Dutch Bros, the fast-growing, drive-through coffee chain known for its colorful drinks and outgoing baristas, has a strategy to attract pedestrian traffic: walk-up-only windows.

The company opened its first walk-up-only location in November near the University of Southern California in Los Angeles, in what it describes as a test of the concept. The location-which features three windows, for ordering, pickup and mobile orders-had the highest sales volume of any Dutch Bros coffee shop until May, when it was surpassed by the opening of the first Chicago-area location, according to Chief Financial Officer Josh Guenser. Dutch Bros is now considering opening similar walk-up shops in other densely populated areas, Guenser said.

"We will be looking for other walk-up tests, to see if that's a new way to go after different real estate," Guenser said.

The move shows how Dutch Bros is adapting to new markets as it expands nationwide. Tempe, Ariz.-based Dutch Bros, founded in southern Oregon in 1992, has been on a tear in recent years, expanding from its Pacific Northwest roots eastward. The company, which went public five years ago, operated 1,225 shops as of June 30, an increase of 17% from last year. It aims to boost its shop count to 2,029 by 2029.

In the growing market for caffeinated, customizable drinks, Dutch Bros stands apart for its focus on customer service, according to industry analysts. Company greeters take customer orders at their car windows when lines begin to form. Baristas-which the company calls "broistas"- are encouraged to create a fun experience by making small talk and playing music.

Dutch Bros is also known for brightly colored energy drinks, offering a long list of flavors and add-ons, and for serving mostly cold drinks. The company's drive-through locations have walk-up windows for mobile-order pickups and no cafe space for lingering inside.

While inflation has put pressure on household budgets, coffee chains have been mostly immune from the pressures elsewhere in the restaurant industry, analysts said. "It's still an affordable luxury," said Sarang Vora, an analyst with Telsey Advisory Group.

Dutch Bros, which owns most of its shops, is using cash from its operations to fund its growth. Revenue during the latest quarter ended June 30 was $550.9 million, up 32% from a year earlier. Profit rose 46%, to $37.4 million.

Acquisitions are part of the company's expansion strategy. Dutch Bros paid about $20 million to acquire 20 locations from Clutch Coffee, a regional coffee chain in the Carolinas. "This is another way for us to get a hold of real estate, and in some cases accelerate our opening into a market, or opening of shops in an existing market," said Guenser, the company's CFO.

Competition from rivals is increasing, including from 7 Brew, a privately held drive-through coffee chain, and larger players such as Starbucks, which is undergoing a turnaround and refreshing its drink menu, analysts said. That could put a damper on Dutch Bros's ambitious growth targets, said Ari Felhandler, an analyst with Morningstar who anticipates the company will fall short of its 2029 shop count goal by about 300 locations.

Over the long term, Dutch Bros has a goal of operating as many as 7,000 drive-through locations nationwide. It is too early to say whether the addition of more walk-up-only windows could increase the company's addressable market, analysts said.