Arcos Dorados: Reports Third Quarter 2022 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 financial results for the three and nine months ended September 30, 2022.

Third Quarter 2022 Highlights – Excluding Venezuela

  • Systemwide comparable sales grew 34.2 percent versus the prior year quarter, twice the period’s blended inflation rate, driven by higher guest traffic and market share gains in all divisions.
  • Consolidated revenue totaled USD 916.3 million, rising 26.7 percent in US Dollars and 38.9 percent in constant currency.
  • Digital channels contributed 42 percent of systemwide sales, totaling nearly USD 500 million in the quarter.
  • Consolidated Adjusted Ebitda of USD 103.0 million rose 15.0 percent in US Dollars versus the prior year result, and 27.0 percent in constant currency.
  • Consolidated Adjusted Ebitda margin reached 11.2 percent in the quarter, with strong profitability in all geographic divisions.
  • Net income per share was USD 0.23, almost double the net income per share of USD 0.12 in the prior year quarter.
  • Net Debt to Adjusted Ebitda leverage ratio improved to 1.0x at the end of the third quarter of 2022.
  • Gross restaurant openings reached 15 new units in the quarter, including 14 freestanding units, of which 9 freestanding restaurants were opened in Brazil.

Message from Marcelo Rabach, Chief Executive Officer

«The McDonald’s Brand is as strong as it has ever been in Latin America and the Caribbean. I firmly believe the key to the successful repositioning of the Brand over the last few years has been the execution of our strategy. This starts at the restaurant level. By consistently delivering the best guest experience in our restaurants, every single day, we are now driving sustainable, long-term revenue growth. This generates opportunities to capture operational efficiencies and dilute fixed costs to enhance profitability. Prudent capital structure management and data-driven investment decisions complete the picture of profitable growth we are delivering, all the way down to the bottom line.

«Unlike the special sauce in the Big Mac, there is no secret to this growth recipe. However, achieving it requires an incredible amount of work, discipline and dedication from everyone involved. So, I would like to congratulate and thank all our employees, suppliers and franchisees for their contributions to our shared success in Latin America and the Caribbean.

«Although execution at the restaurant level is what makes it all a reality, there are many other factors driving these historic results. Guest excitement and strong Brand metrics, effective cost control without sacrificing quality, food safety or product availability and historically high returns on investment with a robust pipeline to support future unit growth are all contributing to these results. We have also been recognized for offering a «Great Place to Work», as evidenced by our 8th place ranking in Brazil (among 150 large companies) and 1st place ranking in Ecuador as a «Great Place to Work» for women, to name a few. And our Recipe for the Future ESG platform is making a positive impact on the communities we serve while building brand trust with our employees, guests, local governments and other stakeholders throughout the region.

«When 2022 began, we estimated unit growth potential of about one thousand additional McDonald’s locations over the next ten years in our footprint. With higher sales per restaurant and above average returns on investment from recent openings, I believe our estimate was conservative. The pipeline for the next few years is now in view and we see an opportunity to accelerate unit growth even further.

«We operate the region’s largest freestanding restaurant portfolio, which is a structural competitive advantage that maximizes the potential of the Three D’s strategy. The omnichannel approach to building our Digital platform is enhancing guest engagement with new and improved capabilities offering optionality and ease of use. Consistent execution has allowed McDelivery to consolidate its position as the favorite Delivery service in the QSR industry. Finally, Drive-thru remains very sticky even as the front counter and other on-premise channels normalize. Guests are coming back because we have done the heavy lifting necessary to ensure we stay true to our mission to ‘make delicious, feel-good moments easy for everyone’.»