The Ultimate Growth Stock to Buy With $1,000 Right Now

If you are looking for a great growth stock outside of the area of artificial intelligence (AI), Dutch Bros (BROS -0.68%) should be at the top of your list. The biggest driver for most successful restaurant chains is aggressive but smart store expansion. That is how McDonald’s, Chipotle, and Starbucks became national powerhouses, and Dutch Bros looks like it is setting itself up to follow that same playbook.

The company just recently passed the 1,000-store mark, yet it operates in only 20 states, mostly clustered in the western U.S. Its largest markets are Texas, California, and Oregon, but even in these markets, there is still a huge amount of white space left to go after. The company is targeting 2,029 shops by 2029, with a long-term goal of 7,000 locations nationwide, which gives it one of the longest runways for growth in the restaurant sector.

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The economics of its shops are what make this expansion strategy so compelling. Dutch Bros has focused on small, efficient stores, most between 800 and 1,000 square feet, with a walk-up window and double drive-thru lanes. The stores are relatively inexpensive to build and have strong cash-on-cash returns that allow the company to reinvest back into growth without stressing its balance sheet.

Last year, Dutch Bros opened 151 shops, and it plans to open at least 160 more this year. At the same time, the company is generating strong operating cash flow, which it is using to fund its expansion while still being free cash flow-positive. This is the kind of discipline you want to see in a retail expansion story.

More than an expansion story

But expansion alone does not make a great growth stock. Dutch Bros has been delivering strong same-store sales growth as well, with systemwide comps up 6.1% last quarter and transactions climbing 3.7%. Company-owned stores are doing even better, with comps up 7.8% and transaction growth of 5.9%, which shows that the brand continues to resonate and gain traction even as it adds new units. A big driver here has been its push into mobile ordering, which is now available at most of its shops and already accounts for more than 11.5% of transactions. This is still very early, and mobile ordering tied into its rewards program should help build customer loyalty and frequency over time.

The company’s biggest untapped opportunity, though, is food. Dutch Bros currently gets less than 2% of its sales from food, compared to nearly 20% for Starbucks, which means it is essentially leaving money on the table. The company has been testing hot food items in select locations, and the early results have been encouraging, with higher ticket and transaction growth, particularly during breakfast hours. Management has said that rolling out a food menu at scale will take time because it requires adding new equipment, but even modest success here could add meaningfully to revenue over the next several years.

Dutch Bros is also getting more sophisticated with its marketing, leaning into paid advertising to boost brand awareness. It continues to innovate with new drinks that drive traffic and repeat visits, and it is building a loyal following with its rewards program. The combination of rapid but measured store growth and new initiatives like food and digital ordering is a powerful one.

A solid stock to buy

For growth-focused investors, Dutch Bros looks like one of the most compelling opportunities in not just the restaurant space but the entire market. The company has a long runway to expand nationally and is already showing strong store-level economics with average unit volumes (AUVs), or sales per store, of over $2 million. At the same time, it has several levers to drive same-store sales higher over time.

If you have $1,000 to put to work right now that isn’t needed to pay month bills or reduce short-term debt, and you want a stock with years of strong potential growth ahead, Dutch Bros deserves serious consideration.