Dutch Bros Coffee Acquires 51 Salad and Go Locations

Dutch Bros Coffee is acquiring 51 former Salad and Go locations across Arizona, Nevada, Texas, and Oklahoma, following the salad chain's abrupt bankruptcy and closure this week. The acquisition was announced by Dutch Bros on Wednesday, coinciding with the company's second-quarter earnings report. Shares of Dutch Bros (NYSE: BROS) experienced a decline of over 13% in after-hours trading following the announcement. Salad and Go, founded in Arizona but now headquartered in Texas, had been facing financial difficulties and multiple waves of closures over the past year. Court documents filed in federal bankruptcy court on Tuesday identified an LLC connected to Dutch Bros as the purchaser of these 51 sites, including existing leases for former Salad and Go properties in Texas and Oklahoma. The salad chain cited an aggressive expansion in 2021 as a contributing factor to its over-leveraged financial state. Salad and Go's Chapter 11 filings indicated that the company had limited options when seeking a buyer for its restaurants. The drive-through-focused format of Salad and Go's locations, which lack indoor seating, made them a strategic fit for companies like Dutch Bros, which operate a similar model. Lawyers for Salad and Go noted in their filing that "strategic coffee or smoothie operators were prime candidates for a transaction" because these businesses are "unlikely to need a kitchen, hood, grill, or fry area." The company also sought a buyer that was already established and scaled, a criterion that Dutch Bros met with its existing network of approximately 1,225 locations. The bankruptcy filing also revealed that the company suffered significant financial strain due to an ongoing cyclosporiasis outbreak, which served as the final blow to the struggling business. The closure of all remaining Salad and Go locations was confirmed for the current week, with the final day of operations being the day of the announcement. The acquisition by Dutch Bros represents a strategic move to expand its footprint by absorbing locations that align with its operational model. The specific list of acquired locations includes 26 in Arizona, 14 in Nevada, 7 in Texas, and 4 in Oklahoma, totaling the 51 sites. This move allows Dutch Bros to quickly integrate new sites into its growing portfolio, leveraging the existing infrastructure of the defunct salad chain. The financial terms of the acquisition were not immediately disclosed in the court documents or the company's earnings announcement. The bankruptcy proceedings for Salad and Go are ongoing, with the court overseeing the liquidation of assets and the distribution of funds to creditors.