Arcos Dorados Holdings Inc. (Arcos Dorados (ARCO)) shares jumped on Wednesday after the company reported first-quarter results that topped Wall Street expectations. The world's largest independent franchisee of McDonald's Corporation (McDonald's (MCD)) is proving that convenience and value still win, especially in Latin America and the Caribbean.
Revenue for the quarter came in at $1.22 billion, slightly ahead of the $1.21 billion analysts were looking for. Earnings were $0.17 per share, well above the consensus estimate of $0.11 per share. That's a beat that investors can sink their teeth into.
Systemwide comparable sales increased 16% year over year, helping drive total revenue growth of 12.9%. The company said results were supported by higher guest traffic in its South Latin America (SLAD) and North Latin America (NOLAD) divisions, along with stronger average check growth in Brazil and SLAD.
Adjusted EBITDA jumped 29.3% year over year to $118 million, marking the strongest first-quarter EBITDA result in company history. EBITDA margin expanded 120 basis points to 9.7%. That's not just a good quarter — it's a record one.
Arcos Dorados opened 19 restaurants during the quarter, including 13 free-standing locations. The company is clearly betting that more locations mean more customers, and so far, it's paying off.
Digital channel revenue climbed 21% year over year and now represents 64% of total systemwide sales. Growth was driven by stronger sales through self-order kiosks, delivery, and loyalty programs. The company said ongoing restaurant modernization efforts supported kiosk sales growth. Delivery sales benefited from new partnerships in Brazil and broader adoption across NOLAD and SLAD markets as consumers increasingly turned to delivery for convenience and value.
By the end of the quarter, 75% of Arcos Dorados' restaurants had been modernized. The company ended the period with $255.6 million in cash and cash equivalents, giving it plenty of firepower to keep investing.
Chief Executive Officer Luis Raganato said the company continues to focus on strategies aimed at monetizing its market share leadership in the region through value-focused marketing campaigns, core menu offerings, licensing partnerships, and digital engagement initiatives. In other words, they're doing what McDonald's does best — but in their own backyard.
Shares of Arcos Dorados were up 9.05% at $8.80 at the time of publication on Wednesday, according to market data. Investors seem to agree: the Golden Arches are looking pretty golden right now.
