Company Announcements

• Systemwide Comparable Sales¹ grew 12.1% versus the prior year, contributing to total company revenues of $1.1 billion in the second quarter of 2025.
• Digital channel sales (from Mobile App, Delivery and Self-order Kiosks) rose 7.9% year-over-year in US dollars and contributed more than 60% of total systemwide sales in the quarter.
• The Loyalty Program had 21.5 million registered members at the end of the second quarter of 2025, across six available markets.
• Consolidated Adjusted EBITDA¹ was $110.1 million and Net Income was $22.6 million, or $0.11 per share, in the second quarter of 2025.
• Net Debt to Adjusted EBITDA leverage ratio was a comfortable 1.4x as of June 30, 2025, which was among the factors cited in S&P’s ‘BBB-’ investment grade rating of Arcos Dorados debt.
• The Company opened 20 Experience of the Future (EOTF) restaurants in the quarter.

MONTEVIDEO, Uruguay--(BUSINESS WIRE)--Aug. 13, 2025-- Arcos Dorados Holdings Inc. (NYSE: ARCO) (“Arcos Dorados” or the “Company”), Latin America and the Caribbean’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, today reported unaudited results for the three and six months ended June 30, 2025.

Message from Luis Raganato, Chief Executive Officer

The results we are reporting today demonstrate the strength of the Arcos Dorados business model. Each of our markets faced a unique set of operating conditions and each delivered strong results within the context of their individual environments. By staying true to our Purpose, we strengthened our bond with guests and expanded our brand preference throughout Latin America and the Caribbean, Making Every Day an Opportunity to Feed People and Build Dreams.

Brazil remained resilient despite challenging consumer dynamics, NOLAD showed that the first quarter calendar effects were only temporary and SLAD continued the strong positive trajectory that began at the end of last year. Combined, the three divisions drove local currency revenue almost 15% higher versus the prior year quarter. Systemwide comparable sales growth was particularly strong in NOLAD and SLAD, rising 1.8x and 1.4x blended inflation, respectively.

Market share saw robust gains across the region according to our research, thanks to marketing and digital initiatives focused on value and Brand strength, together with an ever-growing Loyalty Program that is successfully increasing guest visit frequency. The Big Fest digital campaign, Minecraft Happy Meal (for both kids and adults) and the limited-time Formula One promotion all helped strengthen the brand attributes that keep guests coming back to our restaurants.

The diversified nature of our business model also drove strong profitability in the quarter, despite important cost pressures in some markets. Consolidated Adjusted EBITDA declined as reported, but was up 7.1% in US dollars with a 40 basis point margin expansion, when we adjust last year’s result for a reduction of labor contingencies due to a favorable judgement in Brazil.

Finally, our growth plan remains intact, and we opened 20 new EOTF restaurants in the period. This year’s growth trajectory also includes the addition of our 21^st market: Saint Martin. We believe the choice of Arcos Dorados as the new operator in Saint Martin is a testament to our operational excellence and commitment to growth in the region. We remain convinced there is compelling growth potential for our business and our shareholders for many years to come.

AD Holdings Inc. – Consolidated Key Financial Results

Arcos Dorados’ total revenues reached $1.1 billion, up 2.8% in US dollars versus the prior year quarter. The Company’s comparable systemwide sales rose 12.1% in the quarter, driven by strong sales in NOLAD and SLAD, which grew 1.8x and 1.4x blended inflation, respectively. The consumer environment remained challenging in Brazil during the second quarter of 2025.

The Company’s Digital strategy continued to support sales growth. Digital channel sales rose 7.9% in the period, generating more than 60% of the second quarter’s systemwide sales.

By the end of the second quarter of 2025, the Company’s Loyalty Program was active in 67% of all restaurants in its footprint. The Program remains on target to be available in all main markets by year-end 2025. Offered in Argentina, Brazil, Colombia, Costa Rica, Ecuador and Uruguay, the Loyalty Program reached 21.5 million registered members at the end of the second quarter and was responsible for 22.6% of total sales in these markets.

The Company’s digital channels supported campaigns designed to strengthen the bond with guests and adapt to changing consumer preferences. This included the Big Fest, which celebrated core favorites at a compelling value, resulting in increased Brand Preference, improved Brand Attributes and strong growth in both Mobile App downloads and Loyalty Program membership.

In Brazil, the successful “Méqui do Dia” campaign, offered one menu favorite per day at a compelling value, while the Minecraft Happy Meal enjoyed crossover appeal to both kids and adults throughout the region, which was optimized by offering a unique adult Happy Meal with chicken McNuggets.

Arcos Dorados’ regional Formula 1 sponsorship also served to strengthen ties with families and guests of all ages. Capitalizing on the popularity of Formula 1, The Movie, the Company introduced a limited-edition sandwich and collectible race cars, exclusive to McDonald’s restaurants. The campaign was extremely successful, selling out in just a matter of days or weeks, in each market.

Finally, given the increasingly competitive nature of the dessert category, the Company remained committed to keeping its menu at an affordable price and brought innovation to its dessert platform by leveraging a favorite McDonald’s character with the Grimace Shake and by adding more local flavors to its McFlurry offerings.

Adjusted EBITDA declined in US dollars mainly due to margin pressure in Brazil from higher beef costs this year and a reduction of labor contingencies in the prior year. Excluding the reduction of labor contingencies, consolidated Adjusted EBITDA rose 7.1% and Adjusted EBITDA margin expanded by 40 basis points versus the prior year period. Efficiencies in Payroll (excluding the labor contingency reduction in Brazil from the 2Q24) and Occupancy and other operating expenses, mainly in Brazil and SLAD, were offset by the abovementioned Food & Paper cost pressures.

Net income attributable to the Company totaled $22.6 million in the second quarter of 2025, which represented a net income margin of 2.0%. The decrease in comparison with the prior year quarter was mainly explained by a lower reported Adjusted EBITDA margin and reduced non-cash foreign exchange results.

Arcos Dorados recorded earnings of $0.11 per share in the second quarter of 2025 compared to $0.13 per share in the prior year period. Total weighted average shares amounted to 210,663,057 in the second quarter compared to 210,660,444 in the prior year’s quarter.

Notable items in the Adjusted EBITDA reconciliation

Included in Adjusted EBITDA: Brazil’s result in the second quarter of 2024 included a $16.0 million positive impact from the reduction of labor contingencies due to a favorable judgement.

Additionally, Adjusted EBITDA in the second quarter of 2025 included a $6.9 million gain in Mexico and the second quarter of 2024 included a $4.2 million gain in Chile, both related to restaurant transactions with sub-franchisees in those markets.

Excluded from Adjusted EBITDA: there were no notable items excluded from Adjusted EBITDA in either the second quarter of 2025 or the second quarter of 2024.

New Unit Development: Total and by Format¹

Arcos Dorados added 20 new EOTF restaurants to the Company’s footprint, including 18 free-standing units, in the second quarter of 2025. As of the end of June 2025, there were 1,732 EOTF restaurants in Arcos Dorados’ footprint, making up 70% of its restaurant portfolio.

Consolidated Debt and Financial Ratios

The Company’s net debt to Adjusted EBITDA leverage ratio ended the second quarter at a comfortable 1.4x, up from 1.1x at year-end 2024.

For the six-month period ended June 30, 2025, the net cash provided by operating activities totaled $57.7 million with total property and equipment expenditures of $104.2 million. This compares with net cash provided by operating activities in the same period of the prior year of $63.7 million and total property and equipment expenditures of $148.9 million.

Recent Developments

Appointment of Luis Raganato as Chief Executive Officer (CEO)
On June 6, 2025, Arcos Dorados’ Board of Directors announced the appointment of Luis Raganato as CEO, effective July 1, 2025. He succeeded Marcelo Rabach who served as CEO from July 2019 to June 2025. Prior to his promotion, Mr. Raganato was Arcos Dorados’ Chief Operating Officer.

Appointment of Carlos Gonzalez as Chief Operating Officer (COO)
On June 6, 2025, Arcos Dorados’ Board of Directors also announced the appointment of Mr. Carlos Gonzalez, as COO, to succeed Mr. Raganato, effective July 1, 2025. Prior to his appointment, Mr. Gonzalez was Divisional President for the South Latin American Division.

Appointment of Francisco Staton as Chief Strategy Officer (CSO)
In July 2025, Mr. Francisco Staton assumed a new management role as Chief Strategy Officer for Arcos Dorados, reporting directly to Mr. Raganato. Mr. Staton is a member of the Company’s Board of Directors and previously held several senior leadership positions within the Company.

Acquisition of Saint Martin
In July 2025, the Company acquired 3 restaurants and the exclusive rights to operate or sub-franchise McDonald’s restaurants in Saint Martin, making it the twenty-first territory in the Company’s footprint. This new territory will be managed by the North Latin American Division.

S&P Global Rating Action
In July 2025, S&P Global Ratings assigned a long-term issuer credit rating of ‘BBB-’ with a Stable Outlook to the Company. This marks the Company’s second investment grade rating, following Fitch Ratings’ upgrade to ‘BBB-’ in January 2025, thereby achieving full investment grade status.

2024 Social Impact and Sustainable Development Report
In July 2025, Arcos Dorados published its Social Impact and Sustainable Development Report for 2024. The report includes information audited by EY and provides an update on the progress related to initiatives and implementation of the six pillars of the Company’s “Recipe for the Future” ESG Platform. The full report can be downloaded at www.recipeforthefuture.com.

Second Quarter 2025 Earnings Webcast

A webcast to discuss the information contained in this press release will be held today, August 13, 2025, at 10:00 a.m. ET. In order to access the webcast, members of the investment community should follow this link: Arcos Dorados Second Quarter 2025 Earnings Webcast.

A replay of the webcast will be available later today in the investor section of the Company’s website: https://ir.arcosdorados.com/.

Definitions

In analyzing business trends, management considers a variety of performance and financial measures which are considered to be non-GAAP including: Adjusted EBITDA, Constant Currency basis, Systemwide sales, and Systemwide comparable sales growth.

Adjusted EBITDA: In addition to financial measures prepared in accordance with the general accepted accounting principles (GAAP), this press release and the accompanying tables use a non-GAAP financial measure titled ‘Adjusted EBITDA’. Management uses Adjusted EBITDA to facilitate operating performance comparisons from period to period.

Adjusted EBITDA is defined as the Company’s operating income plus depreciation and amortization plus/minus the following losses/gains: gains from sale or insurance recovery of property and equipment, write-offs of long-lived assets, and impairment of long-lived assets.

Management believes Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures (affecting net interest expense and other financing results), taxation (affecting income tax expense) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance. Figure 5 of this earnings release includes a reconciliation for Adjusted EBITDA. For more information, please see Adjusted EBITDA reconciliation in Note 9 – Segment and geographic information – of our financial statements (6-K Form) filed today with the S.E.C.

Constant Currency basis: refers to amounts calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis. To better discern underlying business trends, this release uses non-GAAP financial measures that segregate year-over-year growth into two categories: (i) currency translation and (ii) constant currency growth. (i) Currency translation reflects the impact on growth of the appreciation or depreciation of the local currencies in which the Company conducts its business against the US dollar (the currency in which the Company’s financial statements are prepared). (ii) Constant currency growth reflects the underlying growth of the business excluding the effect from currency translation. The Company also calculates variations as a percentage in constant currency, which are also considered to be non-GAAP measures, to provide a more meaningful analysis of its business by identifying the underlying business trends, without distortion from the effect of foreign currency fluctuations.

Systemwide sales: Systemwide sales represent measures for both Company-operated and sub-franchised restaurants. While sales by sub-franchisees are not recorded as revenues by the Company, management believes the information is important in understanding its financial performance because these sales are the basis on which it calculates and records sub-franchised restaurant revenues and are indicative of the financial health of its sub-franchisee base.

Systemwide comparable sales growth: this non-GAAP measure, refers to the change, on a constant currency basis, in Company-operated and sub-franchised restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer (year-over-year basis) including those temporarily closed. Management believes it is a key performance indicator used within the retail industry and is indicative of the success of the Company’s initiatives as well as local economic, competitive and consumer trends. Sales by sub-franchisees are not recorded as revenues by the Company.

About Arcos Dorados

Arcos Dorados is the world’s largest independent McDonald’s franchisee, operating the largest quick service restaurant chain in Latin America and the Caribbean. It has the exclusive right to own, operate and grant franchises of McDonald’s restaurants in 21 Latin American and Caribbean countries and territories with more than 2,400 restaurants, operated by the Company or by its sub-franchisees, that together employ more than 100 thousand people (as of 06/30/2025). The Company is also committed to the development of the communities in which it operates, to providing young people their first formal job opportunities and to utilize its Recipe for the Future to achieve a positive environmental impact. Arcos Dorados is listed for trading on the New York Stock Exchange (NYSE: ARCO). To learn more about the Company, please visit the Investors section of our website: https://ir.arcosdorados.com/.

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements. The forward-looking statements contained herein include statements about the Company’s business prospects, its ability to attract customers, its expectation for revenue generation and its outlook and guidance for 2025. These statements are subject to the general risks inherent in Arcos Dorados' business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, Arcos Dorados' business and operations involve numerous risks and uncertainties, many of which are beyond the control of Arcos Dorados, which could result in Arcos Dorados' expectations not being realized or otherwise materially affect the financial condition, results of operations and cash flows of Arcos Dorados. Additional information relating to the uncertainties affecting Arcos Dorados' business is contained in its filings with the Securities and Exchange Commission. The forward-looking statements are made only as of the date hereof, and Arcos Dorados does not undertake any obligation to (and expressly disclaims any obligation to) update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.

Second Quarter 2025 Consolidated Results

Second Quarter 2025 Results by Division and Average Exchange Rates per Quarter

Summarized Consolidated Balance Sheet

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Investor Relations Contact
Dan Schleiniger
VP of Investor Relations
Arcos Dorados
daniel.schleiniger@mcd.com.uy

Media Contact
David Grinberg
VP of Corporate Communications
Arcos Dorados
david.grinberg@mcd.com.uy

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Source: Arcos Dorados Holdings Inc.