Dive Brief:

• Dutch Bros has started testing mobile ordering capabilities in its app in at least one location in Arizona, president and CEO Christine Barone said on the company’s Q4 2023 earnings call on Wednesday.
• The test accompanies a focus on “refining our personalization capabilities” in the brand’s app and loyalty system. Loyalty members drove 65% of Dutch Bros transactions during the quarter, Barone said. 
• The digital test is part of a set of investments the coffee chain is using to “increase technology at the shop level to support scheduling, throughput, and mobile order initiatives.”

Dive Insight:

Dutch Bros plans to expand to a multi-shop test of the mobile order tech, depending on the results of the initial pilot, and ultimately plans “to roll out this capability to the majority of shops by the end of the year.”

Barone, who assumed the CEO position on Jan. 1, said the company was studying the operational implications of mobile ordering across its store portfolio, in hopes of maintaining a consistently high standard of service without negatively impacting its baristas.

“We're thinking through operations: What does this do to line speed? How are we slotting in the drinks as they're ordered?” Barone said. “We also have drive-thru shops that are set up with a walk-up window. So, [we are] looking at how people will come up and pick up their drinks from the walk-up window [and] also how they'll go through our drive-thru lane.”

Barone said the opportunity posed by mobile ordering was considerable, as queries about mobile ordering form a plurality of requests customers make for enhancements to Dutch Bros’ app. But, Barone cautioned, the technology was unlikely to have significant impact on 2024 sales.

Starbucks, the dominant player in the coffee space, captures about 30% of its transactions through mobile order and pay, and orders through all of its digital channels account for 52% of sales. Such a scale, and the benefits associated with in-app ordering — including chances to upsell automatically or encourage customers to add additional items, easier offer personalization and the creation of valuable first-party data — all mean that mobile ordering at Dutch Bros could strengthen the competitiveness of the company.

Mobile ordering could help support Dutch Bros’ explosive growth, as well. The chain’s unit count jumped from 671 at the end of 2022 to 831 stores across 16 states at the end of 2023, according to its most recent earnings release.