Arcos Dorados: Reports Record Q4 and FY-2023 Financial Results

Montevideo / UY. (arc) Arcos Dorados Holdings Inc., Latin America’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, reported unaudited results for the three months, and audited results for the twelve months, ended December 31, 2023.

Fourth Quarter 2023 Highlights

  • Consolidated revenues totaled USD 1.2 billion, rising 15.4 percent in US dollars versus the prior year period.
  • Systemwide comparable sales increased 32.4 percent, with higher guest traffic and average check driving at or above-inflation growth in all divisions.
  • Consolidated Adjusted Ebitda reached USD 132.6 million, the Company’s highest quarterly result, rising 16.3 percent in US dollars.
  • Consolidated Adjusted Ebitda margin was 11.3 percent, rising 10 basis points versus the fourth quarter of 2022.
  • Net income was USD 55.8 million in the quarter, or USD 0.26 per share.
  • The Company opened 36 restaurants in the quarter, including 31 free-standings locations and 18 new restaurants in Brazil.

Full Year 2023 Highlights

  • Consolidated revenues totaled USD 4.3 billion, rising 19.7 percent in US dollars versus 2022.
  • Systemwide comparable sales increased 34.6 percent, with above-inflation growth throughout the year and across all divisions, rising 1.3x the period’s blended inflation rate.
  • Consolidated Adjusted Ebitda reached USD 472.3 million in 2023, up 22.2 percent in US dollars versus the prior year, establishing a new high for a full year.
  • Consolidated Adjusted Ebitda margin rose to 10.9 percent for the year, improving 20 basis points versus the prior year, or 60 basis points, excluding the increase in the effective royalty rate.
  • Net income of USD 181.3 million, or USD 0.86 per share, was the highest earnings per share in the Company’s history and compared with USD 0.67 per share for the full year 2022.
  • Restaurant openings reached 81 new units in 2023, including 72 free-standing locations and 50 openings in Brazil.

Chief Executive’s Commentary

CEO Marcelo Rabach: «We are very pleased to report that we had a solid finish to a very strong year in 2023. Our Three D’s Strategy of Digital, Delivery and Drive-thru continues to evolve while leveraging the industry’s largest free-standing restaurant portfolio.

«The penetration of Digital channels is expanding throughout our footprint thanks to (i) a mobile app that works as an e-commerce platform to offer incentives and convenience to increase guest loyalty and visit frequency, (ii) a Delivery sales channel that continues to grow strongly in a segment where we are clearly the industry leaders, and (iii) self-order kiosks capturing an increasing share of on-premise orders, with about 60 percent of Arcos Dorados’ restaurants already modernized to the Experience of the Future (EOTF) format.

«We have adapted to changes in consumer preferences over the last several years to provide the most compelling value, experience and convenience proposition in the region’s quick service restaurant (QSR) industry. Results in 2023 reflect how this led to increased visit frequency and market share gains across our markets. And we feel like we are just getting started with the Three D’s strategy driving sustainable sales growth, supported by restaurant volume and average check. Our objective is to deliver above inflation growth in systemwide comparable sales to then drive operating leverage and profitability growth over time.

«Our balance sheet is very strong, and we are accelerating the pace of restaurant openings, which will allow us to capture significant growth opportunities for years to come, all while operating responsibly and supporting the communities we serve. I am certain we have the best Brand in the industry, along with the right strategy and team to generate even more shareholder value in 2024. Thank you for your continued support of Arcos Dorados.»