Arcos Dorados, the largest restaurant chain in Latin America and the Caribbean and the world’s largest independent McDonald’s franchisee, has released its unaudited financial results for the three and six months ending June 30, 2024.
Second Quarter 2024 Highlights
- Consolidated revenues reached $1.1 billion, a 6.8% increase in USD compared to the same period last year.
- Systemwide comparable sales surged by 40.8% year-over-year, or 10.2% adjusted for blended inflation, excluding Argentina.
- Consolidated Adjusted EBITDA was $118.8 million, marking a 7.9% increase in USD year-over-year.
- The Net Debt to Adjusted EBITDA leverage ratio remained stable at 1.2x from the end of Q1 2024.
- The Company opened 15 new Experience of the Future (EOTF) restaurants, including 10 in Brazil.
- Digital channel sales growth was driven by strong Delivery sales and expanding Loyalty Program membership, with 24% of sales identified through these channels.
Message from Marcelo Rabach, Chief Executive Officer
Marcelo Rabach highlighted that the strong performance in Q2 2024 reflects the Company’s resilience in challenging economic conditions. Despite tough macroeconomic and consumer environments, the Company has seen consistent growth in sales and profitability. The omnichannel strategy, including Digital, Delivery, and Drive-thru, continues to set Arcos Dorados apart, reinforcing its position as a leading QSR brand in the region.
The Company’s revenue growth of 6.8% in Q2 was the highest for this quarter in USD terms. Guest traffic contributed to comparable sales growth, supported by a strong value proposition and operational excellence. Systemwide comparable sales growth exceeded blended inflation by 2.4x, excluding Argentina, and market share expanded by nearly three percentage points across the region.
The Three D’s Strategy has set new industry standards, with off-premise sales (Delivery and Drive-thru) rising 11% in USD year-over-year and making up 45% of systemwide sales. Digital channel sales grew 24%, contributing to 57% of systemwide sales. As of June 2024, the Customer Relationship Management platform had about 90 million unique users, and the Mobile App had surpassed 130 million downloads.
Adjusted EBITDA Analysis
Adjusted EBITDA for Q2 2024 was $118.8 million, up 7.9% from the previous year. This includes a $16.0 million positive impact from reduced labor contingencies in Brazil. Excluding this, Adjusted EBITDA was still the second highest for a Q2 in the Company’s history. The Adjusted EBITDA margin was 10.7%, relatively stable compared to 10.6% in the prior year. This was due to lower Food and Paper costs and operational efficiencies, partially offset by increased occupancy and other operating expenses.
Non-Operating Results
Non-operating results included a net interest expense of $14.1 million and a $14.9 million loss from non-cash foreign exchange and derivative instruments. Income tax expense for the quarter was $18.1 million. Net income attributable to the Company was $26.6 million, or $0.13 per share, with total weighted average shares amounting to 210,660,444.
Arcos Dorados remains focused on leveraging its competitive advantages to drive sustainable growth and continue making a positive impact through its Recipe for the Future ESG platform. The Company is confident in its potential for future expansion in the underpenetrated QSR market in the region.
