one year from the acquisition dates), as we have not obtained all of the detailed information to finalize the opening balance sheet related to the building and leasehold improvements purchased and franchise rights reacquired.



(in thousands)	March 31, 2022
Acquisition consideration:
Purchase price consideration	$	6,051
Equipment and fixtures	197
Building and leasehold improvements	1,470
Inventories	67
Other assets	6
Operating lease right-of-use assets, net	2,327
Reacquired franchise rights	1,735
Other liabilities	(88)
Gift card liability	(250)
Operating lease obligations	(2,327)
Net assets acquired	3,137
Goodwill	$	2,914

Reacquired franchise rights acquired have weighted-average useful lives of 4.2 years at the time of purchase for the acquisitions made during the three months ended March 31, 2022. The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisitions, including sales and growth opportunities, and is expected to be fully deductible for tax purposes. Goodwill is allocated entirely to the Company-operated shops segment.

The fair value measurement of tangible and intangible assets and liabilities as of the acquisition dates is based on significant inputs not observed in the market and thus represents a Level 3 fair value measurement. Fair value measurements for reacquired franchise rights were determined using the income approach. Fair value measurements for property and equipment were determined using the cost approach.

The results of operations for the 2022 acquisitions are included in the Company’s consolidated statements of operations beginning on the dates of acquisition. Revenues of approximately $1.0 million and net income of approximately $0.2 million are included in the Company’s consolidated statements of operations for the three months ended March 31, 2022.

The following table reflects the unaudited pro forma results of the Company and the five shops purchased in 2022 as if the acquisitions had taken place as of January 1, 2021:


	Three Months Ended March 31,
(in thousands; unaudited)	2022		2021
Revenue	$	154,107	$	101,708
Net loss	$	(15,902)	$	(4,256)

Intangible Assets and Goodwill - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, impairment charges	$ 0	$ 0

Revenue Recognition - Franchise fees (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Franchising
Disaggregation of Revenue [Line Items]
Earned franchise fees	$ 156	$ 120

Related Party Transactions

3 Months Ended

Mar. 31, 2022

Related Party Transactions

NOTE 15 — Related Party Transactions


	Three Months Ended March 31,
(in thousands)	2022		2021
Donations to Dutch Bros Foundation	$	1,373	$	2,125

Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Cash Flows [Abstract]
Net loss	$ (16,279)	$ (4,822)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization:	9,182	5,350
Non-cash interest expense	147	25
Loss (gain) on disposal of assets	290	(274)
Equity-based compensation	9,900	14,650
Deferred income taxes	(511)	5
Non-cash operating leases	2,310
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(2,226)	(1,681)
Inventories, net	(3,515)	1,131
Prepaid expenses and other current assets	2,904	853
Other long-term assets	1,158	18
Accounts payable	(132)	(3,845)
Accrued liabilities	(1,903)	1,065
Other current liabilities	(193)	2,308
Deferred revenue	332	631
Deferred rent	0	82
Other long-term liabilities	(8)	(9)
Operating lease liabilities	(2,212)
Net cash provided by (used in) operating activities	(756)	15,487
Cash flows from investing activities:
Purchases of property and equipment	(39,982)	(7,942)
Proceeds from disposal of fixed assets	12	875
Acquisition of shops from franchisees	(6,051)	0
Net cash used in investing activities	(46,021)	(7,067)
Cash flows from financing activities:
Proceeds from line of credit	62,705	0
Payments on finance lease obligations	(997)	(531)
Payments on long-term debt	(34)	(935)
Payments of debt issuance costs	(2,749)	0
Distributions paid to members	0	(3,618)
Tax withholding payments upon vesting of equity awards	(3,900)	0
Net cash provided by (used in) financing activities	55,025	(5,084)
Net increase in cash and cash equivalents	8,248	3,336
Cash and cash equivalents, beginning of period	18,506	31,640
Cash and cash equivalents, end of period	26,754	34,976
Supplemental disclosure of cash flow information
Cash paid during the period for interest	2,054	1,272
Income taxes paid	130	7
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	1,723
Operating cash flows from operating leases	3,748
Financing cash flows from finance leases	997
Supplemental disclosure of noncash investing and financing activities
Additions of property with capital leases	0	4,621
Additions of property and equipment accrued in accounts payable	1,959	391
Deferred offering costs accrued	250	0
Transfer between line of credit and term loan facility	100,000	$ 0
Right-of-use assets obtained in exchange for lease obligations 1
Finance leases	64,954
Operating leases	$ 157,249

Property and Equipment

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 6 — Property and Equipment

Property and equipment, net consists of the following:



(in thousands)	Useful Life (Years)			March 31, 2022		December 31, 2021
Software	3			$	7,213	$	7,132

Equipment and fixtures	3	—	7	68,214		57,952
Leasehold improvements	5	—	9	22,991		20,744
Buildings	10	—	20	100,509		168,395
Land	N/A			5,034		5,242
Aircraft 1	N/A			9,195		9,531
Construction-in-progress 2	N/A			94,809		88,050
Property and equipment, gross				307,965		357,046
Less: accumulated depreciation				(50,053)		(55,048)
Property and equipment, net				$	257,912	$	301,998

_______________

1 Aircraft are depreciated under the consumption method.

2 Construction-in-progress primarily consists of construction and equipment costs for new and existing shops.

Depreciation expense included in the Company’s condensed consolidated statements of operations was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Cost of sales	$	7,568	$	3,975
Selling, general and administrative expenses	699		587
Total depreciation expense	$	8,267	$	4,562

No impairment charges were recognized for the three months ended March 31, 2022 and 2021.

Shop Acquisitions - Purchase price allocation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill	$ 21,629	$ 18,715
Shops purchased from franchisees
Business Acquisition [Line Items]
Purchase price consideration	6,051
Equipment and fixtures	197
Building and leasehold improvements	1,470
Inventories	67
Other assets	6
Operating lease right-of-use assets, net	2,327
Reacquired franchise rights	1,735
Other liabilities	(88)
Gift card liability	(250)
Operating lease obligations	(2,327)
Net assets acquired	3,137
Goodwill	$ 2,914

Property and Equipment - Summary of property and equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 307,965	$ 357,046
Less: accumulated depreciation	(50,053)	(55,048)
Property and equipment, net	$ 257,912	301,998
Software
Property, Plant and Equipment [Line Items]
Useful Life (Years)	3 years
Property and equipment, gross	$ 7,213	7,132
Equipment and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 68,214	57,952
Equipment and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life (Years)	3 years
Equipment and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life (Years)	7 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 22,991	20,744
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life (Years)	5 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life (Years)	9 years
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 100,509	168,395
Buildings \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life (Years)	10 years
Buildings \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life (Years)	20 years
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 5,034	5,242
Aircraft
Property, Plant and Equipment [Line Items]
Property and equipment, gross	9,195	9,531
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 94,809	$ 88,050

Debt - Schedule of debt instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Line of Credit Facility [Line Items]
Finance lease obligation	$ 0	$ 2,978
Total debt	100,602	3,606
Less: loan origination fees	(1,329)	0
Less: current portion	(1,979)	(103)
Total long-term debt, net of current portion	97,294	3,503
Secured Debt \| New Credit Facility
Line of Credit Facility [Line Items]
Terms loan under credit facility	100,000
Secured Debt \| The 2018 Credit Facility
Line of Credit Facility [Line Items]
Terms loan under credit facility		0
Unsecured Debt
Line of Credit Facility [Line Items]
Unsecured note payable	$ 602	$ 628

Equity and Equity-Based Compensation - Restricted stock awards (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Beginning balance (in shares) \| shares	4,000
Vested (in shares) \| shares	(1,263)
Ending balance (in shares) \| shares	2,737
Weighted-average grant date fair value per share
Beginning balance (in dollars per share) \| $ / shares	$ 23.00
Vested (in dollars per share) \| $ / shares	23.00
Ending balance (in dollars per share) \| $ / shares	$ 23.00
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Beginning balance (in shares) \| shares	596
New grants (in shares) \| shares	145
Vested (in shares) \| shares	(198)
Forfeitures (in shares) \| shares	(1)
Ending balance (in shares) \| shares	542
Weighted-average grant date fair value per share
Beginning balance (in dollars per share) \| $ / shares	$ 43.55
New grants (in dollars per share) \| $ / shares	49.37
Vested (in dollars per share) \| $ / shares	43.55
Forfeitures (in dollars per share) \| $ / shares	49.37
Ending balance (in dollars per share) \| $ / shares	$ 45.11

Leases

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

NOTE 8 — Leases

Adoption of ASC 842

The Company adopted ASC 842, as amended, using the modified retrospective transition method with an effective date of January 1, 2022. The modified retrospective approach permits a company to use its effective date as the date of initial application to apply the standard to its leases, and, therefore, not restate comparative prior period financial information. As such, results for reporting periods beginning on or after January 1, 2022 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 (ASC 840). Further, disclosures required under the new standard will not be provided for dates and periods prior to January 1, 2022. The adoption of the lease standard resulted in a cumulative adjustment to opening equity of $1.3 million.

Upon adoption, the Company recognized additional operating lease liabilities of $152.8 million based on the present value of the remaining lease payments for existing operating leases, and right-of-use assets of $150.7 million, net of reductions for the impacts of deferred rents. As part of the transition, the Company derecognized all landlord funded lease incentives and deemed landlord financing liabilities, including capital assets related to previous sale and leaseback transactions which were remeasured under ASC 842.

The standard provides several optional practical expedients in transition. The Company elected the package of practical expedients, which permits it to not reassess, under the new standard, the Company's prior conclusions about lease identification, lease classification and initial direct costs. As such, the Company applied the modified retrospective transition method as of the adoption date to those lease contracts for which it had taken possession of the property as of January 1, 2022.

The Company also elected the practical expedient pertaining to land easements and did not elect the practical expedient related to use-of-hindsight. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption and also the practical expedient to not separate lease and non-lease components for all its leases.

Upon transition, on January 1, 2022, the Company recorded the following increases (decreases) to the respective line items on its condensed consolidated balance sheet:


(in thousands)	Adjustments as of January 1, 2022

Property and equipment, net	$	(79,821)
Finance lease right-of-use assets	111,826
Operating lease right-of-use assets	150,689

Deferred rent	(3,153)
Current portion of finance lease obligations	607
Current portion of operating lease obligations	8,430
Current portion of long-term debt	(46)
Finance lease obligations, net of current portion	32,534
Operating lease obligations, net of current portion	144,405
Long-term debt, net of current portion	(1,426)
Retained earnings (accumulated deficit)	386
Non-controlling interests	957

Nature of Leases

The Company leases all of its domestic company-operated shops, warehouse facilities, headquarters buildings, and certain equipment under various non-cancelable lease agreements that expire on various dates through 2041. The Company evaluates contracts entered into to determine whether the contract involves the use of property or equipment, which is either explicitly or implicitly identified in the contract. The Company evaluates whether it controls the use of the asset, which is determined by assessing whether it obtains substantially all economic benefits from the use of the asset, and whether the Company has the right to direct the use of the asset. If these criteria are met and a lease has been identified, the Company accounts for the contract under the requirements of ASC 842.

Lease commencement is determined when the Company takes possession of a leased asset, at which time the Company also determines the lease classification as an operating or finance lease. The Company’s real estate leases are comprised of commercial ground leases (land only) and build-to-suit leases (land and building).

The real estate leases are a combination of both operating and finance leases, depending an evaluation of the lease terms. Generally, the Company’s real estate leases have an initial term of 15 years and typically include two to three renewal options at five-years each. These renewal options are included in the lease term when it is reasonably certain that the option will be exercised. For commercial ground leases, one five-year renewal is included in the Company’s initial lease term calculations. The Company’s real estate leases typically provide for fixed minimum rent payments. For operating leases, the Company recognizes lease expense on a straight-line basis over the lease term from the date the Company takes possession of the leased property. Lease expense incurred before a lease commences is included in the calculation of the right-of-use asset. Once a lease commences, the Company records lease expense in cost of sales or selling, general and administrative expense on the Company’s condensed consolidated statements of operations, depending on the lease classification. Variable lease costs generally include payments for additional rent such as real estate taxes, insurance, and common area maintenance, and are excluded from the measurement of the lease liability. Variable lease costs are included in cost of sales on the condensed consolidated statements of operations.

The Company calculates right-of-use assets and lease liabilities based on the present value of the fixed lease payments, including any estimated lease incentives, at lease commencement using its incremental borrowing rate, applied on a portfolio basis. As the rate implicit in the Company’s leases cannot be readily determined, the discount rate used to measure the lease liability is equal to the rate the Company would pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The Company expends cash for leasehold improvements to build out and equip its leased premises. For certain leases, a portion of the leasehold improvements and building costs are reimbursed by landlords as landlord incentives pursuant to agreed-upon terms in the Company’s lease agreements. Landlord incentives, if obtained, are received in cash after the Company takes possession of the property, and as the Company meets required milestones during the construction of the property. The Company includes these amounts in the measurement of the initial right-of-use asset and lease liability.

A summary of finance and operating lease right-of-use assets and lease liabilities as of March 31, 2022 is as follows:


(in thousands)	Balance Sheet Classification	March 31, 2022
Right-of-use assets
Finance leases	Finance lease right-of-use assets	$	141,874
Operating leases	Operating lease right-of-use assets	154,939
Total right-of-use assets		$	296,813

Lease liabilities
Finance leases	Current portion of finance lease obligations	$	4,491
	Finance lease obligations, net of current portion	142,884

Operating leases	Current portion of operating lease obligations	8,698
	Operating lease obligations, net of current portion	148,483
Total lease liabilities		$	304,556

The components of lease cost were as follows for the period presented:

(in thousands)

Statement of Operations Classification

Three Months Ended March 31, 2022

Finance lease cost

Amortization of right-of-use assets

Cost of sales

2,194

Interest on lease liabilities

Interest expense

1,723

Total finance lease cost

3,917

Operating lease cost

Cost of sales

3,847

Variable lease cost

Cost of sales

493

Total lease cost

8,257

Future minimum lease payments for finance and operating lease liabilities as of March 31, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	8,718	$	11,104
2023	12,549		14,503
2024	12,645		14,040
2025	12,871		13,760
2026	13,193		13,647

Thereafter	156,631		146,238
Total	$	216,607	$	213,292
Less: imputed interest	(69,232)		(56,111)
Present value of minimum lease payments	147,375		157,181
Less: current portion	(4,491)		(8,698)
Lease liabilities, net of current portion	$	142,884	$	148,483

A summary of lease terms and discount rates for finance and operating leases as of March 31, 2022 is as follows:


						March 31, 2022
Weighted-average remaining lease term (years)
Finance leases						15.8
Operating leases						15.4

Weighted-average discount rate (percentages)
Finance leases						5.1%
Operating leases						4.0%

Leases

NOTE 8 — Leases

Adoption of ASC 842

Upon transition, on January 1, 2022, the Company recorded the following increases (decreases) to the respective line items on its condensed consolidated balance sheet:


(in thousands)	Adjustments as of January 1, 2022

Property and equipment, net	$	(79,821)
Finance lease right-of-use assets	111,826
Operating lease right-of-use assets	150,689

Deferred rent	(3,153)
Current portion of finance lease obligations	607
Current portion of operating lease obligations	8,430
Current portion of long-term debt	(46)
Finance lease obligations, net of current portion	32,534
Operating lease obligations, net of current portion	144,405
Long-term debt, net of current portion	(1,426)
Retained earnings (accumulated deficit)	386
Non-controlling interests	957

Nature of Leases

A summary of finance and operating lease right-of-use assets and lease liabilities as of March 31, 2022 is as follows:


(in thousands)	Balance Sheet Classification	March 31, 2022
Right-of-use assets
Finance leases	Finance lease right-of-use assets	$	141,874
Operating leases	Operating lease right-of-use assets	154,939
Total right-of-use assets		$	296,813

Lease liabilities
Finance leases	Current portion of finance lease obligations	$	4,491
	Finance lease obligations, net of current portion	142,884

Operating leases	Current portion of operating lease obligations	8,698
	Operating lease obligations, net of current portion	148,483
Total lease liabilities		$	304,556

The components of lease cost were as follows for the period presented:

(in thousands)

Statement of Operations Classification

Three Months Ended March 31, 2022

Finance lease cost

Amortization of right-of-use assets

Cost of sales

2,194

Interest on lease liabilities

Interest expense

1,723

Total finance lease cost

3,917

Operating lease cost

Cost of sales

3,847

Variable lease cost

Cost of sales

493

Total lease cost

8,257

Future minimum lease payments for finance and operating lease liabilities as of March 31, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	8,718	$	11,104
2023	12,549		14,503
2024	12,645		14,040
2025	12,871		13,760
2026	13,193		13,647

Thereafter	156,631		146,238
Total	$	216,607	$	213,292
Less: imputed interest	(69,232)		(56,111)
Present value of minimum lease payments	147,375		157,181
Less: current portion	(4,491)		(8,698)
Lease liabilities, net of current portion	$	142,884	$	148,483

A summary of lease terms and discount rates for finance and operating leases as of March 31, 2022 is as follows:


						March 31, 2022
Weighted-average remaining lease term (years)
Finance leases						15.8
Operating leases						15.4

Weighted-average discount rate (percentages)
Finance leases						5.1%
Operating leases						4.0%

Leases - Additional lease information (Details)	Mar. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term (years), Finance leases	15 years 9 months 18 days
Weighted-average remaining lease term (years), Operating leases	15 years 4 months 24 days
Weighted-average discount rate (percentages), Finance leases	5.10%
Weighted-average discount rate (percentages), Operating leases	4.00%

Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

NOTE 3 — Revenue Recognition

Revenue

The following table disaggregates revenue by major component:


	Three Months Ended March 31,
(in thousands)	2022		2021
Company-operated shops	$	130,187	$	77,917
Franchising	20,773		19,806
Other	1,196		1,062
Total revenues	$	152,156	$	98,785

Deferred Revenue

Deferred revenue activity related to the Company’s loyalty and gift card programs was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Balance, January 1	$	22,765	$	10,576
Revenue deferred - card activations and rewards earned	53,107		25,257
Revenue recognized - card and rewards redemptions and breakage	(52,318)		(24,101)
Balance, March 31	23,554		11,732
Less: current portion	(20,959)		(9,601)
Deferred revenue, net of current portion, gift card and loyalty programs	$	2,595	$	2,131

Deferred revenue also includes customer advances and sales to distributors where the performance obligation has not been satisfied and control has not been transferred to the customer as of the reporting date, as well as initial unearned franchise fees from franchisees. These deferred revenues reported in the Company’s consolidated balance sheets were as follows:



(in thousands)	March 31, 2022		December 31, 2021
Customer advances and outstanding performance obligations	$	2,437	$	2,512
Initial unearned franchise fees from franchisees	2,428		2,560
Total deferred revenue, excluding gift card and loyalty programs	4,865		5,072
Less: current portion	(2,869)		(2,964)
Deferred revenue, net of current portion, excluding gift card and loyalty programs	$	1,996	$	2,108

Revenue recognized from initial unearned franchise fees was as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021

Earned franchise fees	$	156	$	120

Future amortization of initial unearned franchise fees is as follows for the years ending December 31:


(in thousands)
Remainder of 2022	$	330
2023	390
2024	332
2025	278
2026	236

Thereafter	862
Total	$	2,428

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
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-Paragraph 12
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-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Equity and Equity-Based Compensation - Stock-based expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Selling, general and administrative expenses
Class of Stock [Line Items]
Selling, general and administrative expenses	$ 9,900	$ 14,650

Shop Acquisitions - Narrative (Details) $ in Millions	3 Months Ended
Shop Acquisitions - Narrative (Details) $ in Millions	Mar. 31, 2022 USD ($) store
Business Acquisition [Line Items]
Revenues of acquisitions included in current period results of operations \| $	$ 1.0
Net income of acquisitions included in current period results of operations \| $	$ 0.2
Franchise rights
Business Acquisition [Line Items]
Weighted-average amortization period (in years)	4 years 2 months 12 days
Washington
Business Acquisition [Line Items]
Number of franchises purchased shops from \| store	5
Number of franchisees \| store	1

Equity and Equity-Based Compensation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Class of Stock [Line Items]
Total unrecognized stock-based compensation expense	$ 76,556
Restricted stock awards
Class of Stock [Line Items]
Total fair value of restricted stock	(29,000)
Restricted stock units
Class of Stock [Line Items]
Total fair value of restricted stock	$ (8,600)
Granted during or after 2022, Cliff vested \| Year three
Class of Stock [Line Items]
Vesting percentage	100.00%
Granted during or after 2022, Cliff vested \| Year one
Class of Stock [Line Items]
Vesting percentage	0.00%
Granted during or after 2022, Cliff vested \| Year two
Class of Stock [Line Items]
Vesting percentage	0.00%
Granted before 2022 \| Year three
Class of Stock [Line Items]
Vesting percentage	33.33%
Granted before 2022 \| Year one
Class of Stock [Line Items]
Vesting percentage	33.33%
Granted before 2022 \| Year two
Class of Stock [Line Items]
Vesting percentage	33.33%
Granted during or after 2022 \| Year three
Class of Stock [Line Items]
Vesting percentage	50.00%
Granted during or after 2022 \| Year one
Class of Stock [Line Items]
Vesting percentage	0.00%
Granted during or after 2022 \| Year two
Class of Stock [Line Items]
Vesting percentage	50.00%
Class A common stock
Class of Stock [Line Items]
Common stock, outstanding (in shares)	39,557,000	34,433,000
Shares issued in LLC conversion to common stock (in shares)	5,000,000.0
Class A common stock \| Secondary Offering
Class of Stock [Line Items]
Number of shares sold in the public market	5,000,000.0
Class D common stock
Class of Stock [Line Items]
Common stock, outstanding (in shares)	14,062,000	15,441,000
Continuing LLC Equity Owners \| Class A common stock
Class of Stock [Line Items]
LLC units and Class D common stock converted to Class A common stock (in units)	3,600,000
Continuing LLC Equity Owners \| Class D common stock
Class of Stock [Line Items]
LLC units and Class D common stock converted to Class A common stock (in units)	1,400,000
Minimum
Class of Stock [Line Items]
Vesting period (in years)	3 years

Revenue Recognition - Deferred revenue activity related to the Company’s loyalty and gift card programs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Less: current portion	$ (23,828)		$ (22,807)
Deferred revenue, net of current portion	4,591		$ 5,030
Card, reward redemptions and breakage
Disaggregation of Revenue [Line Items]
Beginning balance	22,765	$ 10,576
Revenue deferred - card activations and rewards earned	53,107	25,257
Revenue recognized - card and rewards redemptions and breakage	(52,318)	(24,101)
Ending balance	23,554	11,732
Less: current portion	(20,959)	(9,601)
Deferred revenue, net of current portion	$ 2,595	$ 2,131

Segment Reporting

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

NOTE 16 — Segment Reporting

Segment information is prepared on the same basis that the Company’s Chief Executive Officer (CEO), who is the chief operating decision maker (CODM), manages the segments, evaluates financial results and makes key operating decisions. The Company’s CEO evaluates the financial performance of the Company based on two operating segments: Company-operated shops and Franchising and other. The Company-operated shops segment includes coffee shop sales to customers. The Franchising and other segment includes bean and product sales to franchisees and includes the initial franchise fees, royalties, and marketing fees.

The CODM reviews segment performance and allocates resources based upon segment contribution, which is defined as segment gross profit before depreciation and amortization.

All segment revenue is earned in the United States, and there are no intersegment revenues. As the CODM is not provided with asset information by segment, assets are reported only on a consolidated basis.

Selling, general and administrative expenses primarily consist of the Company’s unallocated corporate expenses. Unallocated corporate expenses include corporate administrative functions that support the segments but are not directly attributable to or managed by any segment and are not included in the reported financial results of the segments.

No changes have been made to the Company’s segments during the three months ended March 31, 2022. In addition, no customer represents 10% or more of total accounts receivable or revenues as of and for the three months ended March 31, 2022 and 2021.

Financial information for the Company’s reportable segments was as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021 ¹
Revenues:
Company-operated shops	$	130,187	$	77,917
Franchising and other	21,969		20,868
Total revenues	152,156		98,785
Cost of sales:
Company-operated shops	113,548		60,339
Franchising and other	7,619		6,169
Total cost of sales	121,167		66,508
Segment contribution:
Company-operated shops	23,779		20,849
Franchising and other	15,692		16,192
Total segment contribution	$	39,471	$	37,041
Depreciation and amortization:
Company-operated shops	7,140		3,271
Franchising and other	1,342		1,493
Total depreciation and amortization	8,482		4,764
Selling, general and administrative	(45,214)		(35,986)
Interest expense, net	(2,489)		(1,017)
Other income (expense), net	221		(53)
Loss before income taxes	$	(16,493)	$	(4,779)

_________________

•Decrease in company-operated shops cost of sales (labor costs) of $0.38 million

•Decrease in franchising and other cost of sales of $0.03 million

•Decrease in total cost of sales of $0.4 million

•Increase in company-operated shops gross profit and segment contribution of $0.38 million

•Increase in franchising and other gross profit and segment contribution of $0.03 million

•Increase in total gross profit and segment contribution of $0.4 million

•Decrease in selling, general and administrative expenses of $0.4 million

•Decrease in loss before income taxes of

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 21
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Intangible Assets and Goodwill - Schedule of intangible assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Acquired Finite-Lived Intangible Assets [Line Items]
Less: accumulated amortization	$ (15,126)	$ (14,211)
Intangibles, net	$ 11,923	11,103
Franchise rights
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted-average amortization period (in years)	3 years 10 months 24 days
Reacquired franchise rights	$ 27,049	$ 25,314

Debt - Narrative (Details) - USD ($)		3 Months Ended
Debt - Narrative (Details) - USD ($)	Feb. 28, 2022	Mar. 31, 2022	Mar. 31, 2021
Line of Credit Facility [Line Items]
Proceeds from line of credit		$ 62,705,000	$ 0
Fair value of the companies term loan		$ 100,000,000
Interest rate on term loan		2.54%
The 2022 Credit Facility
Line of Credit Facility [Line Items]
Borrowing capacity	$ 500,000,000
The 2022 Credit Facility \| Secured Debt
Line of Credit Facility [Line Items]
Delayed draw term loan facility	150,000,000
Borrowing capacity on term loan	100,000,000
Increase to borrowing capacity	$ 150,000,000
Term of credit facility	5 years
Amount drawn on credit facility	$ 100,000,000
New Credit Facility \| Secured Debt
Line of Credit Facility [Line Items]
Balance outstanding on line of credit facility		$ 100,000,000
Revolving Credit Facility \| The 2022 Credit Facility \| Line of Credit
Line of Credit Facility [Line Items]
Borrowing capacity	250,000,000
Proceeds from line of credit	$ 28,000,000
Revolving Credit Facility \| The 2022 Credit Facility \| Line of Credit \| Minimum
Line of Credit Facility [Line Items]
Commitment fee percentage	0.20%
Revolving Credit Facility \| The 2022 Credit Facility \| Line of Credit \| Maximum
Line of Credit Facility [Line Items]
Commitment fee percentage	0.45%
Revolving Credit Facility \| New Credit Facility \| Line of Credit
Line of Credit Facility [Line Items]
Balance outstanding on line of credit facility		28,000,000
Remaining borrowing capacity		$ 222,000,000
Interest rate on line of credit facility		2.66%
Letter of Credit \| The 2022 Credit Facility \| Line of Credit
Line of Credit Facility [Line Items]
Borrowing capacity	$ 50,000,000
Bridge Loan \| The 2022 Credit Facility \| Line of Credit
Line of Credit Facility [Line Items]
Borrowing capacity	$ 15,000,000

Equity and Equity-Based Compensation

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Equity and Equity-Based Compensation

NOTE 11 — Equity and Equity-Based Compensation

Equity Transactions

During the three months ended March 31, 2022, the Company’s Sponsor executed the Secondary Offering, and exchanged approximately 3.6 million Dutch Bros OpCo Class A common units for Dutch Bros PubCo Class A common stock, and also converted approximately 1.4 million shares of Dutch Bros PubCo Class D common stock into Dutch Bros PubCo Class A common stock, for a total of 5.0 million shares of Dutch Bros PubCo Class A common stock. Subsequent to these exchanges and conversions, the Company’s Sponsor sold the 5.0 million shares of Class A common stock in the public market in accordance with Rule 144 of the Securities Act of 1933. These transactions were executed directly by the Sponsor, and no sales proceeds were received by the Company.

Equity Awards

As of March 31, 2022, the Company had equity-based compensation awards outstanding consisting of RSAs and RSUs.

Unless indicated otherwise, the equity-based compensation awards described below are subject to time-based service requirements. The service vesting condition is currently a period of three years. For awards granted prior to 2022, vesting will occur in equal one-third installments on each anniversary of the vesting commencement date, subject to grantee’s continued service to the Company through each vesting date. Beginning with awards granted in 2022, vesting may occur as either (i) 50% each of the total award on the second and third anniversaries of the vesting commencement date, or (ii) 100% cliff vesting of the total award on the third anniversary of the vesting commencement date, subject to grantee’s continued service to the Company through the applicable vesting date(s).

During the three months ended March 31, 2022, the total weighted-average grant date fair value of RSAs and RSUs vested was approximately $29.0 million and $8.6 million, respectively.

Restricted Stock Awards

Activity for the Company’s RSAs was as follows:


(in thousands, except per share amounts)	Restricted Stock Awards	Weighted-average grant date fair value per share
Balance, December 31, 2021	4,000	$	23.00


Vested	(1,263)	23.00

Balance, March 31, 2022	2,737	$	23.00

Restricted Stock Units

Activity for the Company’s RSUs was as follows:


(in thousands, except per share amounts)	Restricted Stock Units	Weighted-average grant date fair value per share
Balance, December 31, 2021	596	$	43.55

New grants	145	49.37
Vested	(198)	43.55
Forfeitures	(1)	49.37
Balance, March 31, 2022	542	$	45.11

Equity-Based Compensation

Equity-based compensation expense is recognized on a straight-line basis and is included in the Company’s condensed consolidated statements of operations was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021

Selling, general and administrative expenses	$	9,900	$	14,650

As of March 31, 2022, total unrecognized stock-based compensation related to unvested stock awards was $76.6 million, which will be recognized as follows:


(in thousands)
2022	$	31,457
2023	41,650
2024	3,056
2025	393


Total unrecognized stock-based compensation expense	$	76,556

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Inventories (Tables)

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

Schedule of inventories, net

Inventories, net consist of the following:



(in thousands)	March 31, 2022		December 31, 2021
Raw materials	$	5,709	$	5,549
Finished goods	21,218		17,796
Total inventories	$	26,927	$	23,345

Organization and Background (Details) $ / shares in Units, $ in Thousands, shares in Millions		3 Months Ended
	Sep. 17, 2021 USD ($) classOfStock agreement $ / shares shares	Mar. 31, 2022 USD ($) store state	Dec. 31, 2021 USD ($) shares
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of stores \| store		572
Number of states in which entity operates \| state		12
Percentage of voting interest held		100.00%
Surrender and cancellation of Class C & D common stock \| $		$ 0
Classes of common stock \| classOfStock	4
Number of tax receivable agreements \| agreement	2
Percentage of tax benefits owed to certain LLC owners	85.00%
Public Stock Offering - Shares From Continuing Members
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Purchase of OpCo common units in connection with the initial public offering \| $			$ 253,300
Class A common stock \| IPO
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Shares issued in IPO (in shares) \| shares	24.2
IPO price per share (in dollars per share) \| $ / shares	$ 23.00
Proceeds received from sale of stock, net of offering costs \| $	$ 520,800
Class A common stock \| Over-Allotment Option
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Shares issued in IPO (in shares) \| shares	3.2
Class A common stock \| Public Stock Offering - Shares From Subsidiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Issuance of common stock sold in initial public offering, net of offering costs (in shares) \| shares			10.9
Purchase of OpCo common units in connection with the initial public offering \| $			$ 234,400
Class A common stock \| Public Stock Offering - Shares From Continuing Members
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Issuance of common stock sold in initial public offering, net of offering costs (in shares) \| shares			11.7
Class D common stock
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Issuance of common stock sold in initial public offering, net of offering costs (in shares) \| shares			1.6
Surrender and cancellation of Class C & D common stock \| $			$ 34,400
Continuing LLC Equity Owners
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Voting interest held by noncontrolling interest		0.00%
Company-operated shops
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of stores \| store		310
Franchising
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of stores \| store		262

Shop Acquisitions - Pro forma information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Business Combination and Asset Acquisition [Abstract]
Revenue	$ 154,107	$ 101,708
Net loss	$ (15,902)	$ (4,256)

Leases - Summary of effect of adoption (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Jan. 01, 2022	Dec. 31, 2021
Lessee, Lease, Description [Line Items]
Property and equipment, net	$ 257,912		$ 301,998
Operating lease right-of-use assets, net	154,939
Deferred rent	0		3,153
Finance leases	4,491
Operating leases	8,698
Less: current portion	1,979		103
Finance lease obligations, net of current portion	142,884
Lease liabilities, net of current portion	148,483
Long-term debt, net of current portion	97,294		3,503
Accumulated deficit	(17,240)		(12,679)
Non-controlling interests	$ 108,033		$ 119,213
Cumulative effect, period of adoption, adjustment
Lessee, Lease, Description [Line Items]
Property and equipment, net		$ (79,821)
Finance lease right-of-use assets, net		111,826
Operating lease right-of-use assets, net		150,689
Deferred rent		(3,153)
Finance leases		607
Operating leases		8,430
Less: current portion		(46)
Finance lease obligations, net of current portion		32,534
Lease liabilities, net of current portion		144,405
Long-term debt, net of current portion		(1,426)
Accumulated deficit		386
Non-controlling interests		$ 957

Non-Controlling Interests - Narrative (Details)	3 Months Ended
Non-Controlling Interests - Narrative (Details)	Mar. 31, 2022
Noncontrolling Interest [Abstract]
Noncontrolling interest weighted average ownership percentage	70.10%

Non-Controlling Interests - Schedule of ownership interest (Details)	Mar. 31, 2022 shares
Restricted stock awards
Noncontrolling Interest [Line Items]
Number of RSAs not vested (in shares)	2,700,000
Class A common units held by Dutch Bros Inc.
Noncontrolling Interest [Line Items]
Common units outstanding (in units)	53,619,000
Class A common units held by Dutch Bros.	32.80%
Class A common units held by non-controlling interest holders
Noncontrolling Interest [Line Items]
Common units outstanding (in units)	110,085,000
Class A common units held by non-controlling interest holders	67.20%
Total Class A common units outstanding
Noncontrolling Interest [Line Items]
Common units outstanding (in units)	163,703,000
Ownership %	100.00%

Subsequent Events (Details) - USD ($) $ in Thousands	Apr. 19, 2022	Apr. 01, 2022	Mar. 31, 2022	Dec. 31, 2021
Subsequent Event [Line Items]
Long-term debt			$ 100,602	$ 3,606
Interest rate on term loan			2.54%
Subsequent event \| Kansas
Subsequent Event [Line Items]
Sale of land and building, net of closing costs	$ 2,600
Subsequent event \| The 2022 Credit Facility \| Secured Debt \| Interest rate swap
Subsequent Event [Line Items]
Long-term debt		$ 70,000
Interest rate on term loan		2.67%

- Definition

+ References + Details

Property and Equipment - Summary of property and equipment depreciation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Property, Plant and Equipment [Line Items]
Depreciation	$ 8,267	$ 4,562
Cost of sales
Property, Plant and Equipment [Line Items]
Depreciation	7,568	3,975
Selling, general and administrative expenses
Property, Plant and Equipment [Line Items]
Depreciation	$ 699	$ 587

Organization and Background	3 Months Ended
Organization and Background	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Background	NOTE 1 — Organization and Background Business Dutch Bros Inc. (the Company) is in the business of operating and franchising drive-thru coffee shops as well as the wholesale and distribution of coffee, coffee-related products and accessories. As of March 31, 2022, there were 572 shops in operation in 12 U.S. states, of which 310 were company-operated and 262 were franchised. Organization Dutch Bros Inc. was formed on June 4, 2021 as a Delaware corporation for the purpose of facilitating an IPO and other related transactions in order to carry on the business of Dutch Bros OpCo. The Company is the sole managing member of Dutch Bros OpCo and operates and controls all of the business and affairs of Dutch Bros OpCo. As a result, the Company consolidates the financial results of Dutch Bros OpCo and reports a non-controlling interest representing the economic interest in Dutch Bros OpCo held by the other members of Dutch Bros OpCo. The Company’s fiscal year end is December 31. As of March 31, 2022, the Company held 100.0% of the voting interest and 32.8% of the economic interest of Dutch Bros OpCo. The Continuing Members held none of the voting interest and the remaining 67.2% of the economic interest of Dutch Bros OpCo. Initial Public Offering On September 17, 2021, the Company completed its IPO of approximately 24.2 million shares of Class A common stock at a public offering price of $23.00 per share, which included approximately 3.2 million shares issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares. The Company received proceeds of approximately $520.8 million, net of offering costs. The proceeds were used to purchase approximately 10.9 million newly-issued Class A common units from Dutch Bros OpCo for approximately $234.4 million. The proceeds were also used to purchase approximately 11.7 million Class A common units from the Continuing Members for approximately $253.3 million, and approximately 1.6 million shares of Class D common stock from the Pre-IPO Blocker Holders for approximately $34.4 million. Reorganization Transactions In connection with the IPO, the Company completed the following transactions (the Reorganization Transactions): •Amended and restated the Second Dutch Bros OpCo Agreement to, among other things, effect a recapitalization in which (i) the outstanding Common Units were converted into Class A common units paired with an equal number of either Class B voting units or Class C voting units, and (ii) the outstanding Profits Interest (PI) Units were converted into Class A common units. •Amended and restated the Company’s certificate of incorporation to, among other things, authorize four classes of common stock. •Acquired Class A common units and Class C voting units indirectly held by the Pre-IPO Blocker Holders in exchange for shares of Class D common stock. •Pre-IPO Dutch Bros OpCo Unitholders’ contribution of Class A common units, Class B voting units, and Class C voting units to the Company in exchange for Class A common stock, Class B common stock, and Class C common stock, respectively. •The Company’s designation as managing member of Dutch Bros OpCo.•Entered into two tax receivable agreements (Tax Receivable Agreements or TRAs), which provide for payment by Dutch Bros PubCo to the Continuing Members and the Pre-IPO Blocker Holders of 85% of the benefits, if any, that Dutch Bros PubCo would be deemed to realize (calculated using certain assumptions) as a result of certain tax attributes and benefits covered by the TRAs.

Condensed Consolidated Statements of Operations - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2022

Mar. 31, 2021

REVENUES

Total revenues

$ 152,156

$ 98,785

COSTS AND EXPENSES

Cost of sales:

121,167

66,508

Selling, general and administrative

45,214

35,986

Total costs and expenses

166,381

102,494

LOSS FROM OPERATIONS

(14,225)

(3,709)

OTHER EXPENSE

Interest expense, net

(2,489)

(1,017)

Other income (expense), net

221

(53)

Total other expense

(2,268)

(1,070)

LOSS BEFORE INCOME TAXES

(16,493)

(4,779)

Income tax expense (benefit)

(214)

NET LOSS

(16,279)

(4,822)

Less: Net loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions

(4,822)

Less: Net loss attributable to non-controlling interests

(11,332)

Net loss attributable to Dutch Bros Inc.

$ (4,947)

Net loss per share of Class A and Class D common stock

Basic (in dollars per share)

^[1]

$ (0.10)

Diluted (in dollars per share)

^[1]

$ (0.10)

Weighted-average shares of Class A and Class D common stock outstanding:

Basic (in shares)

48,059,000

Diluted (in shares)

48,059,000

Company-operated shops

REVENUES

Total revenues

$ 130,187

77,917

Franchising and other

REVENUES

Total revenues

$ 21,969

$ 20,868

[1]	Basic and diluted net loss per share of Class A and Class D common stock are applicable only for periods subsequent to September 14, 2021, the effective date of the Company’s Reorganization Transactions and IPO.

Loss Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Loss Per Share

NOTE 13 — Loss Per Share

Basic loss per share of Class A and Class D common stock is computed by dividing net loss attributable to Dutch Bros Inc. by the weighted-average number of shares of Class A and Class D common stock outstanding during the period. Diluted loss per share of Class A and Class D common stock is computed by dividing loss attributable to Dutch Bros Inc., adjusted for the assumed exchange of all potentially dilutive instruments for Class A common stock, by the weighted-average number of shares of Class A and Class D common stock outstanding, adjusted to give effect to potentially dilutive elements. Share counts used in the diluted loss per share calculations are adjusted for the deemed repurchases provided for in the treasury stock method for restricted stock awards and restricted stock units, and under the if-converted method for the outstanding convertible Class B and Class C common stock.

Prior to the Reorganization Transactions, the Dutch Bros OpCo had multiple classes of units with different economic rights. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings per unit information has not been presented for the three months ended March 31, 2021.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share of Class A and Class D common stock for the three months ended March 31, 2022:


(in thousands)	Three Months Ended March 31, 2022

Numerator:
Net loss	$	(16,279)

Less: net loss attributable to non-controlling interests	(11,332)
Net loss attributable to Dutch Bros Inc.	$	(4,947)

The following table sets forth the computation of basic and diluted net loss per share of Class A and Class D common stock:


(in thousands, except per share amounts)	Three Months Ended March 31, 2022

Numerator:
Net loss attributable to Dutch Bros Inc.	$	(4,947)
Denominator:
Weighted-average number of shares of Class A and Class D common stock outstanding - basic	48,059
Dilutive effect of restricted stock awards	—
Dilutive effect of restricted stock units	—
Weighted-average number of shares of Class A and Class D common stock outstanding - diluted	48,059

Basic net loss per share attributable to common stockholders	$	(0.10)
Diluted net loss per share attributable to common stockholders	$	(0.10)

Shares of the Company’s Class B and Class C common stock do not participate in the earnings or losses of Dutch Bros Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted loss per share of Class B and Class C common stock under the two-class method has not been presented. In addition, the Company has not included the effects of conversion of Class B and Class C common stock to Class A common stock in the diluted loss per share calculation using the if-converted method, because doing so has no impact on diluted loss per share.

The following common stock equivalents were excluded from diluted loss per share in the period presented because they were anti-dilutive:


	Three Months Ended March 31, 2022
Restricted stock awards		2,737
Restricted stock units		542
Total anti-dilutive securities		3,279

Leases (Tables)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Change of accounting principle, allocation

Upon transition, on January 1, 2022, the Company recorded the following increases (decreases) to the respective line items on its condensed consolidated balance sheet:


(in thousands)	Adjustments as of January 1, 2022

Property and equipment, net	$	(79,821)
Finance lease right-of-use assets	111,826
Operating lease right-of-use assets	150,689

Deferred rent	(3,153)
Current portion of finance lease obligations	607
Current portion of operating lease obligations	8,430
Current portion of long-term debt	(46)
Finance lease obligations, net of current portion	32,534
Operating lease obligations, net of current portion	144,405
Long-term debt, net of current portion	(1,426)
Retained earnings (accumulated deficit)	386
Non-controlling interests	957

Summary of finance and operation lease right-of-use assets and lease liabilities

A summary of finance and operating lease right-of-use assets and lease liabilities as of March 31, 2022 is as follows:


(in thousands)	Balance Sheet Classification	March 31, 2022
Right-of-use assets
Finance leases	Finance lease right-of-use assets	$	141,874
Operating leases	Operating lease right-of-use assets	154,939
Total right-of-use assets		$	296,813

Lease liabilities
Finance leases	Current portion of finance lease obligations	$	4,491
	Finance lease obligations, net of current portion	142,884

Operating leases	Current portion of operating lease obligations	8,698
	Operating lease obligations, net of current portion	148,483
Total lease liabilities		$	304,556

A summary of lease terms and discount rates for finance and operating leases as of March 31, 2022 is as follows:


						March 31, 2022
Weighted-average remaining lease term (years)
Finance leases						15.8
Operating leases						15.4

Weighted-average discount rate (percentages)
Finance leases						5.1%
Operating leases						4.0%

Components of lease cost

The components of lease cost were as follows for the period presented:

(in thousands)

Statement of Operations Classification

Three Months Ended March 31, 2022

Finance lease cost

Amortization of right-of-use assets

Cost of sales

2,194

Interest on lease liabilities

Interest expense

1,723

Total finance lease cost

3,917

Operating lease cost

Cost of sales

3,847

Variable lease cost

Cost of sales

493

Total lease cost

8,257

Future minimum lease payments for financing lease liabilities

Future minimum lease payments for finance and operating lease liabilities as of March 31, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	8,718	$	11,104
2023	12,549		14,503
2024	12,645		14,040
2025	12,871		13,760
2026	13,193		13,647

Thereafter	156,631		146,238
Total	$	216,607	$	213,292
Less: imputed interest	(69,232)		(56,111)
Present value of minimum lease payments	147,375		157,181
Less: current portion	(4,491)		(8,698)
Lease liabilities, net of current portion	$	142,884	$	148,483

Future minimum lease payments for operating lease liabilities

Future minimum lease payments for finance and operating lease liabilities as of March 31, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	8,718	$	11,104
2023	12,549		14,503
2024	12,645		14,040
2025	12,871		13,760
2026	13,193		13,647

Thereafter	156,631		146,238
Total	$	216,607	$	213,292
Less: imputed interest	(69,232)		(56,111)
Present value of minimum lease payments	147,375		157,181
Less: current portion	(4,491)		(8,698)
Lease liabilities, net of current portion	$	142,884	$	148,483

Future minimum lease payments under non-cancellable operating leases and capital lease liabilities

Future minimum lease payments under noncancellable operating leases and capital lease liabilities as of December 31, 2021 were as follows:


(in thousands)	Capital		Operating
2022	$	8,824	$	12,398
2023	8,672		12,002
2024	8,743		11,699
2025	8,926		11,420
2026	9,229		11,297

Thereafter	85,985		125,774
Total	$	130,379	$	184,590
Less: imputed interest	(47,402)
Present value of minimum lease payments	82,977
Less: current portion	(3,389)
Lease liabilities, net of current portion	$	79,588

Non-Controlling Interests (Tables)

3 Months Ended

Mar. 31, 2022

Noncontrolling Interest [Abstract]

Schedule of ownership interest

The following table summarizes the ownership interest in Dutch Bros OpCo:


	March 31, 2022
(in thousands)	OpCo Units	Ownership %
Class A common units held by Dutch Bros Inc.1	53,619	32.8	%
Class A common units held by non-controlling interest holders	110,085	67.2	%
Total Class A common units outstanding	163,703	100.0	%

_________________

Summary of changes in ownership

The following table summarizes the effect of changes in ownership of Dutch Bros OpCo on the Company’s equity:


(in thousands)	Three Months Ended March 31, 2022
Net loss attributable to Dutch Bros Inc.	$	(4,947)
Transfers to non-controlling interests:

Increase in additional paid-in capital as a result of the acquisition of Dutch Bros OpCo common units	4,828
Change from net loss attributable to Dutch Bros Inc. and transfers from non-controlling interests	$	(119)

Non-Controlling Interests - Summary of changes in ownership of LLC (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Noncontrolling Interest [Abstract]
Net loss attributable to Dutch Bros Inc.	$ (4,947)	$ 0
Transfers to non-controlling interests:
Increase in additional paid-in capital as a result of the acquisition of Dutch Bros OpCo common units	4,828
Change from net loss attributable to Dutch Bros Inc. and transfers from non-controlling interests	$ (119)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Basis of Presentation and Summary of Significant Accounting Policies - Schedule of immaterial correction of previously issued consolidated financial statements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Current liabilities:
Accrued liabilities	$ 19,571		$ 20,970
Total current liabilities	112,672		138,734
Total liabilities	671,056		339,971
Stockholders’ equity:
Additional paid in capital	122,655		107,193
Accumulated deficit	(17,240)		(12,679)
Total stockholders’ equity attributable to Dutch Bros Inc.	105,417		94,516
Non-controlling interests	108,033		119,213
Total equity	213,450		213,729
Costs and expenses
Cost of sales:	121,167	$ 66,508
Selling, general and administrative	45,214	35,986
Total costs and expenses	166,381	102,494
Loss from operations	(14,225)	(3,709)
Loss before income taxes	(16,493)	(4,779)
Net loss	(16,279)	(4,822)
Permanent equity: members’ deficit
Members' equity, beginning balance		(1,458,285)
Net loss	0	(4,822)
Members' equity, ending balance		(1,641,475)
Cash flows from operating activities:
Net loss	(16,279)	(4,822)
Changes in operating assets and liabilities, net of acquisitions:
Accrued liabilities	$ (1,903)	1,065
As Reported
Current liabilities:
Accrued liabilities			24,513
Total current liabilities			142,277
Total liabilities			343,514
Stockholders’ equity:
Additional paid in capital			106,410
Accumulated deficit			(12,914)
Total stockholders’ equity attributable to Dutch Bros Inc.			93,498
Non-controlling interests			116,688
Total equity			210,186
Costs and expenses
Cost of sales:		66,925
Selling, general and administrative		36,354
Total costs and expenses		103,279
Loss from operations		(4,494)
Loss before income taxes		(5,564)
Net loss		(5,607)
Permanent equity: members’ deficit
Members' equity, beginning balance		(1,459,782)
Net loss		(5,607)
Members' equity, ending balance		(1,643,757)
Cash flows from operating activities:
Net loss		(5,607)
Changes in operating assets and liabilities, net of acquisitions:
Accrued liabilities		1,850
Adjustments
Current liabilities:
Accrued liabilities			(3,543)
Total current liabilities			(3,543)
Total liabilities			(3,543)
Stockholders’ equity:
Additional paid in capital			783
Accumulated deficit			235
Total stockholders’ equity attributable to Dutch Bros Inc.			1,018
Non-controlling interests			2,525
Total equity			$ 3,543
Costs and expenses
Cost of sales:		(417)
Total costs and expenses		(785)
Loss from operations		785
Loss before income taxes		785
Net loss		785
Permanent equity: members’ deficit
Members' equity, beginning balance		1,497
Net loss		785
Members' equity, ending balance		2,282
Cash flows from operating activities:
Net loss		785
Changes in operating assets and liabilities, net of acquisitions:
Accrued liabilities		$ (785)

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ (214)	$ 43
Effective income tax rate	1.30%	(0.90%)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Inventories - Schedule of inventories, net (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 5,709	$ 5,549
Finished goods	21,218	17,796
Total inventories	$ 26,927	$ 23,345

Leases - Future minimum lease payments (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Finance Lease, Liability, Payment, Due [Abstract]
Remainder of 2022	$ 8,718
2023	12,549
2024	12,645
2025	12,871
2026	13,193
Thereafter	156,631
Total	216,607
Less: imputed interest	(69,232)
Present value of minimum lease payments	147,375
Less: current portion	(4,491)
Lease liabilities, net of current portion	142,884
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Remainder of 2022	11,104
2023	14,503
2024	14,040
2025	13,760
2026	13,647
Thereafter	146,238
Total	213,292
Less: imputed interest	(56,111)
Present value of minimum lease payments	157,181
Less: current portion	(8,698)
Lease liabilities, net of current portion	$ 148,483

Loss Per Share - Computation of basic and diluted earnings (loss) per share (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

Mar. 31, 2022

Mar. 31, 2021

Numerator:

Net loss attributable to Dutch Bros Inc.

$ (4,947)

$ 0

Denominator:

Weighted-average number of shares of Class A and Class D common stock outstanding - basic (in shares)

48,059,000

Numerator:

Net loss attributable to Dutch Bros Inc.

$ (4,947)

$ 0

Denominator:

Weighted Average Number of Shares Outstanding, Basic (in shares)

48,059,000

Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract]

Weighted-average number of shares of Class A and Class D common stock outstanding - diluted (in shares)

48,059,000

Basic net loss per share attributable to common stockholders (in dollars per share)

^[1]

$ (0.10)

Diluted net loss per share attributable to common stockholders (in dollars per share)

^[1]

$ (0.10)

Class A common stock

Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract]

Dilutive effect of restricted stock units (in shares)

Restricted stock awards

Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract]

Dilutive effect of restricted stock awards (in shares)

[1]	Basic and diluted net loss per share of Class A and Class D common stock are applicable only for periods subsequent to September 14, 2021, the effective date of the Company’s Reorganization Transactions and IPO.

Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of earnings (loss) per share


(in thousands)	Three Months Ended March 31, 2022

Numerator:
Net loss	$	(16,279)

Less: net loss attributable to non-controlling interests	(11,332)
Net loss attributable to Dutch Bros Inc.	$	(4,947)

The following table sets forth the computation of basic and diluted net loss per share of Class A and Class D common stock:


(in thousands, except per share amounts)	Three Months Ended March 31, 2022

Numerator:
Net loss attributable to Dutch Bros Inc.	$	(4,947)
Denominator:
Weighted-average number of shares of Class A and Class D common stock outstanding - basic	48,059
Dilutive effect of restricted stock awards	—
Dilutive effect of restricted stock units	—
Weighted-average number of shares of Class A and Class D common stock outstanding - diluted	48,059

Basic net loss per share attributable to common stockholders	$	(0.10)
Diluted net loss per share attributable to common stockholders	$	(0.10)

Schedule of weighted average potentially dilutive securities

The following common stock equivalents were excluded from diluted loss per share in the period presented because they were anti-dilutive:


	Three Months Ended March 31, 2022
Restricted stock awards		2,737
Restricted stock units		542
Total anti-dilutive securities		3,279

Condensed Consolidated Statements of Stockholders'/Members' Equity (Parenthetical)	3 Months Ended
	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-02

- Definition

Indicates amendment to accounting standards.

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+ Details

Intangible Assets and Goodwill - Schedule of goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 18,715
Business combinations	2,914
Goodwill, ending balance	$ 21,629

Condensed Consolidated Statements of Stockholders'/Members' Equity - 3 months ended Mar. 31, 2022 - USD ($) $ in Thousands	Total	Cumulative effect, period of adoption, adjustment	Class A common stock	Class B common stock	Class C common stock	Class D common stock	Common Stock Class A common stock	Common Stock Class B common stock	Common Stock Class C common stock	Common Stock Class D common stock	Additional Paid-in Capital	Retained Earnings	Retained Earnings Cumulative effect, period of adoption, adjustment	Noncontrolling Interest	Noncontrolling Interest Cumulative effect, period of adoption, adjustment
Beginning balance (in shares) at Dec. 31, 2021			34,433,000	64,699,000	49,006,000	15,441,000	34,433,000	64,699,000	49,006,000	15,441,000
Beginning balance at Dec. 31, 2021	$ 213,729	$ 1,343					$ 0	$ 1	$ 1	$ 0	$ 107,193	$ (12,679)	$ 386	$ 119,213	$ 957
Permanent equity: members’ deficit
Net loss	(16,279)											(4,947)		(11,332)
Equity-based compensation	9,900										3,122	0		6,778
Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax (in shares)							124,000
Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax	(3,900)										(1,145)			(2,755)
Impact of Tax Receivable Agreements	8,657										8,657
Effect of exchange of OpCo common units	0										4,828			(4,828)
Repurchase and retirement of common stock (in shares)							(5,000,000)		(3,620,000)	(1,379,000)
Surrender and cancellation of Class C & D common stock	0
Ending balance (in shares) at Mar. 31, 2022			39,557,000	64,699,000	45,386,000	14,062,000	39,557,000	64,699,000	45,386,000	14,062,000
Ending balance at Mar. 31, 2022	$ 213,450						$ 0	$ 1	$ 1	$ 0	$ 122,655	$ (17,240)		$ 108,033

Equity and Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Activity schedule for Company's restricted stock

Activity for the Company’s RSAs was as follows:


(in thousands, except per share amounts)	Restricted Stock Awards	Weighted-average grant date fair value per share
Balance, December 31, 2021	4,000	$	23.00


Vested	(1,263)	23.00

Balance, March 31, 2022	2,737	$	23.00

Activity schedule for Company's RSUs

Activity for the Company’s RSUs was as follows:


(in thousands, except per share amounts)	Restricted Stock Units	Weighted-average grant date fair value per share
Balance, December 31, 2021	596	$	43.55

New grants	145	49.37
Vested	(198)	43.55
Forfeitures	(1)	49.37
Balance, March 31, 2022	542	$	45.11

Share-based compensation expense

Equity-based compensation expense is recognized on a straight-line basis and is included in the Company’s condensed consolidated statements of operations was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021

Selling, general and administrative expenses	$	9,900	$	14,650

Total unrecognized stock based compensation related to unvested stock awards.

As of March 31, 2022, total unrecognized stock-based compensation related to unvested stock awards was $76.6 million, which will be recognized as follows:


(in thousands)
2022	$	31,457
2023	41,650
2024	3,056
2025	393


Total unrecognized stock-based compensation expense	$	76,556

Leases - Adoption of ASC 842 and nature of leases (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) renewal	Jan. 01, 2022 USD ($)	Dec. 31, 2021 USD ($)
Lessee, Lease, Description [Line Items]
Catch up adjustment for ASU 2016-02	$ 105,417		$ 94,516
Operating lease liability adjustment	157,181
Recognition of operating right-of-use assets	$ 154,939
Real Estate \| Real Estate Lease, Five Year Renewal Option
Lessee, Lease, Description [Line Items]
Term of lease renewals	5 years
Land \| Ground Lease, Five Year Renewal Option
Lessee, Lease, Description [Line Items]
Number of renewal options \| renewal	1
Term of lease renewals	5 years
Minimum \| Real Estate
Lessee, Lease, Description [Line Items]
Initial terms of real estate leases	15 years
Minimum \| Real Estate \| Real Estate Lease, Five Year Renewal Option
Lessee, Lease, Description [Line Items]
Number of renewal options \| renewal	2
Maximum \| Real Estate \| Real Estate Lease, Five Year Renewal Option
Lessee, Lease, Description [Line Items]
Number of renewal options \| renewal	3
Cumulative effect, period of adoption, adjustment
Lessee, Lease, Description [Line Items]
Catch up adjustment for ASU 2016-02		$ 1,300
Recognition of operating right-of-use assets		150,689
Cumulative effect, period of adoption, adjustment \| Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Operating lease liability adjustment		152,800
Recognition of operating right-of-use assets		$ 150,700

Shop Acquisitions (Tables)

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Summary of preliminary allocations of purchase prices

The following table summarizes the allocations of the purchase prices to the estimated fair values of assets acquired and liabilities assumed. The fair values for the 2022 acquisitions are considered preliminary and subject to change within the measurement period (up to one year from the acquisition dates), as we have not obtained all of the detailed information to finalize the opening balance sheet related to the building and leasehold improvements purchased and franchise rights reacquired.



(in thousands)	March 31, 2022
Acquisition consideration:
Purchase price consideration	$	6,051
Equipment and fixtures	197
Building and leasehold improvements	1,470
Inventories	67
Other assets	6
Operating lease right-of-use assets, net	2,327
Reacquired franchise rights	1,735
Other liabilities	(88)
Gift card liability	(250)
Operating lease obligations	(2,327)
Net assets acquired	3,137
Goodwill	$	2,914

Unaudited pro forma results of shop acquisitions

The following table reflects the unaudited pro forma results of the Company and the five shops purchased in 2022 as if the acquisitions had taken place as of January 1, 2021:


	Three Months Ended March 31,
(in thousands; unaudited)	2022		2021
Revenue	$	154,107	$	101,708
Net loss	$	(15,902)	$	(4,256)

Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of revenue by major component

The following table disaggregates revenue by major component:


	Three Months Ended March 31,
(in thousands)	2022		2021
Company-operated shops	$	130,187	$	77,917
Franchising	20,773		19,806
Other	1,196		1,062
Total revenues	$	152,156	$	98,785

Deferred revenue activity

Deferred revenue activity related to the Company’s loyalty and gift card programs was as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Balance, January 1	$	22,765	$	10,576
Revenue deferred - card activations and rewards earned	53,107		25,257
Revenue recognized - card and rewards redemptions and breakage	(52,318)		(24,101)
Balance, March 31	23,554		11,732
Less: current portion	(20,959)		(9,601)
Deferred revenue, net of current portion, gift card and loyalty programs	$	2,595	$	2,131

These deferred revenues reported in the Company’s consolidated balance sheets were as follows:



(in thousands)	March 31, 2022		December 31, 2021
Customer advances and outstanding performance obligations	$	2,437	$	2,512
Initial unearned franchise fees from franchisees	2,428		2,560
Total deferred revenue, excluding gift card and loyalty programs	4,865		5,072
Less: current portion	(2,869)		(2,964)
Deferred revenue, net of current portion, excluding gift card and loyalty programs	$	1,996	$	2,108

Revenue recognized from initial unearned franchise fees was as follows for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021

Earned franchise fees	$	156	$	120

Schedule of unearned franchise fees

Future amortization of initial unearned franchise fees is as follows for the years ending December 31:


(in thousands)
Remainder of 2022	$	330
2023	390
2024	332
2025	278
2026	236

Thereafter	862
Total	$	2,428