Dive Brief:

• Dutch Bros has expanded a mobile order test, which it began earlier this year through its Mobile Rewards app, CEO Christine Barone said Tuesday during an earnings call. Its initial test began in one store in Arizona.
• The first iteration of the pilot “is going well” and mobile order ahead is now being tested in several stores in Arizona, Barone said. The chain has gathered employee and customer feedback as it works through the stage-gate process, she added. 
• The chain forecasts that mobile order capabilities will be available at most of its stores by the end of the year.

Dive Insight:

Dutch Bros already has a robust digital penetration — 66% of its transactions during Q1 were made by Dutch Rewards members. This provides a strong foundation for the company to build upon with mobile ordering, Barone said. 

The coffee chain partnered with Olo to provide backend technology integration that would support mobile ordering. The chain will redeploy labor to provide better customer service at the drive-thru and in beverage production, Barone said, but won’t shrink store labor “despite likely saving considerable time from the order process.”

“We have the opportunity to establish a new channel that increases customer convenience while maintaining the high levels of hospitality that have defined our brand for over 30 years,” Barone said. 

Mobile ordering could be particularly popular during the morning daypart, when diners are short on time and may not be able to stop at a drive-thru if they see a long line.

“Our ability to potentially capture new occasions in the morning as we roll out mobile order and pay is something that we’re definitely excited about,” Barone said. 

Dutch Bros is also thinking about how mobile ordering will shape future development, like parking and drive-thru lines. Stores already have “escape lanes” that allow employees to run drinks to customers who can then leave the line before they reach the window. Development won’t be impacted right away since it can take some time to get these new designs into the system, Barone said. 

“I do think we have an ideal setup, in many of our locations, for mobile order, by having both a walk-up window and a drive-thru lane,” Barone said. “And having that walk-up window, I think, is going to be a very natural behavior for our customers, who can come in, park in our lots and then just walk up and have a great conversation with our [employees] and grab their drink.”

Mobile ordering could also be a boon for sales. The chain’s same-store sales were up 10% during the first quarter, which Barone said is the strongest single quarter since Q4 2021. The coffee chain also saw success with its protein coffee and boba that had solid sales in both the morning and afternoon dayparts, she said. These items did so well as limited-time offers, creating repeat purchase and positive customer experience, that they have been added to the company’s core menu.