Arcos Dorados Holdings Inc.

What they do

The company operates McDonald's restaurants across Latin America and the Caribbean under a master franchise agreement with McDonald's Corporation. It generates revenue through company-operated and franchised restaurants, offering McDonald's menu items and related products. As of December 31, 2025, the company operates in multiple segments, including Brazil, the Caribbean, and other Latin American countries.

Revenue drivers

• Brazil — The largest market by revenue, contributing a significant portion of total sales through company-operated and franchised restaurants.
• Caribbean — Includes operations in Puerto Rico, the U.S. Virgin Islands, and other Caribbean islands, generating revenue through both company-operated and franchised locations.
• Other Latin American countries — Includes Mexico, Argentina, Colombia, and others, with revenue split between company-operated and franchised restaurants.

Recent performance

For fiscal year 2025, Arcos Dorados reported total revenue of $4.68 billion, an increase from $4.47 billion in 2024. Net income was $212.1 million, or $1.01 per diluted share, compared to $148.8 million, or $0.71 per diluted share, in the prior year. Operating cash flow was $296.3 million, and the company paid dividends of $0.24 per share. At year-end, total assets were $3.89 billion, total liabilities were $3.11 billion, and shareholder equity was $770.5 million.

Strategy

The company's strategy focuses on expanding its restaurant network, enhancing digital sales channels, and improving operational efficiency. It continues to invest in technology and customer experience initiatives, such as self-order kiosks and delivery services. Management also prioritizes maintaining a strong balance sheet and returning capital to shareholders through dividends. The company aims to leverage its master franchise agreement to drive growth across its key markets.

Risks

• Reliance on McDonald's Corporation — The company's operations depend on its master franchise agreement with McDonald's, and any changes or termination could materially affect its business.
• Currency fluctuations — As a multinational operating in various Latin American countries, the company is exposed to foreign exchange risk, particularly in Argentina, Brazil, and Mexico.
• Economic and political instability — Adverse economic or political conditions in the countries where it operates could reduce consumer spending and impact restaurant sales.
• Supply chain disruptions — The company relies on a complex supply chain for food and other products, and disruptions could increase costs or limit its ability to serve customers.

Outlook

Management states that it expects to continue growing its business through new restaurant openings and digital initiatives. It also anticipates maintaining its dividend policy, subject to financial performance and market conditions. However, the company notes that economic volatility and currency fluctuations may affect future results.