Starbucks rival challenges coffee giant's dominance

Since the mid-’90s, Starbucks has dominated the retail coffee scene. With nearly 17,000 U.S. locations, according to ScrapeHero, it’s far and away the largest coffee chain in the country.

But in recent years, a number of companies have started to challenge that dominance. Dunkin’ now has more than 10,000 locations in 44 states. Luckin Coffee, which has actually surpassed Starbucks in China, as CNBC reported, has opened its first U.S. locations.

And regional chains like 7 Brew and Scooters Coffee are rapidly expanding their footholds in certain corners of the country, thanks to the traction they’ve gained on social media.

However, one coffee chain stands apart from the rest as most likely to actually capture a portion of Starbucks’ consumer base: Dutch Bros.

In 1992, Dane and Travis Boersma started Dutch Bros as a single pushcart that they’d move around Grants Pass, Oregon. It didn’t take long for that single cart to turn into a swarm of drive-thru stands scattered around the state, and by 2000, the coffee company opened its first franchise location.

Today, there are 1,100 Dutch Bros locations in 25 states, ScrapeHero confirmed. The majority of these locations are concentrated in the western half of the country, although the Southeast is becoming one of the company’s fastest-growing markets.  

While the number of Dutch Bros locations still pales in comparison to Starbucks’ foothold, the smaller coffee chain gives Starbucks a run for its money in a number of other, arguably more meaningful, ways.

Starbucks’ shine is wearing off

At the close of 2024, Starbucks hit a low point. The company reported a 10% decrease in comparable transactions, resulting in a 3% decline in total revenues. 

“Our results do not reflect the strength of our brand,” former Starbucks CFO Rachel Ruggeri said at the time. “I have seen what Starbucks is capable of when we focus on what we do best. I have confidence in our ability to turn around our business and expect we will return to long-term growth.”

“It is clear we need to fundamentally change our strategy to win back customers,” CEO Brian Niccol added. “My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back.”

That Back to Starbucks plan has been in effect for 18 months, and the coffee chain is starting to see some payoff. Traffic data from Placer.ai reveal that overall visits to the chain improved by 5.2% in Q4 FY2025 and 5.5% in Q1 FY2026. 

“If sustained, this momentum could signal a meaningful and durable return to growth for the brand,” the data company said in its report. 

Related: ThredUp spots a worrisome trend in consumer behavior

While those numbers are certainly encouraging, they don’t account for how difficult it may ultimately be for Starbucks to regain the trust and goodwill it’s lost with customers over the past several years.

“The data shows there are a lot of people out there that don’t like Starbucks anymore, so they need a new reason to believe, to reconsider going back to Starbucks for a coffee experience, because right now, they’re not feeling the love,” Stephen Hahn, executive vice president of corporate reputation management company Reptrak, told Forbes. 

“Starbucks has become a more corporate and money-driven culture and that is trumping anything else in terms of community values and sense of purpose within the realm of the company,” he continued. “That’s potentially very dangerous ground.”

“To complete a turnaround, Starbucks can’t just rely on slick marketing, good-quality products or the coffee experience,” Hahn added. “It needs to find a new angle that allows people to better understand the totality of Starbucks and what it stands for.”

As Starbucks struggles to regain consumer trust, Dutch Bros’ strong brand identity prompts explosive growth.

Getty Images

Dutch Bros’ strong brand identity

Meanwhile, Dutch Bros has been clear on what it stands for from the start, and hasn’t betrayed those values in pursuit of a dollar.

The smaller coffee chain started company-wide givebacks like Dutch Luv, Drink One for Dane, and Buck for Kids as early as 2006. To date, it has raised millions of dollars for ALS research, food banks, children’s organizations, and other charitable organizations.

The company has also brought that community-oriented approach to its customer service.

Dutch Bros CEO Christine Barone has called the company’s customer service its “brand differentiator,” and customers seem to agree.

In 2025, Chatmeter analyzed more than 300,000 customer reviews of major coffee chains and found that consumers identified Dutch Bros as having the best service in the industry.  With a score of 2.7, “Dutch Bros far outperforms Starbucks and Dunkin’,” the report said.

More retail:

Walmart expands access to weight management support & GLP-1sDid Coachella make money in 2026?Gatorade is making a major ingredient change

The emphasis on customer service and community coupled with the chain’s rapid expansion, has resulted in overall visit increases that dramatically outpace those at Starbucks.

For the last five consecutive quarters, Dutch Bros has seen foot traffic growth ranging from 12.3% to 17.9%, according to data from Placer.ai.

“[Dutch Bros] combination of robust overall traffic growth and steady per-location performance points to a healthy expansion strategy, where footprint growth is driving incremental demand rather than diluting it,” the report said. 

Barone is confident the coffee chain will be able to maintain this level of growth going forward, as long as the company doesn’t lose sight of its core values.

“It’s about providing awesome service every single day,” she told attendees at April’s Restaurant Leadership Conference, according to Nation’s Restaurant News.

“If you know what’s important, and you know your teams are happy, and you’re growing the right way, and every day you’re serving the customer and seeking to serve your customers a little bit better than the day before — that’s what builds a long and enduring brand.”

This commitment to its strengths as a brand might also be exactly what it takes for Dutch Bros to win over the disillusioned Starbucks customer and begin to cannibalize the giant’s hold on the industry. 

Related: Fast food giant is coming for Starbucks with fan-approved launch

#Starbucks #rival #challenges #coffee #giant039s #dominance