Dutch Bros Aims to Leverage Stored-Value Payments to Drive Loyalty

As Dutch Bros. looks to convert its regular customers into super fans, the company is leveraging stored-value features to remove friction from the experience.

The Grant Pass, Oregon-based drive-thru coffee shop chain, which has over 500 locations across 13 states, is turning its focus to driving adoption of this payment method, company executives told analysts during a call Tuesday (March 1) discussing the brand’s fourth-quarter 2021 earnings results.

“At year end, our digital tender was over 60%,” said Dutch Bros. President and CEO Joth Ricci on the call. “We are pleased with our customers’ adoption and use of the Dutch Rewards, especially as users begin to utilize the platform’s stored-value features. As more customers load funds to their accounts, we believe it can reduce transaction times, speed up our lines, and free time to create meaningful lasting connections.”

Somewhere between one in four and one in five purchases from the chain’s rewards program members “include stored-value activity,” Chief Financial Officer Charlie Jemley noted, and the company is looking to leverage its points system to incentivize consumers to load additional value to their accounts.

“We … believe that stored value is a big idea not only operationally but just to create attachment and engagement and loyalty, and we’re really at the infancy stages of getting customers to load money on their program,” said Jemley on the call.

Findings from PYMNTS’ Restaurant Friction Index (RFI), created in collaboration with Paytronix, which drew from a survey of more than 500 managers of full-service and quick-service restaurants across the United States, revealed that, as of September, 38% of restaurant managers considered payment options to be “very” or “extremely” important to their innovation strategies, and a similar share said the same of loyalty offerings.

Read more: New Data Show Digital Loyalty Programs Are Key Differentiator for Top-Performing Restaurants

Additionally, the index’s survey of a census-balanced panel of more than 2,100 U.S. consumers found that 43% of customers would be more inclined to purchase from restaurants that offer loyalty rewards, 25% would be similarly incentivized by the ability to pay with a card on file and 23% by the ability to pay with digital wallets.

Ricci stated that Dutch Bros. has “run hundreds of tests over the course of 2022” with regard to the effectiveness of initiatives to encourage consumers to load value and more broadly the effectiveness of digital initiatives to drive spending with an added focus on increasing the visit frequency of mid-tier customers.

These moves are helped by the insight into consumers’ habits and desires gained through the company’s rewards program. At the end of 2021, the Dutch Rewards program, which launched in February 2021, had 3.2 million members signed up, which amounts to around 6,000 members per location, Ricci said.

“Through the app, we … have the ability to remember each interaction with all of our Dutch Rewards members,” he said. “We can leverage this knowledge to generate custom offers and thoughtful messaging to personalize our members’ Dutch Bros. experience. We’re in the early innings of this work, and we’re excited to continue unlocking value for our customers and our brand.”