Arcos Dorados' Q2 2025 Earnings Call: Contradictions on Brazil's Consumer Environment and Beef Price Impact

Consumer environment and market share in Brazil, impact of beef prices on margins, consumer environment and market performance in Brazil, impact of beef cost pressures, and beef cost pressures and margin management are the key contradictions discussed in Arcos Dorados' latest 2025Q2 earnings call.



Revenue Performance and Growth Strategy:
- Arcos Dorados reported Total revenue of $1.1 billion for Q2 2025, with constant currency revenue remaining solid.
- The growth was driven by a 12.1% increase in system-wide comparable sales, which was above blended inflation for the period, and effective marketing and digital initiatives.

Digital and Loyalty Program Impact:
- The digital ecosystem accounted for 60% of sales in Q2, and the digital loyalty program contributed to 23% of total sales in available markets.
- The loyalty program's success was attributed to increased visit frequency, higher sales, and it being available in 6 out of 6 countries, with plans to expand to all restaurants by year-end.

Regional Market Performance:
- NOLAD's total revenue rose 6.9% in constant currency, with comparable sales up 12.4% in Mexico, significantly higher than main competitors.
- SLAD's revenue rose 37.8% in constant currency, with market share expanding strongly in Argentina and Chile, supported by digital sales penetration surpassing 60%.

Profitability and Margin Expansion:
- Adjusted EBITDA in the second quarter reached $110.1 million, with a margin expansion of approximately 40 basis points after excluding last year's labor contingency reduction in Brazil.
- The expansion was driven by improvements in restaurant expenses, cost efficiencies, and successful marketing campaigns that supported market share gains.