Arcos Dorados(ARCO 9.64%) reported second quarter 2025 results on August 13, 2025. Total revenue reached $1.1 billion, with systemwide comparable sales up 12.1% and adjusted EBITDA at $110.1 million, expanding adjusted EBITDA margin by about 40 basis points year-over-year when excluding prior-year labor contingency effects. Notable developments include steady digital and loyalty penetration, resilient market share in core markets, and the acquisition of exclusive franchise rights for Saint Martin.

Arcos Dorados advances digital and loyalty integration

Digital channels contributed approximately 60% of region-wide sales, while the company’s loyalty program drove nearly 23% of total sales across six fully enabled markets and accounted for 32% of Brazil’s identified sales in June 2025. The loyalty program’s coverage expanded to two-thirds of the chain as of the quarter. It is expected to be available in 90% of all restaurants by year-end 2025.

"The digital loyalty program is now available in countries, with a seventh market currently in its prelaunch phase. The program already covers two-thirds of the restaurant portfolio, and we expect it to be available in 90% of all restaurants by the end of this year. Loyalty program members visit us at a much higher rate than non-loyalty guests, and they represented almost 23% of total sales in the six available markets during the second quarter."
-- Luis Raganato, Chief Executive Officer

By increasing the share of digitally engaged and loyalty-driven guests, Arcos Dorados is fortifying customer retention and boosting visit frequency, underpinning higher sales predictability and strengthening competitive differentiation in Latin American quick service restaurants (QSR).

Margin resilience despite Brazil cost pressures

Although Brazil, the company’s largest market, saw beef prices rise approximately 30% year-over-year over the past twelve months and macroeconomic headwinds pressured traffic, the segment maintained a market share lead (2.2 times the nearest competitor) and expanded average check through targeted value campaigns. Company-wide adjusted EBITDA margin grew by about 40 basis points year-over-year, excluding one-off effects, buoyed by disciplined cost controls and productivity gains in other expense lines.

"While food and paper remained pressured due to higher beef prices in Brazil, improvements in all other restaurant expense lines supported a solid EBITDA performance. Similar to the first quarter, Brazil's margin contraction was mainly due to higher food and paper costs from rising beef prices in the market. As you already know, the royalty fee this year is higher in Brazil due to the normalization of the royalty rate across the three divisions. Excluding last year's labor contingency reduction, the net result of the remaining expense lines had a positive margin impact in Brazil."
-- Mariano Tannenbaum, Chief Financial Officer

Management’s ability to counteract severe input inflation and adverse consumer trends in Brazil demonstrates executional agility.

Store expansion and capital discipline reaffirm growth strategy

The company opened 20 new Experience of the Future (EOTF) restaurants and reaffirmed its annual guidance of 90 to 100 openings for 2025, deploying $55.3 million in capital expenditures. Net debt to adjusted EBITDA was 1.4 times as of the quarter, while recent investment grade ratings from both Fitch and S&P were achieved in early 2025.

"We actually maintain our 2025 openings guidance of between 90 to 100 EOTF restaurants, with a CapEx guidance of between $300 million to $350 million. The CapEx this year is usually a bit more back-ended. So we expect for the full year to keep on and maintain our guidance. In terms of improvement, are always looking at improvements and ways to reduce the cost of each opening, and we are doing that all the time. We are looking at efficiencies, we are looking at reducing costs, at localizing the core packages, to reduce the impact of currency movements. So you know, my team and the development team is continuing focusing on these improvements and cost reductions to make our investments more profitable."
-- Mariano Tannenbaum, Chief Financial Officer

By holding firm on disciplined capital allocation and opening targets while enhancing ROI through localized sourcing and cost optimizations, Arcos Dorados positions itself for scalable, higher-return expansion even in fluctuating currency environments.

Looking Ahead

Management reiterated guidance for full-year 2025 EBITDA margins close to 2024 levels, excluding one-offs, driven by stable input cost expectations and continued cost efficiency efforts. The company confirmed plans for 90 to 100 restaurant openings and capital expenditures of $300 million to $350 million for 2025. The loyalty program is expected to reach 90% of all restaurants by the end of 2025.