Starbucks (NASDAQ: SBUX) has created massive wealth for long-term investors. In the last two decades, Starbucks stock has returned 1,610% to investors in dividend-adjusted gains, easily outpacing the S&P 500 index, which surged by 508% in this period. 

Due to the ongoing sell-off in equity markets, Starbucks is down 37% from all-time highs, allowing investors to buy the dip. But there is another stock operating in the beverage and restaurant space that can challenge Starbucks and even outpace the latter in the upcoming decade. 

The growth stock is Dutch Bros (NYSE: BROS), an operator and franchisor of drive-thru shops that serves hand-crafted beverages. Founded in 1992, Dutch Bros is one of the fastest growing brands in the food service industry in the U.S. Let's see if Dutch Bros can steal the coffee crown from Starbucks?

Will Dutch Bros stock outpace Starbucks?

Despite its massive size Starbucks continues to grow at a desirable rate. In the second quarter of fiscal 2023, ended in April, its revenue rose 14.5% year-over-year to $7.64 billion. Comparable store sales were up 7%, while average orders increased by 4%.

Starbucks' loyalty program continues to drive spending as its active members surged by 17% to 26.7 million active members. Its store count also increased by 5% to 34,630 outlets globally. 

Its stellar metrics allow Starbucks to pay investors annual dividends of $1.96 per share, indicating a forward yield of 2.5% and a payout ratio of 68%. 

Analysts expect Starbucks to increase dividends by 8% annually in the next five years, which should also lead to consistent dividend increases in the future. 

Dutch Bros has increased its store count from 254 at the end of 2015 to 538 in 2021. At the end of Q1 of 2022, Dutch Bros store count stood at 572.

The company listed its shares on the NYSE last September, and the stock is down 53% from all-time highs. It has been impacted by rising dairy and gasoline prices which might drag profit margins lower in 2022. 

Dutch Bros has been expanding its presence on the west coast of the United States, suggesting there is plenty of potential to gain traction in other regions of the country. It plans to open 4,000 stores in the U.S., which is 9x greater than its current store count. 

Unlike Starbucks, Dutch Bros has focused on opening drive-thru locations which should reduce overhead expenses considerably. 

In Q1 of 2022, Dutch Bros reported revenue of $152 million, an increase of 54% year-over-year. However, its cost of sales was up 82% in the March quarter resulting in a loss of $16.3 million, compared to a loss of $4.8 million in the prior-year period. 

What next for Dutch Bros stock and investors?

Dutch Bros forecasts revenue between $700 million and $715 million in 2022, valuing the company at 2.8x forward sales, which is quite reasonable for a growth stock. Analysts also expect its adjusted earnings per share to increase from $0.30 in 2021 to $0.42 in 2023. 

The consumer demand for beverages is pretty strong. Additionally, Dutch Bros is well poised to grow sales through the aggressive expansion of its outlets. Alternatively, in the near term, Dutch Bros will be impacted by inflation pressurizing its margins in company-operated shops. 

Dutch Bros is growing at a much faster pace compared to Starbucks and is valued at a similar price to sales multiple. So, Dutch Bros stock might move lower if market sentiment remains bearish, but it should also deliver outsized gains when stocks rebound in the next cycle.