Arcos Dorados (ARCO) Q1 2025 earnings summary

Executive summary

• Total revenue reached $1.1 billion in Q1 2025, flat in US dollars but up 14.1% in constant currency, with systemwide comparable sales growth of 11.1% year-over-year.

• Adjusted EBITDA was $91.3 million (8.5% margin), with net income at $13.9 million (1.3% margin) and EPS of $0.07 per share.

• Digital sales contributed nearly 60% of systemwide sales, with loyalty program membership surpassing 20 million and expansion to six markets.

• 12 new Experience of the Future restaurants opened, with plans to accelerate new openings to 90–100 units in 2025.

• Market share increased despite industry guest volume declines and tough calendar comparisons.

Financial highlights

• Total revenue was $1.1 billion, flat year-over-year in US dollars but up 14.1% in constant currency; systemwide comparable sales up 11.1%.

• Adjusted EBITDA margin declined to 8.5% from 10.1% year-over-year, mainly due to weaker currencies and margin pressures in Brazil.

• Net income dropped to $13.9 million (1.3% margin), down from $28.5 million (2.6% margin) year-over-year.

• Digital channels accounted for nearly 60% of systemwide sales; off-premise channels generated 43% of total sales.

• Food & Paper costs increased in Brazil due to higher beef prices but improved in NOLAD and SLAD.

Outlook and guidance

• Q1 2025 expected to be the year's low point, with sequential improvement anticipated for the remainder of 2025.

• Operating conditions are improving in Q2, with stronger currencies in Brazil and Mexico and a stable Argentine peso.

• Plans to accelerate restaurant openings to achieve 90–100 new units in 2025.

• Loyalty Program expected to be available in all main markets by year-end 2025.

• Sales and margin performance anticipated to improve as the year progresses, supported by robust marketing and digital initiatives.