Dutch Bros (BROS, Financial) is struggling after its Investor Day presentation failed to impress investors, leading to a 6% drop in its stock price. Since reaching record highs in February, the coffee chain's shares have fallen by about 30%, largely due to overall market weakness affecting high-multiple stocks like BROS, which had a forward earnings multiple of 135x post-Q4 results.

• During Investor Day, BROS reaffirmed its same-store sales growth target of +2.0-4.0%, despite achieving +4.6% growth through March 24. The market expected an upward revision of its forecast, especially since it is already outperforming its FY25 projections.
• Economic concerns are also impacting BROS, as the company did not update on input prices. The coffee market's volatility, along with tariffs, could increase input costs. BROS raised prices earlier this year to counter inflation, but continued price hikes could affect demand, particularly for its premium beverages.
• Competitor Starbucks (SBUX, Financial) has seen a shift towards lower-priced drinks due to inflationary pressures, which could also impact BROS.

BROS reiterated its long-term financial goals, including a +20% annual revenue growth rate supported by mid-teens new shop growth. The company also expects annual adjusted EBITDA growth to exceed its sales growth rate. Additionally, BROS announced plans to launch Dutch Bros packaged coffee in retail outlets, aligning with its strategy to expand its food program and boost brand awareness.

Despite these plans, BROS's valuation remains high at approximately 92x forward earnings, much higher than SBUX's 30x. This puts pressure on BROS to improve its comp outlook following a strong Q1 start. Economic uncertainty is causing investor concern about a potential downturn in consumer spending. While coffee remains a daily priority, consumers may seek cheaper options, similar to trends observed by SBUX. At-home coffee consumption is rising, as noted by Keurig Dr Pepper (KDP, Financial), which reported improved at-home coffee trends in Q4. CEO Christine Barone, who started on January 1, 2024, may face challenges in executing her turnaround plan.