0001866581-22-000129 | 10-Q | XBRL Viewer

Total current liabilities

$ 22,850

$ 20,970

190,374

138,734

Total liabilities

885,455

339,971

Additional paid in capital

141,480

107,193

Accumulated deficit

(16,647)

(12,679)

Total stockholders’ equity attributable to Dutch Bros Inc. / members’ equity

125,683

94,516

Non-controlling interests

118,119

119,213

$ 212,655

^[1]

243,802

$ 212,655

^[1]

243,802

$ 212,655

^[1]

$ 222,317

213,729

$ (124,554)

$ 77,487

148,092

90,779

410,629

238,754

45,378

153,700

132,934

223,174

193,470

244,479

543,563

461,928

Loss from operations

5,178

(114,676)

(6,378)

(104,132)

Loss before income taxes

(1,777)

(118,110)

(19,136)

(110,479)

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

(42,389)

^[1]

1,594

(116,830)

(16,436)

(109,763)

(74,441)

$ (74,441)

(67,374)

$ (67,374)

^[1]

Less: net loss attributable to non-controlling interests

^[2]

(169)

(31,312)

(12,346)

(31,312)

^[2]

1,763

(11,077)

(4,090)

(11,077)

(124,554)

77,487

Purchase of OpCo Units in connection with the initial public offering

74,441

67,374

^[1]

^[1]

(253,270)

Effect of exchange of Dutch Bros OpCo Class A common units

^[1]

(42,389)

^[1]

1,594

(116,830)

(16,436)

(109,763)

212,655

Changes in operating assets and liabilities, net of acquisitions:

(42,389)

^[1]

1,594

(116,830)

(16,436)

(109,763)

2,208

6,352

Members’ Equity

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

(74,441)

67,374

(67,374)

^[1]

(124,554)

77,487

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

74,441

(67,374)

67,374

^[1]

^[1]

48,020

Additional Paid-in-Capital

^[1]

105,043

^[1]

141,480

105,043

^[1]

141,480

105,043

^[1]

126,538

107,193

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

(195,936)

Purchase of OpCo Units in connection with the initial public offering

^[1]

(239,421)

Effect of exchange of Dutch Bros OpCo Class A common units

4,528

289

^[1]

9,408

289

^[1]

105,043

Accumulated Deficit

(11,077)

^[1]

(16,647)

^[1]

(11,077)

^[1]

(16,647)

^[1]

(11,077)

^[1]

(18,410)

^[1]

(12,679)

^[1]

(11,077)

^[1]

1,763

^[1]

(11,077)

(4,090)

^[1]

(11,077)

(11,077)

^[1]

1,763

^[1]

(11,077)

(4,090)

^[1]

(11,077)

(11,077)

(11,077)

^[1]

1,763

^[1]

(11,077)

(4,090)

^[1]

(11,077)

Noncontrolling Interests

118,687

^[1]

118,119

^[1]

118,687

^[1]

118,119

^[1]

118,687

^[1]

$ 114,042

^[1]

119,213

^[1]

$ 0

(31,312)

^[1]

(169)

^[1]

(31,312)

(12,346)

^[1]

(31,312)

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

147,914

Purchase of OpCo Units in connection with the initial public offering

^[1]

(13,849)

Effect of exchange of Dutch Bros OpCo Class A common units

^[1]

(4,528)

(289)

(9,408)

(289)

(31,312)

^[1]

(169)

^[1]

(31,312)

(12,346)

^[1]

(31,312)

118,687

(31,312)

^[1]

$ (169)

^[1]

(31,312)

$ (12,346)

^[1]

(31,312)

As Reported

Current liabilities:

Total current liabilities

24,513

142,277

Total liabilities

343,514

Additional paid in capital

106,410

Accumulated deficit

(12,914)

Total stockholders’ equity attributable to Dutch Bros Inc. / members’ equity

93,498

Non-controlling interests

116,688

210,186

91,060

239,869

153,727

223,595

244,787

463,464

Loss from operations

(114,984)

(105,668)

Loss before income taxes

(118,418)

(112,015)

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

(42,697)

(117,138)

(111,299)

(68,602)

Less: net loss attributable to non-controlling interests

(31,531)

(11,166)

(127,279)

75,990

68,602

(42,697)

(117,138)

(111,299)

209,622

Changes in operating assets and liabilities, net of acquisitions:

(42,697)

(117,138)

(111,299)

As Reported | Members’ Equity

7,888

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

68,602

(127,279)

75,990

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

(68,602)

50,745

As Reported | Additional Paid-in-Capital

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

(196,515)

Purchase of OpCo Units in connection with the initial public offering

(239,622)

Effect of exchange of Dutch Bros OpCo Class A common units

285

As Reported | Accumulated Deficit

104,259

(11,166)

(11,166)

(11,166)

As Reported | Noncontrolling Interests

(11,166)

(31,531)

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

145,768

Purchase of OpCo Units in connection with the initial public offering

(13,648)

Effect of exchange of Dutch Bros OpCo Class A common units

(285)

(31,531)

116,527

(31,531)

Adjustments

Current liabilities:

Total current liabilities

(3,543)

(3,543)

Total liabilities

(3,543)

Additional paid in capital

783

Accumulated deficit

235

Total stockholders’ equity attributable to Dutch Bros Inc. / members’ equity

1,018

Non-controlling interests

2,525

$ 3,543

(281)

(1,115)

(27)

(421)

(308)

(1,536)

Loss from operations

308

1,536

Loss before income taxes

308

1,536

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

308

1,536

1,228

Less: net loss attributable to non-controlling interests

219

2,725

1,497

(1,228)

308

1,536

3,033

Changes in operating assets and liabilities, net of acquisitions:

308

1,536

Adjustments | Members’ Equity

(1,536)

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

(1,228)

2,725

$ 2,725

1,497

$ 1,497

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

1,228

(2,725)

Adjustments | Additional Paid-in-Capital

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

579

Purchase of OpCo Units in connection with the initial public offering

201

Effect of exchange of Dutch Bros OpCo Class A common units

Adjustments | Accumulated Deficit

784

Adjustments | Noncontrolling Interests

219

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

2,146

Purchase of OpCo Units in connection with the initial public offering

(201)

Effect of exchange of Dutch Bros OpCo Class A common units

(4)

219

$ 2,160

2,160

Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]

$ 219

[1]	Amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of Dutch Bros OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.
[2]	2021 amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.

Basis of Presentation and Summary of Significant Accounting Policies - Vendor incentives and advertising expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Accounting Policies [Abstract]
Vendor incentives	$ 13,808	$ 11,585	$ 32,700	$ 30,348
Advertising expense	$ 8,158	$ 7,602	$ 22,840	$ 19,948

Revenue Recognition - Franchise fees (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Earned franchise fees			$ 3,600	$ 3,500
Franchising
Disaggregation of Revenue [Line Items]
Earned franchise fees			400	500
Franchising
Disaggregation of Revenue [Line Items]
Earned franchise fees	$ 117	$ 198	$ 390	$ 514

Fair Value Measurements (Details) $ in Millions	Sep. 30, 2022 USD ($)
Interest rate swap contract \| Level 2 \| Fair Value, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	$ 3.3

Organization and Background (Details)
$ / shares in Units, $ in Thousands, shares in Millions

3 Months Ended

9 Months Ended

Sep. 17, 2021

USD ($)

class_of_stock

$ / shares

Sep. 30, 2022

USD ($)

store

state

Dec. 31, 2021

USD ($)

Sep. 30, 2021

USD ($)

Sep. 30, 2022

USD ($)

store

state

Sep. 30, 2021

USD ($)

Number of stores | store

641

Number of states in which entity operates | state

Percentage of voting interest held

100.00%

Purchase of Dutch Bros OpCo Class A common units in connection with the initial public offering

^[1]

$ 253,270

Surrender and cancellation of Class C & D common stock

$ 0

$ 34,394

$ 0

$ 34,394

Classes of common stock | class_of_stock

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 Dutch Bros OpCo Class A 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 Dutch Bros OpCo Class A 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

370

Franchising

Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]

Number of stores | store

271

[1]

Amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of Dutch Bros OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.

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

Non-Controlling Interests - Narrative (Details)	Sep. 30, 2022 $ / shares
Class A common stock \| Public Stock Offering - Shares From Continuing Members
Noncontrolling Interest [Line Items]
Number of shares issued in reorganization transaction	$ 1

Equity and Equity-Based Compensation - Schedule of recognition of stock based compensation expense (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Share-Based Payment Arrangement [Abstract]
Remainder of 2022	$ 10,611
2023	41,911
2024	3,133
2025	437
Total unrecognized stock-based compensation expense	$ 56,092

Revenue Recognition - Deferred revenue activity related to the Company’s loyalty and gift card programs (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Change In Contract With Customer, Liability [Roll Forward]
Less: current portion	$ (28,829)		$ (22,807)
Deferred revenue, net of current portion, gift card and loyalty programs	5,118		$ 5,030
Card, reward redemptions and breakage
Change In Contract With Customer, Liability [Roll Forward]
Beginning balance	22,765	$ 10,576
Revenue deferred - gift card activations, loyalty app loads, and loyalty points and rewards earned	186,303	122,326
Revenue recognized - gift card, loyalty app, and loyalty rewards redemptions, and breakage	(180,538)	(116,967)
Ending balance	28,530	15,935
Less: current portion	(25,371)	(13,681)
Deferred revenue, net of current portion, gift card and loyalty programs	$ 3,159	$ 2,254

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of revenue by major component

The following table disaggregates revenue by major component:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Company-operated shops	$	173,501	$	108,661	$	464,200	$	289,548
Franchising	23,802		20,396		69,028		65,589
Other	1,345		746		3,957		2,659
Total revenues	$	198,648	$	129,803	$	537,185	$	357,796

Deferred revenue activity

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


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance, December 31	$	22,765	$	10,576
Revenue deferred - gift card activations, loyalty app loads, and loyalty points and rewards earned	186,303		122,326
Revenue recognized - gift card, loyalty app, and loyalty rewards redemptions, and breakage	(180,538)		(116,967)
Balance, September 30	28,530		15,935
Less: current portion	(25,371)		(13,681)
Deferred revenue, net of current portion, gift card and loyalty programs	$	3,159	$	2,254

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



(in thousands)	September 30, 2022		December 31, 2021
Outstanding performance obligations	$	3,027	$	2,512
Initial unearned franchise fees from franchisees	2,390		2,560
Total deferred revenue, excluding gift card and loyalty programs	5,417		5,072
Less: current portion	(3,458)		(2,964)
Deferred revenue, net of current portion, excluding gift card and loyalty programs	$	1,959	$	2,108

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021

Earned franchise fees	$	117	$	198	$	390	$	514

Schedule of unearned franchise fees

Future amortization of initial unearned franchise fees outstanding as of September 30, 2022 is as follows::


(in thousands)
Remainder of 2022	$	112
2023	419
2024	361
2025	307
2026	265

Thereafter	926
Total	$	2,390

Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 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 September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Donations to Dutch Bros Foundation	$	1,866	$	2,599	$	5,086	$	6,916

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 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)	45,541,000	34,433,000
Common stock, outstanding (in shares)	45,541,000	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)	41,056,000	49,006,000
Common stock, outstanding (in shares)	41,056,000	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)	12,411,000	15,441,000
Common stock, outstanding (in shares)	12,411,000	15,441,000

Equity and Equity-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Equity and Equity-Based Compensation

NOTE 13 — Equity and Equity-Based Compensation

Equity Awards

As of September 30, 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 occurs 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 nine months ended September 30, 2022, the total weighted-average grant date fair value of RSAs and RSUs vested was approximately $30.7 million and $8.8 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	(1,333)	23.00

Balance, September 30, 2022	2,667	$	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	164	47.85
Vested	(203)	43.50
Forfeitures	(2)	49.37
Balance, September 30, 2022	555	$	44.82

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 as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021

Selling, general and administrative expenses	$	10,649	$	124,779	$	30,995	$	147,761

As of September 30, 2022, total unrecognized stock-based compensation related to unvested stock awards was $56.1 million, which will be recognized as follows:


(in thousands)
Remainder of 2022	$	10,611
2023	41,911
2024	3,133
2025	437


Total unrecognized stock-based compensation expense	$	56,092

Non-Controlling Interests - Schedule of non-controlling interest holders' weighted-average ownership percentage (Details)	1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2022
Noncontrolling Interest [Abstract]
Weighted-average ownership percentage	71.30%	67.00%	68.50%

Non-Controlling Interests (Tables)

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Schedule of ownership interest

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


	September 30, 2022
(in thousands)	OpCo Units	Ownership %
Dutch Bros OpCo Class A common units held by Dutch Bros Inc.1	57,953	35.4	%
Dutch Bros OpCo Class A common units held by non-controlling interest holders	105,756	64.6	%
Total Dutch Bros OpCo Class A common units outstanding	163,708	100.0	%

_________________

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

Summary of changes in ownership

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


(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss) attributable to Dutch Bros Inc.	$	1,763	$	(11,077)	$	(4,090)	$	(11,077)
Other comprehensive income:
Unrealized gain on derivative securities, effective portion, net of income tax expense	703		—		848		—
Transfers from (to) non-controlling interests:
Decrease in additional paid-in capital as a result of the Reorganization Transactions	—		(195,936)		—		(195,936)
Decrease in accumulated deficit as a result of the adoption of ASC 842	—		—		122		—
Increase in additional paid-in capital as a result of equity-based compensation	3,656		9,802		10,083		9,802
Decrease in additional paid-in capital as a result of common stock issuances pursuant to vesting of equity awards, net of stock withheld for tax	—		(3,258)		(1,145)		(3,258)
Increase (decrease) in additional paid-in capital as a result of the acquisition of Dutch Bros OpCo Class A common units	4,528		(239,132)		9,408		(239,132)
Total effect of changes in ownership interest on equity attributable to Dutch Bros Inc.	$	10,650	$	(439,601)	$	15,226	$	(439,601)

Schedule of non-controlling interest holders' weighted-average ownership percentage

The non-controlling interest holders’ weighted-average ownership percentage were as follows for the periods presented:


	Three Months Ended September 30,			Nine Months Ended September 30,
	2022		2021	2022		2021
Weighted-average ownership percentage	67.0	%	*	68.5	%	*

* The non-controlling interest holders’ weighted-average ownership percentage for the period from the September 14, 2021 Reorganization date to September 30, 2021 was 71.3%.

Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 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)	September 30, 2022		December 31, 2021
Reacquired franchise rights	3.6	$	27,049	$	25,314
Less: accumulated amortization		(17,223)		(14,211)
Intangibles, net		$	9,826	$	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 September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Cost of sales	$	1,055	$	948	$	3,012	$	2,579

The estimated future amortization expense of the reacquired franchise rights as of September 30, 2022 is as follows:


(in thousands)
Remainder of 2022	$	1,022
2023	3,389
2024	2,469
2025	1,435
2026	681

Thereafter	830
Total	$	9,826

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, September 30, 2022	$	21,629

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1A
-URI https://asc.fasb.org/extlink&oid=121556970&loc=SL108378252-109267

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 2
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13854-109267

Reference 11: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 55
-Paragraph 24
-URI https://asc.fasb.org/extlink&oid=122137925&loc=d3e14258-109268

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Members' equity, beginning balance at Dec. 31, 2020

Property and Equipment - Summary of property and equipment (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 391,889	$ 357,046
Less: accumulated depreciation	(64,289)	(55,048)
Property and equipment, net	$ 327,600	301,998
Software
Property, Plant and Equipment [Line Items]
Useful Life (Years)	3 years
Property and equipment, gross	$ 7,430	7,132
Equipment and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 85,232	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	$ 26,996	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)	15 years
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 134,640	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	$ 4,211	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	$ 124,185	$ 88,050

Leases

9 Months Ended

Sep. 30, 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 $0.4 million, as provided in the table below.

Subsequent to the Company’s January 1, 2022 adoption of the lease standard, the Company continued to review relevant lease contract elements and improve business processes, which resulted in adjustments to the Company’s adoption entries and presentation. The impacts of the adjustments were recorded in the nine months ended September 30, 2022, and are presented in the table below and in the condensed consolidated financial statements.

Upon adoption, the Company recognized 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, 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 (As Reported)		Subsequent Adjustments		Cumulative Adjustments as of September 30, 2022 (As Corrected)

Property and equipment, net	$	(79,821)	$	(6,171)	$	(85,992)
Finance lease right-of-use assets	111,826		3,745		115,571
Operating lease right-of-use assets	150,689		—		150,689

Deferred rent	(3,153)		—		(3,153)
Current portion of finance lease obligations	607		—		607
Current portion of operating lease obligations	8,430		—		8,430
Current portion of long-term debt	(46)		—		(46)
Finance lease obligations, net of current portion	32,534		—		32,534
Operating lease obligations, net of current portion	144,405		—		144,405
Long-term debt, net of current portion	(1,426)		(1,506)		(2,932)
Accumulated deficit	386		(264)		122
Non-controlling interests	957		(656)		301

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, a lease has been identified and has a term greater than one year, 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 consist 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 on 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 of 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 on the Company’s condensed consolidated statements of operations. 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 September 30, 2022 is as follows:


(in thousands)	Balance Sheet Classification	September 30, 2022
Right-of-use assets
Finance leases	Finance lease right-of-use assets, net	$	214,903
Operating leases	Operating lease right-of-use assets, net	165,682
Total right-of-use assets		$	380,585

Lease liabilities
Finance leases	Current portion of finance lease obligations	$	7,004
	Finance lease obligations, net of current portion	209,257

Operating leases	Current portion of operating lease obligations	9,462
	Operating lease obligations, net of current portion	157,319
Total lease liabilities		$	383,042

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


(in thousands)	Statement of Operations Classification	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Finance lease cost
Amortization of right-of-use assets	Cost of sales	$	3,121	$	7,919
Interest on lease liabilities	Interest expense	2,482		6,261
Total finance lease cost		5,603		14,180


Operating lease cost	Cost of sales	4,228		12,109






Variable lease cost	Cost of sales	566		1,625
Total lease cost		$	10,397	$	27,914

Future minimum lease payments for finance and operating lease liabilities as of September 30, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	4,882	$	4,363
2023	17,527		15,601
2024	18,185		15,291
2025	18,417		15,009
2026	18,741		14,868

Thereafter	246,068		161,592
Total	$	323,820	$	226,724
Less: imputed interest	(107,559)		(59,943)
Present value of minimum lease payments	216,261		166,781
Less: current portion	(7,004)		(9,462)
Lease liabilities, net of current portion	$	209,257	$	157,319

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

A summary of lease terms and discount rates for finance and operating leases as of September 30, 2022 is as follows:


						September 30, 2022
Weighted-average remaining lease term (years)
Finance leases						16.2
Operating leases						15.1

Weighted-average discount rate (percentages)
Finance leases						5.2%
Operating leases						4.1%

Supplemental cash flow information related to leases as of September 30, 2022 is as follows for the period presented:


(in thousands; unaudited)	Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	6,261
Operating cash flows from operating leases	11,611
Financing cash flows from finance leases	3,144
Right-of-use assets obtained in exchange for lease obligations 1
Finance leases	135,987
Operating leases	171,437

_________________

1 Amounts include the transition adjustment for the adoption of ASU 2016-02, as amended.

Leases

NOTE 8 — Leases

Adoption of ASC 842

Upon transition, 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 (As Reported)		Subsequent Adjustments		Cumulative Adjustments as of September 30, 2022 (As Corrected)

Property and equipment, net	$	(79,821)	$	(6,171)	$	(85,992)
Finance lease right-of-use assets	111,826		3,745		115,571
Operating lease right-of-use assets	150,689		—		150,689

Deferred rent	(3,153)		—		(3,153)
Current portion of finance lease obligations	607		—		607
Current portion of operating lease obligations	8,430		—		8,430
Current portion of long-term debt	(46)		—		(46)
Finance lease obligations, net of current portion	32,534		—		32,534
Operating lease obligations, net of current portion	144,405		—		144,405
Long-term debt, net of current portion	(1,426)		(1,506)		(2,932)
Accumulated deficit	386		(264)		122
Non-controlling interests	957		(656)		301

Nature of Leases

A summary of finance and operating lease right-of-use assets and lease liabilities as of September 30, 2022 is as follows:


(in thousands)	Balance Sheet Classification	September 30, 2022
Right-of-use assets
Finance leases	Finance lease right-of-use assets, net	$	214,903
Operating leases	Operating lease right-of-use assets, net	165,682
Total right-of-use assets		$	380,585

Lease liabilities
Finance leases	Current portion of finance lease obligations	$	7,004
	Finance lease obligations, net of current portion	209,257

Operating leases	Current portion of operating lease obligations	9,462
	Operating lease obligations, net of current portion	157,319
Total lease liabilities		$	383,042

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


(in thousands)	Statement of Operations Classification	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Finance lease cost
Amortization of right-of-use assets	Cost of sales	$	3,121	$	7,919
Interest on lease liabilities	Interest expense	2,482		6,261
Total finance lease cost		5,603		14,180


Operating lease cost	Cost of sales	4,228		12,109






Variable lease cost	Cost of sales	566		1,625
Total lease cost		$	10,397	$	27,914

Future minimum lease payments for finance and operating lease liabilities as of September 30, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	4,882	$	4,363
2023	17,527		15,601
2024	18,185		15,291
2025	18,417		15,009
2026	18,741		14,868

Thereafter	246,068		161,592
Total	$	323,820	$	226,724
Less: imputed interest	(107,559)		(59,943)
Present value of minimum lease payments	216,261		166,781
Less: current portion	(7,004)		(9,462)
Lease liabilities, net of current portion	$	209,257	$	157,319

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

A summary of lease terms and discount rates for finance and operating leases as of September 30, 2022 is as follows:


						September 30, 2022
Weighted-average remaining lease term (years)
Finance leases						16.2
Operating leases						15.1

Weighted-average discount rate (percentages)
Finance leases						5.2%
Operating leases						4.1%

Supplemental cash flow information related to leases as of September 30, 2022 is as follows for the period presented:


(in thousands; unaudited)	Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	6,261
Operating cash flows from operating leases	11,611
Financing cash flows from finance leases	3,144
Right-of-use assets obtained in exchange for lease obligations 1
Finance leases	135,987
Operating leases	171,437

_________________

1 Amounts include the transition adjustment for the adoption of ASU 2016-02, as amended.

Condensed Consolidated Statements of Stockholders'/Members' Equity - 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

Members’ Equity

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

Accumulated Other Comprehensive Income

Accumulated Deficit

Cumulative Effect, Period of Adoption, Adjustment

^[1]

Noncontrolling Interests

Cumulative Effect, Period of Adoption, Adjustment

^[1]

$ 77,487

Beginning balance (in shares) at Dec. 31, 2020

Beginning balance at Dec. 31, 2020

77,487

$ 0

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions

(67,374)

67,374

Reclass of profits interest liability to equity

76,596

Member distributions

(213,308)

Equity-based compensation recognized prior to the Reorganization Transactions

78,579

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

48,020

^[1]

(195,936)

147,914

Effect of the Reorganization Transactions and initial public offering on non-controlling interest (in shares)

^[1]

9,877,000

71,408,000

54,068,000

17,036,000

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

^[1]

$ 1

(195,936)

147,914

Issuance of Class A common stock sold in initial public offering, net of offering costs (in shares)

24,211,000

Issuance of Class A common stock sold in initial public offering, net of offering costs

520,804

Purchase of OpCo Units in connection with the initial public offering (in shares)

^[1]

(6,709,000)

(5,062,000)

Purchase of OpCo Units in connection with the initial public offering

^[1]

(253,270)

(239,421)

(13,849)

Unrealized gain on derivative securities, effective portion, net of income tax expense

(109,763)

(11,077)

(31,312)

$ 0

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax (in shares)

^[1]

344,000

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax

^[1]

(11,333)

(3,258)

(8,075)

Effect of exchange of Dutch Bros OpCo Class A common units

47,157

^[1]

289

(289)

Surrender and cancellation of Class C & D common stock (in shares)

(1,595,000)

Surrender and cancellation of Class C & D common stock

(34,394)

Members' equity, ending balance at Sep. 30, 2021

212,655

^[1]

105,043

(11,077)

118,687

Ending balance (in shares) at Sep. 30, 2021

^[1]

34,432,000

64,699,000

49,006,000

15,441,000

Ending balance at Sep. 30, 2021

^[1]

212,655

$ 0

$ 1

$ 0

105,043

(11,077)

118,687

Members' equity, beginning balance at Dec. 31, 2020

77,487

Beginning balance (in shares) at Dec. 31, 2020

Beginning balance at Dec. 31, 2020

77,487

$ 0

Ending 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

Ending balance at Dec. 31, 2021

$ 213,729

$ 423

$ 0

$ 1

$ 0

107,193

(12,679)

^[1]

$ 122

119,213

^[1]

$ 301

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Accounting Standards Update [Extensible Enumeration]

Accounting Standards Update 2016-02

Members' equity, beginning balance at Jun. 30, 2021

$ (124,554)

(124,554)

Beginning balance (in shares) at Jun. 30, 2021

Beginning balance at Jun. 30, 2021

(124,554)

$ 0

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions

(74,441)

Reclass of profits interest liability to equity

76,596

Member distributions

(4,200)

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

48,020

^[1]

(195,936)

147,914

Effect of the Reorganization Transactions and initial public offering on non-controlling interest (in shares)

^[1]

9,877,000

71,408,000

54,068,000

17,036,000

Effect of the Reorganization Transactions and initial public offering on non-controlling interests

^[1]

$ 1

(195,936)

147,914

Issuance of Class A common stock sold in initial public offering, net of offering costs (in shares)

24,211,000

Issuance of Class A common stock sold in initial public offering, net of offering costs

520,804

Purchase of OpCo Units in connection with the initial public offering (in shares)

^[1]

(6,709,000)

(5,062,000)

Purchase of OpCo Units in connection with the initial public offering

^[1]

(253,270)

(239,421)

(13,849)

Unrealized gain on derivative securities, effective portion, net of income tax expense

(116,830)

(11,077)

(31,312)

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax (in shares)

^[1]

344,000

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax

^[1]

(11,333)

(3,258)

(8,075)

Effect of exchange of Dutch Bros OpCo Class A common units

47,157

^[1]

289

(289)

Surrender and cancellation of Class C & D common stock (in shares)

(1,595,000)

Surrender and cancellation of Class C & D common stock

(34,394)

Members' equity, ending balance at Sep. 30, 2021

212,655

$ 0

^[1]

105,043

(11,077)

118,687

Ending balance (in shares) at Sep. 30, 2021

^[1]

34,432,000

64,699,000

49,006,000

15,441,000

Ending balance at Sep. 30, 2021

^[1]

212,655

$ 0

$ 1

$ 0

105,043

(11,077)

118,687

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

$ 423

$ 0

$ 1

$ 0

107,193

(12,679)

^[1]

$ 122

119,213

^[1]

$ 301

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions

Unrealized gain on derivative securities, effective portion, net of income tax expense

(16,436)

(4,090)

^[1]

(12,346)

^[1]

3,033

(17)

848

2,202

^[1]

Equity-based compensation

30,995

10,083

20,912

^[1]

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax (in shares)

128,000

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax

(3,900)

(1,145)

(2,755)

^[1]

Effect of exchange of Dutch Bros OpCo Class A common units

15,958

9,408

(9,408)

^[1]

Surrender and cancellation of Class C & D common stock (in shares)

(10,980,000)

(7,950,000)

(3,030,000)

Surrender and cancellation of Class C & D common stock

$ 1

$ (1)

Ending balance (in shares) at Sep. 30, 2022

45,541,000

64,699,000

41,056,000

12,411,000

45,541,000

64,699,000

41,056,000

12,411,000

Ending balance at Sep. 30, 2022

243,802

$ 1

$ 0

141,480

848

(16,647)

^[1]

118,119

^[1]

Beginning balance (in shares) at Jun. 30, 2022

39,558,000

64,699,000

45,386,000

14,062,000

Beginning balance at Jun. 30, 2022

222,317

$ 0

$ 1

$ 0

126,538

145

(18,410)

^[1]

114,042

^[1]

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions

Unrealized gain on derivative securities, effective portion, net of income tax expense

1,594

1,763

^[1]

(169)

^[1]

2,467

(17)

703

1,781

^[1]

Equity-based compensation

10,649

3,656

6,993

^[1]

Issuance of Class A common stock pursuant to vesting of equity awards, net of stock withheld for tax (in shares)

3,000

Effect of exchange of Dutch Bros OpCo Class A common units

6,775

4,528

(4,528)

^[1]

Surrender and cancellation of Class C & D common stock (in shares)

(5,980,000)

(4,330,000)

(1,651,000)

Surrender and cancellation of Class C & D common stock

$ 1

$ (1)

Ending balance (in shares) at Sep. 30, 2022

45,541,000

64,699,000

41,056,000

12,411,000

45,541,000

64,699,000

41,056,000

12,411,000

Ending balance at Sep. 30, 2022

$ 243,802

$ 1

$ 0

$ 141,480

$ 848

$ (16,647)

^[1]

$ 118,119

^[1]

[1]

Label

Element

Value

APIC, Share-Based Payment Arrangement, Increase for Cost Recognition

us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue

$ 34,100,000

^[1]

APIC, Share-Based Payment Arrangement, Restricted Stock Unit, Increase for Cost Recognition

us-gaap_AdjustmentsToAdditionalPaidInCapitalShareBasedCompensationRestrictedStockUnitsRequisiteServicePeriodRecognition

78,579,000

Additional Paid-in Capital [Member]

APIC, Share-Based Payment Arrangement, Increase for Cost Recognition

us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue

9,802,000

^[1]

Noncontrolling Interest [Member]

APIC, Share-Based Payment Arrangement, Increase for Cost Recognition

us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue

24,298,000

^[1]

Member Units [Member]

APIC, Share-Based Payment Arrangement, Restricted Stock Unit, Increase for Cost Recognition

us-gaap_AdjustmentsToAdditionalPaidInCapitalShareBasedCompensationRestrictedStockUnitsRequisiteServicePeriodRecognition

$ 78,579,000

[1]

Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 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)	September 30, 2022		December 31, 2021
Reacquired franchise rights	3.6	$	27,049	$	25,314
Less: accumulated amortization		(17,223)		(14,211)
Intangibles, net		$	9,826	$	11,103

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Cost of sales	$	1,055	$	948	$	3,012	$	2,579

The estimated future amortization expense of the reacquired franchise rights as of September 30, 2022 is as follows:


(in thousands)
Remainder of 2022	$	1,022
2023	3,389
2024	2,469
2025	1,435
2026	681

Thereafter	830
Total	$	9,826

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, September 30, 2022	$	21,629

No impairment charges were recognized for the nine months ended September 30, 2022 and 2021.

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

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Financial Statements Presentation

The accompanying unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 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

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.

•NOTE 5 — Inventories: components of inventory related to our Blue Rebel energy drink have been reclassified from finished goods to raw materials.

Derivative Instruments

The Company manages exposure to fluctuations in interest rates within its condensed consolidated financial statements according to a hedging policy. Under this policy, the Company may engage in interest rate swap agreements to hedge interest rate risk. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. The Company does not enter into derivative instruments for speculative purposes.

By using swap instruments, the Company is exposed to potential credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. The Company minimizes this credit risk by entering into transactions with carefully selected, credit-worthy counterparties.

Cash Flow Hedges

For derivative instruments that are designated and qualify as a cash flow hedge, the derivative's gain or loss is reported as a component of other comprehensive income (OCI) and recorded in accumulated other comprehensive income (AOCI) on our condensed consolidated balance sheets. The gain or loss is subsequently reclassified into net earnings when the hedged exposure affects net earnings, in the same

line item as the underlying hedged item on the Company’s condensed consolidated statements of operations.

Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge. Cash flows from hedging transactions are classified in the same categories as the cash flows from the respective hedged items.

Leases

LeasesThe Company adopted ASC Topic 842 (ASC 842), Leases, as amended, with an effective date of January 1, 2022.

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 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 released the digital 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. Points collected but not redeemed expire after six months, and earned rewards expire six months after issuance. The Company defers revenue as points are accumulated and rewards are earned under the Dutch Rewards 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 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

The 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 condensed consolidated statements of operations. Vendor incentives recognized in cost of sales were as follows for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Vendor incentives	$	13,808	$	11,585	$	32,700	$	30,348

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 condensed 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 condensed 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.

Fair Value Measurements

The Company’s condensed consolidated financial statements include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities, for which the carrying amounts approximate fair value due to their short-term maturity. The fair value of the Company’s variable-rate term loan and revolving loans approximate their carrying amounts; these debt instruments are designated as Level 2 within the fair value hierarchy, as the Company’s cost of borrowing is variable and approximates current market rates.

Inventories (Tables)

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Schedule of inventories, net

Inventories, net consist of the following:



(in thousands)	September 30, 2022		December 31, 2021
Raw materials	$	16,070	$	8,453
Finished goods	17,643		14,892
Total inventories	$	33,713	$	23,345

Revenue Recognition - Deferred revenue (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Less: current portion	$ (28,829)		$ (22,807)
Deferred revenue, net of current portion, gift card and loyalty programs	5,118		5,030
Revenue recognized that was included in unearned revenue at the beginning of the year	3,600	$ 3,500
Outstanding performance obligations
Disaggregation of Revenue [Line Items]
Contract with customer, liability	3,027		2,512
Franchising
Disaggregation of Revenue [Line Items]
Contract with customer, liability	2,390		2,560
Revenue recognized that was included in unearned revenue at the beginning of the year	400	$ 500
Customer advances and sales to distributors and franchise fee
Disaggregation of Revenue [Line Items]
Contract with customer, liability	5,417		5,072
Less: current portion	(3,458)		(2,964)
Deferred revenue, net of current portion, gift card and loyalty programs	$ 1,959		$ 2,108

Debt - Schedule of debt instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Line of Credit Facility [Line Items]
Finance lease obligation	$ 1,377
Finance lease obligation		$ 2,978
Total debt	100,678	3,606
Less: loan origination fees	(1,191)	0
Less: current portion	(2,608)	(103)
Long-term debt, net of current portion	96,879	3,503
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	$ 551	$ 628

Leases - Supplemental cash flow information regarding leases (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$ 6,261
Operating cash flows from operating leases	11,611
Financing cash flows from finance leases	3,144
Right-of-use assets obtained in exchange for lease obligations
Finance leases	135,987
Operating leases	$ 171,437

Leases - Summary of finance and operating lease right-of-use assets and lease liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Right-of-use assets
Finance lease right-of-use assets, net	$ 214,903
Operating lease right-of-use assets, net	165,682
Total right-of-use assets	380,585
Finance leases
Current portion of finance lease obligations	7,004
Finance lease obligations, net of current portion	209,257
Operating leases
Current portion of operating lease obligations	9,462	$ 0
Operating lease obligations, net of current portion	157,319	$ 0
Total lease liabilities	$ 383,042

Shop Acquisitions - Narrative (Details) $ in Millions	9 Months Ended
Shop Acquisitions - Narrative (Details) $ in Millions	Sep. 30, 2022 USD ($) store
Business Acquisition [Line Items]
Revenues of acquisitions included in current period results of operations \| $	$ 6.7
Net income of acquisitions included in current period results of operations \| $	$ 1.2
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

Shop Acquisitions - Purchase price allocation (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 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	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

Intangible Assets and Goodwill - Summary of intangible assets amortization expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Cost of sales
Finite-Lived Intangible Assets [Line Items]
Cost of sales	$ 1,055	$ 948	$ 3,012	$ 2,579

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value derivative instruments included in condensed consolidated balance sheets

The fair value of the Company’s derivative instrument was included in the condensed consolidated balance sheet as follows:


(in thousands)	Balance Sheet Classification	September 30, 2022		December 31, 2021
Derivative instrument designated as cash flow hedge:
Interest rate swap contract	Prepaid expenses and other current assets	$	1,030	$	—
	Other long-term assets	2,297		—
Total derivative instrument designated as cash flow hedge		$	3,327	$	—

Schedule of derivatives instruments effect on condensed consolidated statement of operations

The effect of its derivative instrument on the Company’s condensed consolidated statements of operations was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	Statement of Operations Classification	2022		2021		2022		2021
Derivative instrument designated as cash flow hedge:
Income recognized in other comprehensive income before reclassifications		$	2,651	$	—	$	2,935	$	—
Reclassification from accumulated other comprehensive income to earnings for the effective portion	Interest expense, net	77		—		409		—
Income tax expense	Income tax expense	(244)		—		(294)		—

Intangible Assets and Goodwill - Schedule of goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 18,715
Business combinations	2,914
Goodwill, ending balance	$ 21,629

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Financial information for reportable segments

Equity and Equity-Based Compensation - Restricted stock awards (Details) shares in Thousands	9 Months Ended
	Sep. 30, 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	(1,333)
Ending balance (in shares) \| shares	2,667
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	164
Vested (in shares) \| shares	(203)
Forfeitures (in shares) \| shares	(2)
Ending balance (in shares) \| shares	555
Weighted-average grant date fair value per share
Beginning balance (in dollars per share) \| $ / shares	$ 43.55
New grants (in dollars per share) \| $ / shares	47.85
Vested (in dollars per share) \| $ / shares	43.50
Forfeitures (in dollars per share) \| $ / shares	49.37
Ending balance (in dollars per share) \| $ / shares	$ 44.82

Non-Controlling Interests - Schedule of ownership interest (Details)	Sep. 30, 2022 shares
Restricted stock awards
Noncontrolling Interest [Line Items]
Number of RSAs not vested (in shares)	2,700,000
Dutch Bros OpCo Class A common units held by Dutch Bros Inc.
Noncontrolling Interest [Line Items]
Common units outstanding (in units)	57,953,000
Class A common units held by Dutch Bros.	35.40%
Dutch Bros OpCo Class A common units held by non-controlling interest holders
Noncontrolling Interest [Line Items]
Common units outstanding (in units)	105,756,000
Dutch Bros OpCo Class A common units held by non-controlling interest holders	64.60%
Total Dutch Bros OpCo Class A common units outstanding
Noncontrolling Interest [Line Items]
Common units outstanding (in units)	163,708,000
Ownership %	100.00%

Basis of Presentation and Summary of Significant Accounting Policies - Loyalty Programs (Details)	9 Months Ended
	Sep. 30, 2022
Accounting Policies [Abstract]
Contract With Customer, Loyalty Rewards, Term	6 months

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021 ¹		2022		2021 ¹
Revenues:
Company-operated shops	$	173,501	$	108,661	$	464,200	$	289,548
Franchising and other	25,147		21,142		72,985		68,248
Total revenues	198,648		129,803		537,185		357,796
Cost of sales:
Company-operated shops	138,781		85,550		381,623		219,407
Franchising and other	9,311		5,229		29,006		19,347
Total cost of sales	148,092		90,779		410,629		238,754
Segment contribution:
Company-operated shops	44,344		27,405		107,648		81,179
Franchising and other	17,314		17,616		48,319		53,629
Total segment contribution	$	61,658	$	45,021	$	155,967	$	134,808
Depreciation and amortization:
Company-operated shops	9,624		4,294		25,071		11,038
Franchising and other	1,478		1,703		4,340		4,728
Total depreciation and amortization	11,102		5,997		29,411		15,766
Selling, general and administrative	(45,378)		(153,700)		(132,934)		(223,174)
Interest expense, net	(5,011)		(2,393)		(11,096)		(5,248)
Other expense, net	(1,944)		(1,041)		(1,662)		(1,099)
Loss before income taxes	$	(1,777)	$	(118,110)	$	(19,136)	$	(110,479)

_________________

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 prior period reported amounts with impacted line items presented below for the three and nine months ended September 30, 2021, respectively.

•Decrease in company-operated shops cost of sales (labor costs) of $0.3 million and $1.1 million

•Decrease in total cost of sales of $0.3 million and $1.1 million

•Increase in company-operated shops gross profit of $0.3 million and $1.1 million

•Increase in company-operated shops segment contribution of $0.3 million and $1.1 million

•Increase in total gross profit of $0.3 million and $1.1 million

•Increase in total segment contribution of $0.3 million and $1.1 million

•Decrease in selling, general and administrative expenses of less than $0.1 million and $0.4 million

•Increase in income before income taxes of $0.3 million and $1.5 million

Debt - Maturity schedule (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Debt Disclosure [Abstract]
Remainder of 2022	$ 666
2023	2,667
2024	4,549
2025	7,056
2026	13,313
Thereafter	72,427
Total debt	$ 100,678

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

Related Party Transactions

Intangible Assets and Goodwill - Narrative (Details) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, impairment charges	$ 0	$ 0

Related Party Transactions

9 Months Ended

Sep. 30, 2022

NOTE 17 — Related Party Transactions


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Donations to Dutch Bros Foundation	$	1,866	$	2,599	$	5,086	$	6,916

Derivative Financial Instruments - Schedule of fair value derivative instruments included in condensed consolidated balance sheets (Details) - Designated as Hedging Instrument - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total derivative instrument designated as cash flow hedge	$ 3,327	$ 0
Interest rate swap contract
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Prepaid expenses and other current assets	1,030	0
Other long-term assets	$ 2,297	$ 0

Shop Acquisitions (Tables)

9 Months Ended

Sep. 30, 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)	September 30, 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	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:


	Nine Months Ended September 30,
(in thousands; unaudited)	2022		2021
Revenue	$	539,136	$	366,564
Net loss	$	(16,058)	$	(108,218)

Leases - Additional lease information (Details)	Sep. 30, 2022
Leases [Abstract]
Weighted-average remaining lease term (years), Finance leases	16 years 2 months 12 days
Weighted-average remaining lease term (years), Operating leases	15 years 1 month 6 days
Weighted-average discount rate (percentages), Finance leases	5.20%
Weighted-average discount rate (percentages), Operating leases	4.10%

Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12 — Income Taxes


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022		2021			2022	2021
Income tax benefit	$	(3,371)	$	(1,280)			$	(2,700)		$	(716)
Effective tax rate	N/M		1.1		%		14.1		%	0.6		%

Three and Nine Months Ended September 30, 2022 v 2021

The increase in tax benefit was primarily driven by adjustments to the outside basis differences as a result of the 2021 tax filings.

As a result of the Secondary Offerings, the Company recorded an additional deferred tax asset, net of valuation allowance, of $130.6 million, which primarily consists of the Company’s outside basis differences in its limited liability company subsidiaries. As of September 30, 2022, the Company recognized deferred tax assets of approximately $293.1 million, net of a valuation allowance of approximately $1.5 million. The Secondary Offerings also resulted in the Company recording additional liability of $114.7 million related to the TRAs. As of September 30, 2022, the Company had a liability of approximately $226.3 million related to its projected obligations under the TRAs in connection with the Secondary Offerings and 2021 reorganization and exchange transactions. TRAs-related liabilities are classified as current or non-current based on the expected date of payment and are included in the Company’s condensed 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.

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.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Business Combination and Asset Acquisition [Abstract]

Shop Acquisitions

9 Months Ended

Sep. 30, 2022

Shop Acquisitions

NOTE 4 — Shop Acquisitions

During the nine months ended September 30, 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)	September 30, 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	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 nine months ended September 30, 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 condensed consolidated statements of operations beginning on the dates of acquisition. Revenues of approximately $6.7 million and net income of approximately $1.2 million are included in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 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:


	Nine Months Ended September 30,
(in thousands; unaudited)	2022		2021
Revenue	$	539,136	$	366,564
Net loss	$	(16,058)	$	(108,218)

Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Change of accounting principle, allocation

Upon transition, 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 (As Reported)		Subsequent Adjustments		Cumulative Adjustments as of September 30, 2022 (As Corrected)

Property and equipment, net	$	(79,821)	$	(6,171)	$	(85,992)
Finance lease right-of-use assets	111,826		3,745		115,571
Operating lease right-of-use assets	150,689		—		150,689

Deferred rent	(3,153)		—		(3,153)
Current portion of finance lease obligations	607		—		607
Current portion of operating lease obligations	8,430		—		8,430
Current portion of long-term debt	(46)		—		(46)
Finance lease obligations, net of current portion	32,534		—		32,534
Operating lease obligations, net of current portion	144,405		—		144,405
Long-term debt, net of current portion	(1,426)		(1,506)		(2,932)
Accumulated deficit	386		(264)		122
Non-controlling interests	957		(656)		301

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 September 30, 2022 is as follows:


(in thousands)	Balance Sheet Classification	September 30, 2022
Right-of-use assets
Finance leases	Finance lease right-of-use assets, net	$	214,903
Operating leases	Operating lease right-of-use assets, net	165,682
Total right-of-use assets		$	380,585

Lease liabilities
Finance leases	Current portion of finance lease obligations	$	7,004
	Finance lease obligations, net of current portion	209,257

Operating leases	Current portion of operating lease obligations	9,462
	Operating lease obligations, net of current portion	157,319
Total lease liabilities		$	383,042

A summary of lease terms and discount rates for finance and operating leases as of September 30, 2022 is as follows:


						September 30, 2022
Weighted-average remaining lease term (years)
Finance leases						16.2
Operating leases						15.1

Weighted-average discount rate (percentages)
Finance leases						5.2%
Operating leases						4.1%

Components of lease cost

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


(in thousands)	Statement of Operations Classification	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Finance lease cost
Amortization of right-of-use assets	Cost of sales	$	3,121	$	7,919
Interest on lease liabilities	Interest expense	2,482		6,261
Total finance lease cost		5,603		14,180


Operating lease cost	Cost of sales	4,228		12,109






Variable lease cost	Cost of sales	566		1,625
Total lease cost		$	10,397	$	27,914

Future minimum lease payments for financing lease liabilities

Future minimum lease payments for finance and operating lease liabilities as of September 30, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	4,882	$	4,363
2023	17,527		15,601
2024	18,185		15,291
2025	18,417		15,009
2026	18,741		14,868

Thereafter	246,068		161,592
Total	$	323,820	$	226,724
Less: imputed interest	(107,559)		(59,943)
Present value of minimum lease payments	216,261		166,781
Less: current portion	(7,004)		(9,462)
Lease liabilities, net of current portion	$	209,257	$	157,319

Future minimum lease payments for operating lease liabilities

Future minimum lease payments for finance and operating lease liabilities as of September 30, 2022 were as follows:


(in thousands)	Finance		Operating
Remainder of 2022	$	4,882	$	4,363
2023	17,527		15,601
2024	18,185		15,291
2025	18,417		15,009
2026	18,741		14,868

Thereafter	246,068		161,592
Total	$	323,820	$	226,724
Less: imputed interest	(107,559)		(59,943)
Present value of minimum lease payments	216,261		166,781
Less: current portion	(7,004)		(9,462)
Lease liabilities, net of current portion	$	209,257	$	157,319

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

Schedule of Cash Flow, Supplemental Disclosures

Supplemental cash flow information related to leases as of September 30, 2022 is as follows for the period presented:


(in thousands; unaudited)	Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	6,261
Operating cash flows from operating leases	11,611
Financing cash flows from finance leases	3,144
Right-of-use assets obtained in exchange for lease obligations 1
Finance leases	135,987
Operating leases	171,437

_________________

1 Amounts include the transition adjustment for the adoption of ASU 2016-02, as amended.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 16 — 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 September 30, 2022 and December 31, 2021, the Company had guaranteed approximately $1.6 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 routine legal actions arising in the ordinary course of and incidental to 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. Because litigation is inherently unpredictable, assessing contingencies is highly subjective and requires judgments about future events. When evaluating litigation contingencies, we may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, developments in legislation or regulations that affect the validity of certain claims and defenses, the availability of appellate remedies, insurance coverage related to the claim or claims in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matter. 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.

Non-Controlling Interests - Summary of changes in ownership of LLC (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Noncontrolling Interest [Line Items]

Net income (loss) attributable to Dutch Bros Inc.

^[1]

$ 1,763

$ (11,077)

$ (4,090)

$ (11,077)

Other comprehensive income:

Unrealized gain on derivative securities, effective portion, net of income tax expense

2,467

3,033

Transfers from (to) non-controlling interests:

Decrease in additional paid-in capital as a result of the Reorganization Transactions

(195,936)

Decrease in accumulated deficit as a result of the adoption of ASC 842

122

Increase in additional paid-in capital as a result of equity-based compensation

3,656

9,802

10,083

9,802

Decrease in additional paid-in capital as a result of common stock issuances pursuant to vesting of equity awards, net of stock withheld for tax

(3,258)

(1,145)

(3,258)

Increase (decrease) in additional paid-in capital as a result of the acquisition of Dutch Bros OpCo Class A common units

4,528

(239,132)

9,408

(239,132)

Total effect of changes in ownership interest on equity attributable to Dutch Bros Inc.

10,650

(439,601)

15,226

(439,601)

Accumulated Other Comprehensive Income

Other comprehensive income:

Unrealized gain on derivative securities, effective portion, net of income tax expense

$ 703

$ 0

$ 848

$ 0

[1]

2021 amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.

Segment Reporting

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Reporting

NOTE 18 — 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 and nine months ended September 30, 2022. In addition, no customer represents 10% or more of total accounts receivable or revenues as of and for the three and nine months ended September 30, 2022 and 2021.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021 ¹		2022		2021 ¹
Revenues:
Company-operated shops	$	173,501	$	108,661	$	464,200	$	289,548
Franchising and other	25,147		21,142		72,985		68,248
Total revenues	198,648		129,803		537,185		357,796
Cost of sales:
Company-operated shops	138,781		85,550		381,623		219,407
Franchising and other	9,311		5,229		29,006		19,347
Total cost of sales	148,092		90,779		410,629		238,754
Segment contribution:
Company-operated shops	44,344		27,405		107,648		81,179
Franchising and other	17,314		17,616		48,319		53,629
Total segment contribution	$	61,658	$	45,021	$	155,967	$	134,808
Depreciation and amortization:
Company-operated shops	9,624		4,294		25,071		11,038
Franchising and other	1,478		1,703		4,340		4,728
Total depreciation and amortization	11,102		5,997		29,411		15,766
Selling, general and administrative	(45,378)		(153,700)		(132,934)		(223,174)
Interest expense, net	(5,011)		(2,393)		(11,096)		(5,248)
Other expense, net	(1,944)		(1,041)		(1,662)		(1,099)
Loss before income taxes	$	(1,777)	$	(118,110)	$	(19,136)	$	(110,479)

_________________

•Decrease in company-operated shops cost of sales (labor costs) of $0.3 million and $1.1 million

•Decrease in total cost of sales of $0.3 million and $1.1 million

•Increase in company-operated shops gross profit of $0.3 million and $1.1 million

•Increase in company-operated shops segment contribution of $0.3 million and $1.1 million

•Increase in total gross profit of $0.3 million and $1.1 million

•Increase in total segment contribution of $0.3 million and $1.1 million

•Decrease in selling, general and administrative expenses of less than $0.1 million and $0.4 million

•Increase in income before income taxes of

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.

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Derivative Instruments and Hedging Activities Disclosure [Abstract]

Inventories - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Inventory valuation reserves	$ 105	$ 2,126

Inventories - Schedule of inventories, net (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 16,070	$ 8,453
Finished goods	17,643	14,892
Total inventories	$ 33,713	$ 23,345

Commitments and Contingencies (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Property Lease Guarantee
Other Commitments [Line Items]
Guarantor obligation in franchise lease payment	$ 1.6	$ 1.7

Income (Loss) Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Income (Loss) Per Share

NOTE 15 — Income (Loss) Per Share

Basic net income (loss) per share of Class A and Class D common stock is computed by dividing net income (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 income (loss) per share of Class A and Class D common stock is computed by dividing loss attributable to the Company, 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 income (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.

The following tables set forth the numerators and denominators used to compute basic and diluted income (loss) per share of Class A and Class D common stock for the periods presented. The basic and diluted loss per share for the three and nine months ended September 30, 2021 reflects only the period from September 14, 2021 to September 30, 2021, which represents the period from the date of the Reorganization Transactions during which the Company had outstanding Class A and Class D common stock.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Numerator:
Net income (loss)	$	1,594	$	(116,830)	$	(16,436)	$	(109,763)
Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions	—		(74,441)		—		(67,374)
Less: net loss attributable to non-controlling interests	(169)		(31,312)		(12,346)		(31,312)
Net income (loss) attributable to Dutch Bros Inc.	$	1,763	(11,077)		$	(4,090)	(11,077)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Basic net income (loss) per share attributable to common stockholders
Numerator:
Net income (loss) attributable to Dutch Bros Inc.	$	1,763	$	(11,077)	$	(4,090)	$	(11,077)
Denominator:
Weighted-average number of shares of Class A and Class D common stock outstanding - basic	53,118		45,807		50,719		45,807




Basic net income (loss) per share attributable to common stockholders	$	0.03	(0.24)		$	(0.08)	$	(0.24)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Diluted net income (loss) per share attributable to common stockholders
Numerator:
Undistributed income (loss) for basic computation	$	1,763	$	(11,077)	$	(4,090)	$	(11,077)
Decrease in net income attributable to common stockholders upon conversion of potentially dilutive instruments	(1)		—		—		—
Allocation of undistributed income (loss)	$	1,762	$	(11,077)	$	(4,090)	$	(11,077)

Denominator:
Number of shares used in basic computation	53,118		45,807		50,719		45,807
Add: weighted-average effect of dilutive securities
Restricted stock awards	1,300		—		—		—

Weighted-average number of shares of Class A and Class D common stock outstanding used to calculate diluted net income (loss) per share	54,418		45,807		50,719		45,807
Diluted net income (loss) per share attributable to common stockholders	$	0.03	$	(0.24)	$	(0.08)	$	(0.24)

Shares of the Company’s Class B and Class C common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted income (loss) per share of Class B and Class C common stock under the two-class method has not been presented.

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


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Restricted stock awards	—	4,000	2,667	4,000
Restricted stock units	555	597	555	597
Total anti-dilutive securities	555	4,597	3,222	4,597

Leases - Summary of effect of adoption (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jan. 01, 2022	Dec. 31, 2021
Lessee, Lease, Description [Line Items]
Property and equipment, net	$ 327,600		$ 301,998
Operating lease right-of-use assets	165,682
Deferred rent	0		3,153
Current portion of finance lease obligations	7,004
Current portion of operating lease obligations	9,462		0
Current portion of long-term debt	2,608		103
Finance lease obligations, net of current portion	209,257
Operating lease obligations, net of current portion	157,319		0
Long-term debt, net of current portion	96,879		3,503
Accumulated deficit	(16,647)		(12,679)
Non-controlling interests	$ 118,119		119,213
As Reported
Lessee, Lease, Description [Line Items]
Accumulated deficit			(12,914)
Non-controlling interests			$ 116,688
Revision of Prior Period, Adjustment
Lessee, Lease, Description [Line Items]
Property and equipment, net		$ (6,171)
Finance lease right-of-use assets		3,745
Operating lease right-of-use assets		0
Deferred rent		0
Current portion of finance lease obligations		0
Current portion of operating lease obligations		0
Current portion of long-term debt		0
Finance lease obligations, net of current portion		0
Operating lease obligations, net of current portion		0
Long-term debt, net of current portion		(1,506)
Accumulated deficit		(264)
Non-controlling interests		(656)
Cumulative Effect, Period of Adoption, Adjustment
Lessee, Lease, Description [Line Items]
Property and equipment, net		(85,992)
Finance lease right-of-use assets		115,571
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		(2,932)
Accumulated deficit		122
Non-controlling interests		301
Cumulative Effect, Period of Adoption, Adjustment \| As Reported
Lessee, Lease, Description [Line Items]
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)
Accumulated deficit		386
Non-controlling interests		$ 957

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2022

Derivative Financial Instruments

NOTE 11 — Derivative Financial Instruments

From time to time, the Company may enter into interest rate swaps to fix a portion of interest expense. The Company does not enter into derivative instruments for any other purpose other than to manage its risks related to fluctuations in interest rates, and does not engage in interest rate speculation using derivative instruments.

As of September 30, 2022, the Company had a $70 million receive-variable, pay-fixed interest rate swap outstanding with JPMorgan Chase Bank, N.A. This interest rate swap matures on February 28, 2027 and has a fixed rate of 2.67% per annum. The variable rate on the interest rate swap is the one-month adjusted term SOFR rate plus an applicable margin. As of September 30, 2022, the one-month adjusted term SOFR rate was 3.03%.

The Company typically designates all interest rate swaps as cash flow hedges, and accordingly, records the change in fair value for the effective portion of the interest rate swap in AOCI rather than in current period earnings until the underlying hedged transaction affects earnings. As of September 30, 2022, the Company expects to reclassify a gain of approximately $1.0 million from AOCI to earnings within the next twelve months.

The fair value of the Company’s derivative instrument was included in the condensed consolidated balance sheet as follows:


(in thousands)	Balance Sheet Classification	September 30, 2022		December 31, 2021
Derivative instrument designated as cash flow hedge:
Interest rate swap contract	Prepaid expenses and other current assets	$	1,030	$	—
	Other long-term assets	2,297		—
Total derivative instrument designated as cash flow hedge		$	3,327	$	—

The effect of its derivative instrument on the Company’s condensed consolidated statements of operations was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	Statement of Operations Classification	2022		2021		2022		2021
Derivative instrument designated as cash flow hedge:
Income recognized in other comprehensive income before reclassifications		$	2,651	$	—	$	2,935	$	—
Reclassification from accumulated other comprehensive income to earnings for the effective portion	Interest expense, net	77		—		409		—
Income tax expense	Income tax expense	(244)		—		(294)		—

For additional information related to the Company’s derivative, see NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies and NOTE 10 — Fair Value Measurements.

Income (Loss) Per Share - Antidilutive securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total anti-dilutive securities (in shares)	555	4,597	3,222	4,597
Restricted stock awards
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total anti-dilutive securities (in shares)	0	4,000	2,667	4,000
Restricted stock units
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total anti-dilutive securities (in shares)	555	597	555	597

Revenue Recognition - Amortization of franchise fees (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unearned franchise fees, amortization	$ 2,390
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	3 months
Unearned franchise fees, amortization	$ 112
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	$ 419
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	$ 361
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	$ 307
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	$ 265
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	$ 926

Derivative Financial Instruments - Narrative (Details) - Designated as Hedging Instrument - Cash Flow Hedging - Interest rate swap contract	9 Months Ended
	Sep. 30, 2022 USD ($)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Interest rate swap outstanding	$ 70,000,000
Fixed interest rate	2.67%
Expected reclassification of gain within the next twelve months	$ 1,000,000.0
SOFR
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Variable interest rate	3.03%

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 34,567	$ 18,506
Accounts receivable, net	14,415	10,644
Inventories, net	33,713	23,345
Prepaid expenses and other current assets	11,110	8,796
Total current assets	93,805	61,291
Property and equipment, net	327,600	301,998
Finance lease right-of-use assets, net	214,903
Operating lease right-of-use assets, net	165,682
Intangibles, net	9,826	11,103
Goodwill	21,629	18,715
Deferred income tax assets, net	293,108	159,031
Other long-term assets	2,704	1,562
Total assets	1,129,257	553,700
Current liabilities:
Accounts payable	26,973	20,440
Accrued liabilities	22,850	20,970
Other current liabilities	6,446	6,471
Deferred revenue	28,829	22,807
Line of credit	85,752	64,104
Current portion of tax receivable agreements liability	450	450
Current portion of finance lease obligations	7,004
Current portion of finance lease obligations		3,389
Operating leases	9,462	0
Current portion of long-term debt	2,608	103
Total current liabilities	190,374	138,734
Deferred revenue, net of current portion	5,118	5,030
Tax receivable agreements liability, net of current portion	225,849	109,283
Finance lease obligations, net of current portion	209,257
Finance lease obligations, net of current portion		79,588
Lease liabilities, net of current portion	157,319	0
Long-term debt, net of current portion	96,879	3,503
Deferred rent	0	3,153
Other long-term liabilities	659	680
Total liabilities	885,455	339,971
Commitments and contingencies (Note 16)
Preferred stock, $0.00001 par value per share - 20,000 shares authorized; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021	0	0
Additional paid in capital	141,480	107,193
Accumulated other comprehensive income	848	0
Accumulated deficit	(16,647)	(12,679)
Total stockholders' equity attributable to Dutch Bros Inc.	125,683	94,516
Non-controlling interests	118,119	119,213
Total equity	243,802	213,729
Total liabilities and equity	1,129,257	553,700
Class A common stock
Current liabilities:
Common stock	1	0
Class B common stock
Current liabilities:
Common stock	1	1
Class C common stock
Current liabilities:
Common stock	0	1
Class D common stock
Current liabilities:
Common stock	$ 0	$ 0

Property and Equipment

9 Months Ended

Sep. 30, 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)			September 30, 2022		December 31, 2021
Software	3			$	7,430	$	7,132

Equipment and fixtures	3	—	7	85,232		57,952
Leasehold improvements	5	—	15	26,996		20,744
Buildings	10	—	20	134,640		168,395
Land	N/A			4,211		5,242
Aircraft 1	N/A			9,195		9,531
Construction-in-progress 2	N/A			124,185		88,050
Property and equipment, gross				391,889		357,046
Less: accumulated depreciation				(64,289)		(55,048)
Property and equipment, net				$	327,600	$	301,998

_______________

1 Aircraft is 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 September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Cost of sales	$	6,932	$	5,048	$	18,486	$	13,186
Selling, general and administrative expenses	702		700		2,114		1,962
Total depreciation expense	$	7,634	$	5,748	$	20,600	$	15,148

No impairment charges were recognized for the nine months ended September 30, 2022 and 2021.

Intangible Assets and Goodwill - Schedule of intangible assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Acquired Finite-Lived Intangible Assets [Line Items]
Less: accumulated amortization	$ (17,223)	$ (14,211)
Intangibles, net	$ 9,826	11,103
Franchise rights
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted-average amortization period (in years)	3 years 7 months 6 days
Reacquired franchise rights	$ 27,049	$ 25,314

Non-Controlling Interests

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Non-Controlling Interests

NOTE 14 — 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 Dutch Bros OpCo Class A common units may, from time to time, require Dutch Bros OpCo to redeem all or a portion of its Dutch Bros OpCo Class A common units for newly-issued shares of Class A common stock on a one-for-one basis. In connection with any redemption or exchange, the Company will receive a corresponding number of Dutch Bros OpCo Class A common 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 Dutch Bros OpCo Class A common 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:


	September 30, 2022
(in thousands)	OpCo Units	Ownership %
Dutch Bros OpCo Class A common units held by Dutch Bros Inc.1	57,953	35.4	%
Dutch Bros OpCo Class A common units held by non-controlling interest holders	105,756	64.6	%
Total Dutch Bros OpCo Class A common units outstanding	163,708	100.0	%

_________________

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


(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss) attributable to Dutch Bros Inc.	$	1,763	$	(11,077)	$	(4,090)	$	(11,077)
Other comprehensive income:
Unrealized gain on derivative securities, effective portion, net of income tax expense	703		—		848		—
Transfers from (to) non-controlling interests:
Decrease in additional paid-in capital as a result of the Reorganization Transactions	—		(195,936)		—		(195,936)
Decrease in accumulated deficit as a result of the adoption of ASC 842	—		—		122		—
Increase in additional paid-in capital as a result of equity-based compensation	3,656		9,802		10,083		9,802
Decrease in additional paid-in capital as a result of common stock issuances pursuant to vesting of equity awards, net of stock withheld for tax	—		(3,258)		(1,145)		(3,258)
Increase (decrease) in additional paid-in capital as a result of the acquisition of Dutch Bros OpCo Class A common units	4,528		(239,132)		9,408		(239,132)
Total effect of changes in ownership interest on equity attributable to Dutch Bros Inc.	$	10,650	$	(439,601)	$	15,226	$	(439,601)

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 were as follows for the periods presented:


	Three Months Ended September 30,			Nine Months Ended September 30,
	2022		2021	2022		2021
Weighted-average ownership percentage	67.0	%	*	68.5	%	*

* The non-controlling interest holders’ weighted-average ownership percentage for the period from the September 14, 2021 Reorganization date to September 30, 2021 was 71.3%.

Leases - Lease cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
Leases - Lease cost (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2022
Finance lease cost
Amortization of right-of-use assets	$ 3,121	$ 7,919
Interest on lease liabilities	2,482	6,261
Total finance lease cost	5,603	14,180
Operating lease cost	4,228	12,109
Variable lease cost	566	1,625
Total lease cost	$ 10,397	$ 27,914

Leases - Adoption of ASC 842 and nature of leases (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) renewal	Jan. 01, 2022 USD ($)	Dec. 31, 2021 USD ($)
Lessee, Lease, Description [Line Items]
Catch up adjustment for ASU 2016-02	$ 125,683		$ 94,516
Operating lease liability adjustment	166,781
Recognition of operating right-of-use assets	$ 165,682
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		$ 400
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

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Income tax benefit	$ (3,371)	$ (1,280)	$ (2,700)	$ (716)
Effective tax rate		1.10%	14.10%	0.60%

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

Schedule of immaterial correction of previously issued consolidated financial statements

Property and Equipment - Summary of property and equipment depreciation expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation	$ 7,634	$ 5,748	$ 20,600	$ 15,148
Cost of sales
Property, Plant and Equipment [Line Items]
Depreciation	6,932	5,048	18,486	13,186
Selling, general and administrative expenses
Property, Plant and Equipment [Line Items]
Depreciation	$ 702	$ 700	$ 2,114	$ 1,962

Shop Acquisitions - Pro forma information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]
Revenue	$ 539,136	$ 366,564
Net loss	$ (16,058)	$ (108,218)

Segment Reporting (Details) $ in Thousands	3 Months Ended		9 Months Ended
Segment Reporting (Details) $ in Thousands	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) segment	Sep. 30, 2021 USD ($)
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Number of operating segments \| segment			2
Revenues:	$ 198,648	$ 129,803	$ 537,185	$ 357,796
Cost of sales:	148,092	90,779	410,629	238,754
Depreciation and amortization:			31,531	17,727
Selling, general and administrative	(45,378)	(153,700)	(132,934)	(223,174)
Interest expense, net	(5,011)	(2,393)	(11,096)	(5,248)
Other expense, net	(1,944)	(1,041)	(1,662)	(1,099)
Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(281)		(1,115)
Segment contribution:		300		1,100
Selling, general and administrative		27		421
Loss before income taxes		300		1,500
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	198,648	129,803	537,185	357,796
Cost of sales:	148,092	90,779	410,629	238,754
Segment contribution:	61,658	45,021	155,967	134,808
Depreciation and amortization:	11,102	5,997	29,411	15,766
Operating Segments \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(300)		(1,100)
Corporate, Non-Segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative	(45,378)	(153,700)	(132,934)	(223,174)
Interest expense, net	(5,011)	(2,393)	(11,096)	(5,248)
Other expense, net	(1,944)	(1,041)	(1,662)	(1,099)
Loss before income taxes	(1,777)	(118,110)	(19,136)	(110,479)
Corporate, Non-Segment \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative				400
Corporate, Non-Segment \| Adjustments \| Maximum
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative		100
Company-operated shops
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	173,501	108,661	464,200	289,548
Company-operated shops \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	173,501	108,661	464,200	289,548
Cost of sales:	138,781	85,550	381,623	219,407
Segment contribution:	44,344	27,405	107,648	81,179
Depreciation and amortization:	9,624	4,294	25,071	11,038
Company-operated shops \| Operating Segments \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Cost of sales:		(300)		(1,100)
Segment contribution:		300		1,100
Franchising and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	25,147	21,142	72,985	68,248
Franchising and other \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Revenues:	25,147	21,142	72,985	68,248
Cost of sales:	9,311	5,229	29,006	19,347
Segment contribution:	17,314	17,616	48,319	53,629
Depreciation and amortization:	$ 1,478	1,703	$ 4,340	4,728
Franchising and other \| Operating Segments \| Adjustments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment contribution:		$ 300		$ 1,100

Equity and Equity-Based Compensation - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Restricted stock awards
Class of Stock [Line Items]
Total fair value of restricted stock	$ 30.7
Restricted stock units
Class of Stock [Line Items]
Total fair value of restricted stock	$ 8.8
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 before 2022 \| Year three
Class of Stock [Line Items]
Vesting percentage	33.33%
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%
Granted during or after 2022 \| Year three
Class of Stock [Line Items]
Vesting percentage	50.00%
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 during or after 2022, Cliff vested \| Year three
Class of Stock [Line Items]
Vesting percentage	100.00%
Minimum
Class of Stock [Line Items]
Vesting period (in years)	3 years

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

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

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

Condensed Consolidated Balance Sheet:


	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. / members’ equity	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 Statements of Operations:


	Three Months Ended September 30, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Costs and expenses
Cost of sales	$	91,060	$	(281)	$	90,779
Selling, general and administrative	153,727		(27)		153,700
Total costs and expenses	244,787		(308)		244,479
Loss from operations	(114,984)		308		(114,676)
Loss before income taxes	(118,418)		308		(118,110)

Net loss	$	(117,138)	$	308	$	(116,830)

Less: Net loss attributable to non-controlling interests 1	(31,531)		219		(31,312)
NET LOSS ATTRIBUTABLE TO DUTCH BROS INC.1	$	(11,166)	$	89	$	(11,077)

_________________

1 Amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of Dutch Bros OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.


	Nine Months Ended September 30, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Costs and expenses
Cost of sales	$	239,869	$	(1,115)	$	238,754
Selling, general and administrative	223,595		(421)		223,174
Total costs and expenses	463,464		(1,536)		461,928
Loss from operations	(105,668)		1,536		(104,132)
Loss before income taxes	(112,015)		1,536		(110,479)

Net loss	$	(111,299)	$	1,536	$	(109,763)
Less: Net loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions	(68,602)		1,228		(67,374)
Less: Net loss attributable to non-controlling interests 1	(31,531)		219		(31,312)
NET LOSS ATTRIBUTABLE TO DUTCH BROS INC. 1	$	(11,166)	$	89	$	(11,077)

_________________

Condensed Consolidated Statements of Stockholders’/Members’ Equity:


	Three Months Ended September 30, 2021
(in thousands)	As Reported 1		Adjustments		As Corrected
Members' Equity
Balance, June 30, 2021	$	(127,279)	$	2,725	$	(124,554)
Effect of the Reorganization Transactions and initial public offering on non-controlling interests	50,745		(2,725)		48,020


Additional Paid-in-Capital

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	(196,515)		579		(195,936)
Purchase of OpCo Units in connection with the initial public offering	(239,622)		201		(239,421)
Effect of exchange of Dutch Bros OpCo Class A common units	285		4		289
Balance, September 30, 2021	104,259		784		105,043

Accumulated Deficit

Net loss subsequent to the Reorganization Transactions	(11,166)		89		(11,077)
Balance, September 30, 2021	(11,166)		89		(11,077)

Non-Controlling Interests

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	145,768		2,146		147,914
Purchase of OpCo Units in connection with the initial public offering	(13,648)		(201)		(13,849)
Net loss subsequent to the Reorganization Transactions	(31,531)		219		(31,312)
Effect of exchange of Dutch Bros OpCo Class A common units	(285)		(4)		(289)
Balance, September 30, 2021	116,527		2,160		118,687

Total Equity
Balance, June 30, 2021	(127,279)		2,725		(124,554)
Net loss subsequent to the Reorganization Transactions	(42,697)		308		(42,389)
Balance, September 30, 2021	209,622		3,033		212,655

_________________


	Nine Months Ended September 30, 2021
(in thousands)	As Reported 1		Adjustments		As Corrected
Members' Equity
Balance, December 31, 2020	$	75,990	$	1,497	$	77,487
Net loss prior to the Reorganization Transactions	(68,602)		1,228		(67,374)
Effect of the Reorganization Transactions and initial public offering on non-controlling interests	50,745		(2,725)		48,020


Additional Paid-in-Capital

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	(196,515)		579		(195,936)
Purchase of OpCo Units in connection with the initial public offering	(239,622)		201		(239,421)
Effect of exchange of Dutch Bros OpCo Class A common units	285		4		289
Balance, September 30, 2021	104,259		784		105,043

Accumulated Deficit

Net loss subsequent to the Reorganization Transactions	(11,166)		89		(11,077)
Balance, September 30, 2021	(11,166)		89		(11,077)

Non-Controlling Interests

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	145,768		2,146		147,914
Purchase of OpCo Units in connection with the initial public offering	(13,648)		(201)		(13,849)
Net loss subsequent to the Reorganization Transactions	(31,531)		219		(31,312)
Effect of exchange of Dutch Bros OpCo Class A common units	(285)		(4)		(289)
Balance, September 30, 2021	116,527		2,160		118,687

Total Equity
Balance, December 31, 2020	75,990		1,497		77,487
Net loss prior to the Reorganization Transactions	(68,602)		1,228		(67,374)
Net loss subsequent to the Reorganization Transactions	(42,697)		308		(42,389)
Balance, September 30, 2021	209,622		3,033		212,655

_________________

Condensed Consolidated Statement of Cash Flows:


	Nine Months Ended September 30, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Cash flows from operating activities:
Net loss	$	(111,299)	$	1,536	$	(109,763)


Changes in operating assets and liabilities, net of acquisitions:
Accrued liabilities	7,888		(1,536)		6,352

Schedule of vendor incentives and advertising costs

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Vendor incentives	$	13,808	$	11,585	$	32,700	$	30,348

Advertising expense was as follows for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Advertising expense	$	8,158	$	7,602	$	22,840	$	19,948

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Provision for income taxes


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022		2021			2022	2021
Income tax benefit	$	(3,371)	$	(1,280)			$	(2,700)		$	(716)
Effective tax rate	N/M		1.1		%		14.1		%	0.6		%

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

3 Months Ended

9 Months Ended

Sep. 30, 2021

^[1]

Sep. 30, 2022

Sep. 30, 2021

Sep. 16, 2021

Sep. 30, 2022

Sep. 30, 2021

Sep. 16, 2021

^[1]

Numerator:

Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions

$ (42,389)

$ 1,594

$ (116,830)

$ (16,436)

$ (109,763)

(74,441)

$ (74,441)

(67,374)

$ (67,374)

Less: net loss attributable to non-controlling interests

^[2]

(169)

(31,312)

(12,346)

(31,312)

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

^[2]

$ 1,763

$ (11,077)

$ (4,090)

$ (11,077)

Denominator:

53,118

45,807

50,719

45,807

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

^[3]

$ 0.03

$ (0.24)

$ (0.08)

$ (0.24)

Numerator:

Undistributed income (loss) for basic computation

^[2]

$ 1,763

$ (11,077)

$ (4,090)

$ (11,077)

Decrease in net income attributable to common stockholders upon conversion of potentially dilutive instruments

(1)

Allocation of undistributed income (loss)

$ 1,762

$ (11,077)

$ (4,090)

$ (11,077)

Denominator:

Number of shares used in basic computation (in shares)

53,118

45,807

50,719

45,807

Weighted-average number of shares of Class A and Class D common stock outstanding used to calculate diluted net loss per share (in shares)

54,418

45,807

50,719

45,807

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

^[3]

$ 0.03

$ (0.24)

$ (0.08)

$ (0.24)

Restricted stock awards

Denominator:

Restricted stock awards (in shares)

1,300

Restricted stock units (in shares)

1,300

[1]	Amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of Dutch Bros OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.
[2]	2021 amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.
[3]	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.

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2022	Nov. 07, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-40798
Entity Registrant Name	DUTCH BROS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-1041305
Entity Address, Address Line One	110 SW 4th Street
Entity Address, City or Town	Grants Pass,
Entity Address, State or Province	OR
Entity Address, Postal Zip Code	97526
City Area Code	541
Local Phone Number	955-4700
Title of 12(b) Security	Class A Common Stock, par value $0.00001 per share
Trading Symbol	BROS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001866581
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		45,541,195
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		64,699,136
Class C common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		41,056,429
Class D common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		12,411,419

Income Taxes - Narrative (Details) $ in Millions	Sep. 30, 2022 USD ($)
Valuation Allowance [Line Items]
Valuation allowance	$ 1.5
Net deferred tax assets	293.1
Tax receivable agreement, amount due	226.3
Secondary Offering
Valuation Allowance [Line Items]
Valuation allowance	130.6
Tax receivable agreement, amount due	$ 114.7

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

3 Months Ended

9 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

REVENUES

Total revenues

$ 198,648

$ 129,803

$ 537,185

$ 357,796

COSTS AND EXPENSES

148,092

90,779

410,629

238,754

45,378

153,700

132,934

223,174

INCOME (LOSS) FROM OPERATIONS

193,470

244,479

543,563

461,928

5,178

(114,676)

(6,378)

(104,132)

OTHER EXPENSE

Interest expense, net

(5,011)

(2,393)

(11,096)

(5,248)

Other expense, net

(1,944)

(1,041)

(1,662)

(1,099)

Total other expense

(6,955)

(3,434)

(12,758)

(6,347)

LOSS BEFORE INCOME TAXES

(1,777)

(118,110)

(19,136)

(110,479)

Income tax benefit

(3,371)

(1,280)

(2,700)

(716)

NET INCOME (LOSS)

1,594

(116,830)

(16,436)

(109,763)

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

(74,441)

(67,374)

Less: Net loss attributable to non-controlling interests

^[1]

(169)

(31,312)

(12,346)

(31,312)

Net income (loss) per share of Class A and Class D common stock

^[1]

$ 1,763

$ (11,077)

$ (4,090)

$ (11,077)

Basic (in dollars per share)

^[2]

$ 0.03

$ (0.24)

$ (0.08)

$ (0.24)

Diluted (in dollars per share)

^[2]

$ 0.03

$ (0.24)

$ (0.08)

$ (0.24)

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

Basic (in shares)

53,118

45,807

50,719

45,807

Diluted (in shares)

54,418

45,807

50,719

45,807

Company-operated shops

REVENUES

Total revenues

$ 173,501

$ 108,661

$ 464,200

$ 289,548

Franchising and other

REVENUES

Total revenues

$ 25,147

$ 21,142

$ 72,985

$ 68,248

[1]	2021 amounts and balances have been updated to reflect reclassifications based on updated timing and sequence of certain Reorganization Transactions and purchase of OpCo Class A common units in connection with the IPO from previously reported figures in the Company’s Form 10-Q for the period ended September 30, 2021, as filed with the SEC on November 12, 2021.
[2]	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.

Equity and Equity-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [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	(1,333)	23.00

Balance, September 30, 2022	2,667	$	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	164	47.85
Vested	(203)	43.50
Forfeitures	(2)	49.37
Balance, September 30, 2022	555	$	44.82

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 as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021

Selling, general and administrative expenses	$	10,649	$	124,779	$	30,995	$	147,761

Total unrecognized stock based compensation related to unvested stock awards.

As of September 30, 2022, total unrecognized stock-based compensation related to unvested stock awards was $56.1 million, which will be recognized as follows:


(in thousands)
Remainder of 2022	$	10,611
2023	41,911
2024	3,133
2025	437


Total unrecognized stock-based compensation expense	$	56,092

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Chief Executive Officer
Related Party Transaction [Line Items]
Donations to Dutch Bros Foundation	$ 1,866	$ 2,599	$ 5,086	$ 6,916

Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 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

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 for the three and nine months ended September 30, 2021, the financial statement line items impacted by this error have been corrected. In addition, the immaterial error is being 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 Sheet:


	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. / members’ equity	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 Statements of Operations:


	Three Months Ended September 30, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Costs and expenses
Cost of sales	$	91,060	$	(281)	$	90,779
Selling, general and administrative	153,727		(27)		153,700
Total costs and expenses	244,787		(308)		244,479
Loss from operations	(114,984)		308		(114,676)
Loss before income taxes	(118,418)		308		(118,110)

Net loss	$	(117,138)	$	308	$	(116,830)

Less: Net loss attributable to non-controlling interests 1	(31,531)		219		(31,312)
NET LOSS ATTRIBUTABLE TO DUTCH BROS INC.1	$	(11,166)	$	89	$	(11,077)

_________________


	Nine Months Ended September 30, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Costs and expenses
Cost of sales	$	239,869	$	(1,115)	$	238,754
Selling, general and administrative	223,595		(421)		223,174
Total costs and expenses	463,464		(1,536)		461,928
Loss from operations	(105,668)		1,536		(104,132)
Loss before income taxes	(112,015)		1,536		(110,479)

Net loss	$	(111,299)	$	1,536	$	(109,763)
Less: Net loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions	(68,602)		1,228		(67,374)
Less: Net loss attributable to non-controlling interests 1	(31,531)		219		(31,312)
NET LOSS ATTRIBUTABLE TO DUTCH BROS INC. 1	$	(11,166)	$	89	$	(11,077)

_________________

Condensed Consolidated Statements of Stockholders’/Members’ Equity:


	Three Months Ended September 30, 2021
(in thousands)	As Reported 1		Adjustments		As Corrected
Members' Equity
Balance, June 30, 2021	$	(127,279)	$	2,725	$	(124,554)
Effect of the Reorganization Transactions and initial public offering on non-controlling interests	50,745		(2,725)		48,020


Additional Paid-in-Capital

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	(196,515)		579		(195,936)
Purchase of OpCo Units in connection with the initial public offering	(239,622)		201		(239,421)
Effect of exchange of Dutch Bros OpCo Class A common units	285		4		289
Balance, September 30, 2021	104,259		784		105,043

Accumulated Deficit

Net loss subsequent to the Reorganization Transactions	(11,166)		89		(11,077)
Balance, September 30, 2021	(11,166)		89		(11,077)

Non-Controlling Interests

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	145,768		2,146		147,914
Purchase of OpCo Units in connection with the initial public offering	(13,648)		(201)		(13,849)
Net loss subsequent to the Reorganization Transactions	(31,531)		219		(31,312)
Effect of exchange of Dutch Bros OpCo Class A common units	(285)		(4)		(289)
Balance, September 30, 2021	116,527		2,160		118,687

Total Equity
Balance, June 30, 2021	(127,279)		2,725		(124,554)
Net loss subsequent to the Reorganization Transactions	(42,697)		308		(42,389)
Balance, September 30, 2021	209,622		3,033		212,655

_________________


	Nine Months Ended September 30, 2021
(in thousands)	As Reported 1		Adjustments		As Corrected
Members' Equity
Balance, December 31, 2020	$	75,990	$	1,497	$	77,487
Net loss prior to the Reorganization Transactions	(68,602)		1,228		(67,374)
Effect of the Reorganization Transactions and initial public offering on non-controlling interests	50,745		(2,725)		48,020


Additional Paid-in-Capital

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	(196,515)		579		(195,936)
Purchase of OpCo Units in connection with the initial public offering	(239,622)		201		(239,421)
Effect of exchange of Dutch Bros OpCo Class A common units	285		4		289
Balance, September 30, 2021	104,259		784		105,043

Accumulated Deficit

Net loss subsequent to the Reorganization Transactions	(11,166)		89		(11,077)
Balance, September 30, 2021	(11,166)		89		(11,077)

Non-Controlling Interests

Effect of the Reorganization Transactions and initial public offering on non-controlling interests	145,768		2,146		147,914
Purchase of OpCo Units in connection with the initial public offering	(13,648)		(201)		(13,849)
Net loss subsequent to the Reorganization Transactions	(31,531)		219		(31,312)
Effect of exchange of Dutch Bros OpCo Class A common units	(285)		(4)		(289)
Balance, September 30, 2021	116,527		2,160		118,687

Total Equity
Balance, December 31, 2020	75,990		1,497		77,487
Net loss prior to the Reorganization Transactions	(68,602)		1,228		(67,374)
Net loss subsequent to the Reorganization Transactions	(42,697)		308		(42,389)
Balance, September 30, 2021	209,622		3,033		212,655

_________________

Condensed Consolidated Statement of Cash Flows:


	Nine Months Ended September 30, 2021
(in thousands)	As Reported		Adjustments		As Corrected
Cash flows from operating activities:
Net loss	$	(111,299)	$	1,536	$	(109,763)


Changes in operating assets and liabilities, net of acquisitions:
Accrued liabilities	7,888		(1,536)		6,352

Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Reclassifications

The Company has reclassified certain amounts in prior-period financial statements to conform to the current period's presentation.

•NOTE 5 — Inventories: components of inventory related to our Blue Rebel energy drink have been reclassified from finished goods to raw materials.

Derivative Instruments

Cash Flow Hedges

line item as the underlying hedged item on the Company’s condensed consolidated statements of operations.

Refer to NOTE 11 — Derivative Financial Instruments for further discussion of the Company’s derivative instruments.

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

Loyalty Programs

Deferred Revenue

Vendor Incentives


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Vendor incentives	$	13,808	$	11,585	$	32,700	$	30,348

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 September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Advertising expense	$	8,158	$	7,602	$	22,840	$	19,948

Recently Issued Accounting Standards

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.

Derivative Financial Instruments - Schedule of derivatives instruments effect on condensed consolidated statement of operations (Details) - Interest rate swap contract - Designated as Hedging Instrument - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Income recognized in other comprehensive income before reclassifications	$ 2,651	$ 0	$ 2,935	$ 0
Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Reclassification from accumulated other comprehensive income to earnings for the effective portion	77	0	409	0
Income Tax Expense (Benefit)
Derivative Instruments, Gain (Loss) [Line Items]
Income tax expense	$ (244)	$ 0	$ (294)	$ 0

Organization and Background	9 Months Ended
Organization and Background	Sep. 30, 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 September 30, 2022, there were 641 shops in operation in 14 U.S. states, of which 370 were company-operated and 271 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 September 30, 2022, the Company held 100.0% of the voting interest and 35.4% of the economic interest of Dutch Bros OpCo. The Continuing Members held none of the voting interest and the remaining 64.6% 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 Dutch Bros OpCo Class A common units from Dutch Bros OpCo for approximately $234.4 million. The proceeds were also used to purchase approximately 11.7 million Dutch Bros OpCo 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 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 Dutch Bros OpCo 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 Dutch Bros OpCo Class A common units. •Amended and restated the Company’s certificate of incorporation to, among other things, authorize four classes of common stock. •Acquired Dutch Bros OpCo 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. •Contribution of Dutch Bros OpCo Class A common units, Class B voting units, and Class C voting units by Pre-IPO Dutch Bros OpCo Unitholders to the Company in exchange for Class A common stock, Class B common stock, and Class C common stock, respectively. •Designation of the Company as managing member of Dutch Bros OpCo.•Entered into a Reorganization Tax Receivable Agreement with the Pre-IPO Blocker Holders and an Exchange Tax Receivable Agreement with the Continuing Members (collectively, the Tax Receivable Agreements or the 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.

Revenue Recognition - Disaggregation of revenue by major component (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Revenue by major component	$ 198,648	$ 129,803	$ 537,185	$ 357,796
Company-operated shops
Disaggregation of Revenue [Line Items]
Revenue by major component	173,501	108,661	464,200	289,548
Franchising
Disaggregation of Revenue [Line Items]
Revenue by major component	23,802	20,396	69,028	65,589
Other
Disaggregation of Revenue [Line Items]
Revenue by major component	$ 1,345	$ 746	$ 3,957	$ 2,659

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.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Fair Value Measurements	9 Months Ended
Fair Value Measurements	Sep. 30, 2022
Fair Value Disclosures [Abstract]
Fair Value Measurements	NOTE 10 — Fair Value Measurements The Company’s condensed consolidated financial statements include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities, for which the carrying amounts approximate fair value due to their short-term maturity. The fair value of the Company’s variable-rate term loan and revolving loans approximate their carrying amounts; these debt instruments are designated as Level 2 within the fair value hierarchy, as the Company’s cost of borrowing is variable and approximates current market rates. The Company has an interest rate swap, which is required to be measured at fair value on a recurring basis. Designated as a Level 2 instrument within the fair value hierarchy, the interest rate swap as of September 30, 2022 had a fair value of $3.3 million, and is recorded as an asset on the Company’s condensed consolidated balance sheet. The fair value of the Company’s interest rate swap was determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based on observable inputs. See NOTE 11 — Derivative Financial Instruments for additional details related to the interest rate swap.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Schedule of earnings (loss) per share

Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Numerator:
Net income (loss)	$	1,594	$	(116,830)	$	(16,436)	$	(109,763)
Less: net loss attributable to Dutch Bros OpCo before Reorganization Transactions	—		(74,441)		—		(67,374)
Less: net loss attributable to non-controlling interests	(169)		(31,312)		(12,346)		(31,312)
Net income (loss) attributable to Dutch Bros Inc.	$	1,763	(11,077)		$	(4,090)	(11,077)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Basic net income (loss) per share attributable to common stockholders
Numerator:
Net income (loss) attributable to Dutch Bros Inc.	$	1,763	$	(11,077)	$	(4,090)	$	(11,077)
Denominator:
Weighted-average number of shares of Class A and Class D common stock outstanding - basic	53,118		45,807		50,719		45,807




Basic net income (loss) per share attributable to common stockholders	$	0.03	(0.24)		$	(0.08)	$	(0.24)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Diluted net income (loss) per share attributable to common stockholders
Numerator:
Undistributed income (loss) for basic computation	$	1,763	$	(11,077)	$	(4,090)	$	(11,077)
Decrease in net income attributable to common stockholders upon conversion of potentially dilutive instruments	(1)		—		—		—
Allocation of undistributed income (loss)	$	1,762	$	(11,077)	$	(4,090)	$	(11,077)

Denominator:
Number of shares used in basic computation	53,118		45,807		50,719		45,807
Add: weighted-average effect of dilutive securities
Restricted stock awards	1,300		—		—		—

Weighted-average number of shares of Class A and Class D common stock outstanding used to calculate diluted net income (loss) per share	54,418		45,807		50,719		45,807
Diluted net income (loss) per share attributable to common stockholders	$	0.03	$	(0.24)	$	(0.08)	$	(0.24)

Schedule of weighted average potentially dilutive securities

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


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Restricted stock awards	—	4,000	2,667	4,000
Restricted stock units	555	597	555	597
Total anti-dilutive securities	555	4,597	3,222	4,597

Inventories

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Inventories

NOTE 5 — Inventories

Inventories, net consist of the following:



(in thousands)	September 30, 2022		December 31, 2021
Raw materials	$	16,070	$	8,453
Finished goods	17,643		14,892
Total inventories	$	33,713	$	23,345

As of September 30, 2022 and December 31, 2021, reserves for inventories were $105 and $2,126, respectively.

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Statement of Cash Flows [Abstract]
Net loss	$ (16,436)	$ (109,763)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	31,531	17,727
Non-cash interest expense	509	213
(Gain) loss on disposal of assets	(265)	664
Loss on extinguishment of debt	0	1,286
Equity-based compensation	30,995	147,761
Deferred income taxes	(3,757)	(1,580)
Remeasurement loss on TRAs	1,910	0
Non-cash operating leases	7,299	0
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(3,771)	(182)
Inventories, net	(10,301)	(2,818)
Prepaid expenses and other current assets	(1,283)	(2,115)
Other long-term assets	1,161	14
Accounts payable	3,967	5,777
Accrued liabilities	2,208	6,352
Other current liabilities	(38)	3,527
Deferred revenue	5,860	5,424
Deferred rent	0	243
Other long-term liabilities	(21)	(226)
Operating lease liabilities	(6,800)	0
Net cash provided by operating activities	42,768	72,304
Cash flows from investing activities:
Purchases of property and equipment	(134,634)	(74,121)
Proceeds from disposal of fixed assets	1,274	2,727
Acquisition of shops from franchisees	(6,051)	(5,387)
Net cash used in investing activities	(139,411)	(76,781)
Cash flows from financing activities:
Proceeds from line of credit	122,705	35,000
Payments on line of credit	0	(15,000)
Payments on finance lease obligations	(3,144)
Payments on finance lease obligations		(1,877)
Proceeds from financing lease obligations	0	1,484
Proceeds from long-term debt	1,375	200,000
Payments on long-term debt	(1,333)	(227,543)
Payments of debt issuance costs	(2,749)	(2,406)
Proceeds from initial public offering, net of offering costs	0	524,858
Distributions paid to members	0	(213,308)
Payments to repurchase outstanding equity / member units	0	(287,664)
Payments of IPO issuance costs	(250)	(3,511)
Tax withholding payments upon vesting of equity awards	(3,900)	(11,333)
Net cash provided by (used in) financing activities	112,704	(1,300)
Net increase (decrease) in cash and cash equivalents	16,061	(5,777)
Cash and cash equivalents, beginning of period	18,506	31,640
Cash and cash equivalents, end of period	34,567	25,863
Supplemental disclosure of cash flow information
Cash paid for interest	10,134	5,567
Income taxes paid	1,138	676
Supplemental disclosure of noncash investing and financing activities
Additions of property with capital leases	0	25,317
Additions of property and equipment accrued as of end of period	8,864	2,194
Deferred offering costs accrued	0	543
Transfer between line of credit and term loan facility	$ 100,000	$ 0

Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Unrealized gain on derivative securities, income tax expense	$ 244	$ 294

Revenue Recognition

9 Months Ended

Sep. 30, 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 September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Company-operated shops	$	173,501	$	108,661	$	464,200	$	289,548
Franchising	23,802		20,396		69,028		65,589
Other	1,345		746		3,957		2,659
Total revenues	$	198,648	$	129,803	$	537,185	$	357,796

Deferred Revenue

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


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance, December 31	$	22,765	$	10,576
Revenue deferred - gift card activations, loyalty app loads, and loyalty points and rewards earned	186,303		122,326
Revenue recognized - gift card, loyalty app, and loyalty rewards redemptions, and breakage	(180,538)		(116,967)
Balance, September 30	28,530		15,935
Less: current portion	(25,371)		(13,681)
Deferred revenue, net of current portion, gift card and loyalty programs	$	3,159	$	2,254

Revenue recognized related to gift card redemptions that was included in deferred revenue as of the end of the previous years was $3.6 million and $3.5 million for the nine months ended September 30, 2022 and 2021, respectively. These amounts exclude cash loads and transactions for the Company’s loyalty rewards program.

Deferred revenue also includes 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 condensed consolidated balance sheets were as follows:



(in thousands)	September 30, 2022		December 31, 2021
Outstanding performance obligations	$	3,027	$	2,512
Initial unearned franchise fees from franchisees	2,390		2,560
Total deferred revenue, excluding gift card and loyalty programs	5,417		5,072
Less: current portion	(3,458)		(2,964)
Deferred revenue, net of current portion, excluding gift card and loyalty programs	$	1,959	$	2,108

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021

Earned franchise fees	$	117	$	198	$	390	$	514

Revenue recognized from earned franchise fees that was included in unearned revenue at the beginning of the year was $0.4 million and $0.5 million for the nine months ended September 30, 2022 and 2021, respectively.

Future amortization of initial unearned franchise fees outstanding as of September 30, 2022 is as follows::


(in thousands)
Remainder of 2022	$	112
2023	419
2024	361
2025	307
2026	265

Thereafter	926
Total	$	2,390

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.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

NOTE 9 — Debt

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, limit 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 September 30, 2022, approximately $98.8 million and $87.7 million were outstanding on the term loan and revolving loans, respectively, and $162.3 million was available for borrowing on the revolving loans. The term loan bears interest at 5.63% and revolving loans bear interest at approximately 5.58% as of September 30, 2022. 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)	September 30, 2022		December 31, 2021
Terms loan under credit facility	$	98,750	$	—
Finance obligation1	1,377		2,978
Unsecured note payable	551		628
Total debt	100,678		3,606
Less: loan origination fees	(1,191)		—
Less: current portion	(2,608)		(103)
Total long-term debt, net of current portion	$	96,879	$	3,503

_______________

1 Effective January 1, 2022, with our adoption of ASC 842 (Leases), the 2021 failed sale-leaseback transactions were remeasured and included in our lease obligations. Subsequently we entered into a failed sale-leaseback arrangement under ASC 842 during the six months ended June 30, 2022.

Future annual maturities of long-term debt as of September 30, 2022 are as follows:


(in thousands)
Remainder of 2022	$	666
2023	2,667
2024	4,549
2025	7,056
2026	13,313
Thereafter	72,427
Total	$	100,678

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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Property, Plant and Equipment [Abstract]

Intangible Assets and Goodwill - Schedule of amortization of reacquired franchise rights (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Remainder of 2022	$ 1,022
Intangibles, net	9,826	$ 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	$ 9,826

Leases - Future minimum lease payments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Finance Lease, Liability, Payment, Due [Abstract]
Remainder of 2022	$ 4,882
2023	17,527
2024	18,185
2025	18,417
2026	18,741
Thereafter	246,068
Total	323,820
Less: imputed interest	(107,559)
Present value of minimum lease payments	216,261
Less: current portion	(7,004)
Lease liabilities, net of current portion	209,257
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Remainder of 2022	4,363
2023	15,601
2024	15,291
2025	15,009
2026	14,868
Thereafter	161,592
Total	226,724
Less: imputed interest	(59,943)
Present value of minimum lease payments	166,781
Less: current portion	(9,462)	$ 0
Lease liabilities, net of current portion	$ 157,319	$ 0

Equity and Equity-Based Compensation - Stock-based expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Selling, general and administrative expenses
Class of Stock [Line Items]
Selling, general and administrative expenses	$ 10,649	$ 124,779	$ 30,995	$ 147,761

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2022

Summary of property and equipment, net

Property and equipment, net consists of the following:



(in thousands)	Useful Life (Years)			September 30, 2022		December 31, 2021
Software	3			$	7,430	$	7,132

Equipment and fixtures	3	—	7	85,232		57,952
Leasehold improvements	5	—	15	26,996		20,744
Buildings	10	—	20	134,640		168,395
Land	N/A			4,211		5,242
Aircraft 1	N/A			9,195		9,531
Construction-in-progress 2	N/A			124,185		88,050
Property and equipment, gross				391,889		357,046
Less: accumulated depreciation				(64,289)		(55,048)
Property and equipment, net				$	327,600	$	301,998

_______________

1 Aircraft is 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 September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Cost of sales	$	6,932	$	5,048	$	18,486	$	13,186
Selling, general and administrative expenses	702		700		2,114		1,962
Total depreciation expense	$	7,634	$	5,748	$	20,600	$	15,148

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 1,594	$ (116,830)	$ (16,436)	$ (109,763)
Other comprehensive income (loss):
Unrealized gain on derivative securities, effective portion, net of income tax expense of $244 and $294, respectively	2,484	0	3,050	0
Comprehensive income (loss)	4,078	(116,830)	(13,386)	(109,763)
Less: comprehensive loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions	0	(74,441)	0	(67,374)
Less: comprehensive income (loss) attributable to non-controlling interests	1,612	(31,312)	(10,144)	(31,312)
Comprehensive income (loss) attributable to Dutch Bros Inc.	$ 2,466	$ (11,077)	$ (3,242)	$ (11,077)

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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Schedule of debt instruments

Debt - Narrative (Details) - USD ($)		9 Months Ended
Debt - Narrative (Details) - USD ($)	Feb. 28, 2022	Sep. 30, 2022	Sep. 30, 2021
Line of Credit Facility [Line Items]
Proceeds from line of credit		$ 122,705,000	$ 35,000,000
Long-term debt		100,678,000
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
Long-term debt		98,800,000
Balance outstanding on line of credit facility		98,750,000
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
Balance outstanding on line of credit facility		87,700,000
Remaining borrowing capacity		$ 162,300,000
Interest rate on term loan		5.63%
Interest rate on line of credit facility		5.58%
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%
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

Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

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



(in thousands)	September 30, 2022		December 31, 2021
Terms loan under credit facility	$	98,750	$	—
Finance obligation1	1,377		2,978
Unsecured note payable	551		628
Total debt	100,678		3,606
Less: loan origination fees	(1,191)		—
Less: current portion	(2,608)		(103)
Total long-term debt, net of current portion	$	96,879	$	3,503

_______________

Schedule of maturities of long-term debt

Future annual maturities of long-term debt as of September 30, 2022 are as follows:


(in thousands)
Remainder of 2022	$	666
2023	2,667
2024	4,549
2025	7,056
2026	13,313
Thereafter	72,427
Total	$	100,678

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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