The Exchanges

Q But you were starting to drink some of these drinks, and you liked them, and you thought, hey, why don't we do it A coffee cart, like make espresso drinks from a cart, and you pitch this to your brother after you get him to try a vanilla latte, and he says what?

A Well, he's kind of like, well, this is really good. This is kind of a mind blow. He goes, what, how do we find more out about it? And I said, well, I remember up in Valley River Mall in Eugene, they used to have a cart at Nordstrom's, and Nordstrom's would serve up these coffees in the mall, and I said, I don't know what they ever did with a cart, but You know, maybe I should give them a call and, and see if I can chase it down, and, and so I ended up making a phone call, and they said, oh yeah, you know, we still have that car, believe it or not, it's in storage, and, uh, I asked them if they had it, you know, if they had any interest in selling it, and they said, you know, yeah, we do, and, and if you want to come take a look at it, you're more than welcome.

AI assessment note: “Well, he's kind of like, well, this is really good. This is kind of a mind blow.”

Q So you were basically trying to manifest these things that you, you'd written down. And meantime, you are, you've got these push carts, and, and I think, like, what, a good day would be, what, like, 200 bucks?

A Yeah, so, you know, I guess second year in, our downtown location's doing, you know, between two and 300 dollars a day, and Fred Meyer tips around the, you know, 80 to a hundred dollar mark every day, and, and we, we opened Three more push carts, and we ended up going to Walmart in Grants Pass, RCC in Grants Pass, and then Walmart in Medford, and we have employees now, and trying to figure out, like, how do we get those other locations to perform, like, our downtown one? We never really could, and we kind of finally landed on the ultimate success formula that we learned in this Tony Robbins book, and it was know your specific outcome, take massive action toward it, Ask yourself if the action's working that you're taking, and if it's not, change it until it does. And we started to look at the push cart gig, and we said, you know what? I think we need to change it. I think we need to have our own environment. Bonnie, who had Western Expresso, had moved on, and she had given it to her kids, and they kind of ran it into the ground, and they were, it was dead and gone. And we said, you know, that may be the best location for it. Let's pull these carts out of Walmart's. That environment is not for us. They wanted us to monitor people smoking. They, it was just a weird environment. You couldn't play music. It just wasn't us.

AI assessment note: “our downtown location's doing, you know, between two and 300 dollars a day”

Q And I think it destroyed everything inside, like, your inventory, like, what, what happened?

A Well, it was August eight. It was a 108 degrees out that day. And I'm over at my sister's house, Carly's house, with her husband, Brian, who works with us at the stage, and we're swimming in their pool, and we're literally You know, maybe a half a mile away from where our headquarters is located, and, and my mom comes driving up the driveway at a pace, like, that looked dangerous, and she slams the brakes on and jumps out. She's like, there's a fire. We need to go, and we literally jumped out of the pool in board shorts, and Headed down to the warehouse and, and when we got there, what I saw was this giant trash dumpster that we had that's made out of plastic melted against the wall on fire. All of a sudden, here came the fire department pulling in, and they, the one chief came over to me, and he was like, hey, listen, uh, you know, we're gonna do the best we can. Is there anything that we need to know? And, and I said, well, the number one thing is to save the coffee roaster out of there. If that's the only thing that made it out, that, that'd be the thing that's really important for us. And I said, I, I'd like to go in and get that, and he goes, you cannot go in here. You're not allowed, if you do, Your insurance could be voided. Trust me. Do not even, I know it's tempting. Sit here. Let us do our job. And I said, okay. And so I ultimately still had confidence that they're ju…

AI assessment note: “Well, it was August eight. It was a 108 degrees out that day.”

Q Okay, so, uh, so you knew that you wanted to get an espresso cart. This was not going to be the one. So did you go, did, what'd you do next?

A So I came home, Told Dan, I said, look, man, that's not it. We got to figure out a new path, and he goes, you know what? One of the guys that I graduated high school with works up at Boyd's Coffee up in Portland, and his name was Larry Winkler, and Larry told Dan, he goes, we sell espresso machines, we sell carts, we've, we've got packages, and you know, we wholesale coffee to A number of different restaurants, and, and we provide coffee to different people who have push carts, believe it or not, and he goes, you know, you guys should come up, check it out. So we did. We made a trip. We decided to, to not just go to Boyd's, but to hit any coffee establishment that we could through the I-Five corridor all the way up to Seattle and back.

AI assessment note: “So I came home, Told Dan, I said, look, man, that's not it.”

Q mortar, right? And that's a different beast, because now you're talking about rent, and you're talking about, you know, Hiring a team, and it's a, it's just a, it's a different level of stress. Um, how did you guys kind of deal with that transition when you went from the espresso car to an actual store? Was that, in retrospect, one of the hardest things that you think you did?

A I don't think so. I mean, it's kind of like learning how to walk. You got to start crawling, and then you start balancing out, and then eventually you make steps, and you fall down, you pick yourself up. That's what it is with any kind of business. We went from pushcart to an enclosed mobile unit that you could still move to different locations if you wanted to, but where we found our niche was the drive-through model. And, you know, we were one of the pioneers, I think, of, of drive-through coffee. And so that was something that was a real differentiator for us, and it ended up evolving into a brick and mortar kind of building, and, and that's really served us.

AI assessment note: “I don't think so. I mean, it's kind of like learning how to walk.”

Q point in the business to move away from a franchise model to, to, to a model where shops are actually corporate owned. They're run by Dutch Bros employees, um, who've been promoted up through the ranks. So similar to like a Chick-fil-A or In-N-Out. Um, it's not something that a lot of brands, uh, do, um, quick service restaurants do. Why do you think that model works better for you?

A Well, I think The thing that was always most important to me was scaling the culture and doing the right thing for the people. And so, you know, all of the people that we have in our organization, they're the ones who make it what it is. They're the ones who provide the experience. They're the ones who have the fire in the belly, the, the operational know how the ability to cultivate culture and lead people. And, you know, we made a decision back in 2008 to only grow from within and not sell franchises any longer to anybody else, because while some people had great business acumen, Teaching the culture and scaling the culture. That's just different in nature.

AI assessment note: “The thing that was always most important to me was scaling the culture”

Q All right, and you made an agreement with Paul that you would buy beans from him?

A Well, so we, when we left from that experience with Paul, we were ecstatic. We were like, we found our guy. This is it, man. We're over the moon. And when we got back to Grant's past, it was like within a week, he was down with the equipment, the cart was being built, and we set it up on a, an old living room table, and we were in our old milk house, and you know, we brought our stereo in with a couch, and, and he brought with him 10, 10 pound bags of coffee, and he said, you know what? I think the best thing for you guys to do is once I teach you how to pull these shots and steam milk is just have fun with it and try to come up with what you think would be best. I mean, it was back to let's, let's throw some, some music on and let's, I remember making a hazelnut latte and sipping that thing, man, and going, dude, this is unbelievable, man. Well, now let's try it with that mocha java bean, and let's try it with the Colombian bean, and what about that blend that he had that was dark, and what about that French roast stuff, man? That's, yeah.

AI assessment note: “we found our guy. This is it, man... he brought with him 10, 10 pound bags”