Black Rock Coffee Bar Q1 Earnings Call Highlights

Key Points

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- Black Rock Coffee Bar posted strong Q1 growth, with revenue up 23.7% to $55.5 million and adjusted EBITDA up 23.5% to $7.4 million. Same-store sales rose 5.2% despite weather and Phoenix densification headwinds.

- Store expansion remains the core growth strategy: the company opened nine new stores in the quarter, ending with 190 locations, and reaffirmed plans to open 36 stores in 2026 as it works toward a long-term goal of 1,000 units by 2035.

- Marketing, loyalty and menu innovation are driving engagement and margins, including digital sales of about 17% of total sales, loyalty participation of 66%, and successful tests of personalized offers and new products like protein beverages. Store-level profit margin improved to 29.6%, and the company reaffirmed full-year guidance.

Black Rock Coffee Bar (NASDAQ:BRCB) reported higher first-quarter revenue and adjusted EBITDA as the drive-thru coffee chain continued opening new locations and leaned on loyalty, menu innovation and marketing initiatives to drive guest engagement.

Chief Executive Officer Mark Davis said the company delivered first-quarter revenue and adjusted EBITDA growth of 24% compared with the prior-year period, which he said was ahead of the company’s long-term growth algorithm. Chief Financial Officer Rodd Booth said total revenue rose 23.7% year over year to $55.5 million.

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Same-store sales increased 5.2% in the quarter, or 14.4% on a two-year basis, despite what management described as a strong comparison against 9.2% growth in the prior-year period. Same-store transactions declined 0.6%, while pricing contributed 3% and check grew 2.8%, Booth said.

Booth said the company delivered its mid-single-digit same-store sales target despite a 60-basis-point impact from challenging weather in January and a 160-basis-point headwind from strategic densification in Phoenix, where the company opened new stores near existing high-volume locations.

Store growth remains central to long-term plan

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Black Rock opened nine new stores during the quarter, bringing its total store count to 190 at quarter-end. Davis said the openings were across Colorado, Texas, Arizona and Oregon, with four of the new stores located in Colorado, which he described as a leading growth market for the company.

The company reaffirmed its plan to open 36 new stores in 2026 and said it expects to open at least 10 locations in the second quarter. Booth said Black Rock’s development spending is primarily directed toward new unit development supporting its 2026 and early 2027 pipeline.

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Davis said the company remains confident in its long-term plan to reach 1,000 units by 2035. He said Black Rock believes it can double its footprint within existing markets while also evaluating new market entries in 2027 and 2028.

During the question-and-answer session, Davis said the company is seeking to expand in a “purposeful and predictable” way and is mindful of avoiding unnecessary cannibalization. He said the company is looking at new states with coffee culture, similar customer demographics, competitive dynamics, income levels and education profiles.

Phoenix densification creates comp headwind

Management spent part of the call addressing sales transfer in Phoenix, the company’s most mature and highest-performing market. Davis said the company intentionally added stores near high-volume units to better serve demand and improve the guest experience.

Booth said the Phoenix impact represented about 160 basis points of same-store sales pressure, including roughly 130 basis points tied to transactions. He said the company has only a few historical examples of sales transfer and that affected stores have generally built back over 12 to 24 months.

“It’s really a way to continue to grow within Phoenix,” Booth said, adding that the company has another 10 to 12 stores planned in Phoenix this year, with only about three to four expected to be within five miles of existing stores depending on timing.

Davis said the new stores are producing strong volumes and that market-level sales are growing. He framed the same-store sales headwind as a byproduct of strong underlying demand rather than weakness in the market.

Loyalty, digital and marketing efforts gain traction

Davis said digital sales reached approximately 17% of total sales in the first quarter, supported by increased guest frequency across the app, online ordering and third-party delivery. Loyalty rewards participation reached 66%, and Davis said loyalty members continue to visit more often and spend more per visit than non-members.

The company piloted segmented personalized offers in Phoenix, Colorado and Dallas during the quarter. Davis said moving from blanket offers to incentives tailored by guest type produced “meaningfully higher engagement and spend.” In one case study, he said personalized segmentation more than doubled engagement, drove a nearly 100% increase in incremental spend and generated more than three times the incremental visits versus a blanket approach.

Black Rock also continued a programmatic marketing campaign launched in the fourth quarter of 2025. Davis said the effort helped maintain same-store sales and guest engagement during a seasonally softer period and produced the strongest lift in visits from non-customers and the company’s highest-frequency visitors.

In response to an analyst question, Davis said Black Rock increased marketing spend by 30% versus the prior year, bringing marketing to about 2% of sales. He said paid media, influencers, merchandise drops and other efforts are intended to build brand awareness, particularly among new guests.

Menu innovation supports check growth

Davis said the company’s first seasonal window of the year delivered strong year-over-year growth, with product mix of core offerings increasing more than 60% versus last year. He cited Pecan Pie Blondie, Prickly Pear Fuel and Strawberry Blondie among the top sellers for the quarter.

The company said Egg Bites continued to exceed expectations, driving attachment and check growth. Davis said product mix for fuel and food increased sequentially in the first quarter, with coffee representing about 55% of mix, energy rising to 25% and food reaching about 13%.

Black Rock launched a protein test in Phoenix in early March, including protein-boosted milk, protein boosts for shakes and smoothies, and protein cold foam. Davis said early results were encouraging, with incremental attachment and ticket lift, particularly for cold foam. The test was expanded to additional markets, and a full system rollout was completed in April.

Davis also described the company’s seasonal Dirty Soda partnership with Olipop as a “test and learn opportunity.” He said guest ratings were encouraging and that the product showed incremental strength in the afternoon daypart. The company plans an Olipop recipe refresh in the second quarter along with barista-driven variations.

Margins improve; guidance reaffirmed

Store-level profit rose 29.2% year over year to $16.4 million, while store-level profit margin improved 126 basis points to 29.6%, Booth said. Consolidated adjusted EBITDA increased 23.5% to $7.4 million.

Beverage, food and packaging costs were $15 million, or 27.1% of revenue, improving 122 basis points from the prior year. Store-level labor costs were $11.5 million, or 20.7% of revenue, improving 32 basis points year over year. Booth attributed margin performance to retail execution, inventory management, disciplined procurement and pricing management.

As of March 31, Black Rock had $20 million in cash and cash equivalents and total debt of $27.4 million, including $18.7 million outstanding under its credit facility and $8.7 million of financing obligations related to certain reverse build-to-suit arrangements. The company reported net debt of $7.4 million and full access to its $25 million unfunded revolver.

Black Rock reaffirmed its full-year 2026 outlook, including:

- 36 new store openings;

- Total revenue of $255 million to $257 million;

- Same-store sales growth in the mid-single digits;

- Consolidated adjusted EBITDA of $33.5 million to $34.5 million;

- Capital expenditures of $40 million to $41 million inclusive of anticipated tenant improvement allowances, or $58 million to $61 million excluding those allowances.

Booth said the company remains committed to its longer-term targets of 20% annual unit growth, revenue growth of 20% or more, mid-single-digit same-store sales growth and adjusted EBITDA growth that outpaces revenue.

About Black Rock Coffee Bar (NASDAQ:BRCB)

Our Mission: To Fuel People Forward - One Connection, One Moment, One Cup at a Time We are a high-growth operator of guest-centric, drive-thru coffee bars offering premium caffeinated beverages and an elevated in-store experience crafted by our engaging baristas. Black Rock Coffee Bar was founded in 2008 in Beaverton, Oregon, by our co-founders Daniel Brand and Jeff Hernandez. What started as a single 160 square foot coffee bar in 2008 is now one of the fastest growing beverage companies in the United States by revenue and the largest fully company-owned coffee retailer in the country, with 158 locations spanning seven states as of June 30, 2025, from the Pacific Northwest to Texas.

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