A fast-growing specialty coffee retailer is moving up from punch cards to a mobile app for its loyalty offering.
When the COVID-19 pandemic hit in 2020, Dutch Bros Inc. found that its existing manual, punch card-based rewards program did not meet the contact-free needs of social distancing mandates. The retailer sought to obtain a fast, frictionless, and personalized way to maintain a connection with its customers that did not require direct physical contact.
Leveraging the Paytronix platform, Dutch Bros built its “Dutch Rewards” loyalty app. Dutch Rewards is a points-based loyalty program where customers can earn free drinks, win contests, and collect prizes such as signature Dutch Bros stickers.
Utilizing the Paytronix AI to IA solution, Dutch Bros performs customer segmentation and ultra-specific messaging in an effort to reach the right person, at the right time. Dutch Bros is able to collect and analyze customer data, retain customer loyalty, and offer new engagement programs.
Offering rewards campaigns such as free drink offers or “Double Dutch, Double the Points” programs, Dutch Bros was able to obtain 1.4 million Dutch Rewards loyalty members one month into the launch of the new program.
“One of my goals for the company and thoughts are that it has the potential to be the most dynamic digital business in the industry,” said Dutch Bros president and CEO Joth Ricci.
“For a brand like Dutch Bros with an amazing stamp-card loyalty program, the move to digital loyalty and contactless mobile payments had incredibly high stakes,” said Jesse Dundon, CEO of Hathway, a digital growth company and Paytronix partner.
Dutch Bros pursues growth
Dutch Bros is revamping its loyalty program as it is following aggressive growth and went public in September 2021. The company said in its filing at the time that it hopes to eventually have 4,000 shops, with the majority of its growth to be company-owned locations.
The company opened 65 stores during the second quarter of fiscal 2022 — including its 600th location — and is on track for at least 130 openings for the full year. In addition to moving East, Dutch Bros will continue to expand in existing markets, including Southern California, a market it said will be a “significant” growth driver.
During 2021, Dutch Bros launched its brand in Texas. In early 2022, the company entered the Nashville market.
Dutch Bros reported that its total revenues rose 44.2% to $186.4 million for the quarter ended June 30, with the increase helped by a 3% price increase. Company-operated same-shop sales declined 4.3% compared to the prior year, but grew 4.3% compared to 2019.
Inflation took a toll on the company’s performance during the quarter. Dutch Bros reported a loss of $1.8 million as compared to net income of $11.9 million in year-ago period.
Grants Pass, Ore.-based Dutch Bros, which is celebrating its 30th anniversary this year, currently operates 603 locations across 14 states.