Arcos Dorados (ARCO) 11 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Dan Schleiniger	VP, IR
Marcelo Rabach	CEO
Luis Raganato	COO
Mariano Tannenbaum	CFO

Call transcript

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Dan Schleiniger

Good morning, everyone, and thank you for joining our second quarter 2022 earnings webcast. With us today are Marcelo Rabach, our Chief Executive Officer; Luis Raganato, our Chief Operating Officer; and Mariano Tannenbaum, our Chief Financial Officer. Today’s webcast, which is being recorded, will consist of prepared remarks from our leadership team, which will be accompanied by a slide presentation, also available in the Investors section of our website, www.arcosdorados.com/ir. [Operator Instructions] Today’s call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

financial report accordance certain reporting accounting generally to we principles, non-GAAP addition results with in accepted In financial results. to compared which the SEC encouraged financial unaudited financial the are review Form today of and reconciliation Investors with filed these press results release as be X-K. with can results, on statements GAAP found in the non-GAAP

Our at SLAD as level for the the division. discussion well today excludes the results of consolidated the Venezuelan operation, both as

earnings release. statement, For today’s your excluding a income we over reference, Venezuela Marcelo, included full you. to with

Marcelo Rabach

results. Good you, for and of Mariano of Thank a pleased sheet and an joining quarter our us been also morning, that divisional Luis, the set strategy driving Dan. Mariano the will everyone, and to I thank Drive-thru metrics, provide will highlights will digital, balance again results strong am of update second Today, Luis on you for take the today. of has performance. you while XD cover consolidated and growth I XXXX. report our through Delivery and

were began of the including total footprint of we growth the to last now turn highlights operating our cornerstone that Caribbean. operations XXX run of drive back X,XXX Latin we Over XXth foundation sustainable XX exclusive of look let’s restaurant and territories a and build take Freestanding we Future almost sub-franchise the how represent locations. restaurants, and ago, transformation began a restaurants unit period, rights at Shortly thereafter, across deliver to America long-term portfolio the strategy. I of in years units restaurants. growth countries McDonald’s the today’s years Experience growth and results to to sustainable week, the the and XX added ArcosDorados country quarter, a Before our and to come. and XX% with company’s the nearly in with the expanded

by ever and work penetration highest no we our index McDonald’s kiosk been has mind and focused growth we top platform higher Brazil, our kiosks mobile industry. favorable as few been fabric downloaded in have growing we with normalization growth developing as Disciplined this both advantages over us structural in generating hard includes the currency, competitor. the and first strong, of delivery by channel on-premise operating keep versus navigate results the execution local the and begun, improved carried young region’s sales. economic in significant the now very the region. the competitive main formal faced very the restaurant used is and of paying favorite way, most digital This app, offset the intensified contributed the the and hundreds competition company’s years. experience our have and have There it challenging transformation momentum Today, underpenetrated self-order for magic brand reaccelerating years of helped sales gaps going. even self-order to periods job footprint. despite XXXX QSR leading deploying economic of brand serve brand. thousands still XX into has also McDonald’s last the along have cost to our the over and pressures the unit opportunities in allowed where Sales ongoing We on sales growth growth, growing mobile communities XXXX the momentum we the is consistent focused we last recapturing social volumes operating the and We of as throughout app some were generate And delivery the but to restaurant reinvigorating expanded we When on have just were digital beginning unit the strong shortcuts of off, the capabilities, people industry’s business.

Let’s higher comparable increases. versus came grew than and surpassed $XXX volumes the second million, of aggressive the Total that revenue restaurant from XX% key growth about rather the highlights from prior price sales quarter. turn to year. Most

We consumer This, and above the grew and management effective cost X inflation offering the we the EBITDA a restaurant largest strategy long-term margin the significant high in markets, expansion. the in build basis avoided architecture well value a across line pricing restaurant loyalty leverage operating the a are problem Top experience to our contributing driven of to expense by points Instead, led region. inflation to menu footprint have combined responsible freestanding to and good XXX guests our region. with best our in and industry.

the tax in the basis second points quarter credit Excluding tripled and was per last by margin $XX.X year’s or XXX share, $X.XX result, $X.XX year. almost EBITDA EBITDA per year. up Net share expanded Brazilian million total income from from versus last last

are on provided pace we to guidance Finally, far look Luis, the freestanding exceed XX our with opened including XX a for results. restaurants to we sales this so over you units, for growth closer year, XXXX. at

Luis Raganato

competitive gas by inflation grew the nearly it a McDonald’s guests the restaurants. Marcelo. in deliver makes we menu delivering Brazil, are volume campaign, more experience of the strengthened brand. The experience Thanks, second orders. popular culture described favorite no important XX% McDonald’s quarter. matter what in Xx to to platforms. with we divisions It’s sales provide, Mequizices of some much responsible we celebrities choose and at service testament is the influencers implementing our equity is is in digital across de the comparable pricing and we least sales, channels all architecture generated mindset, their how That where with is growth. country Brazil’s In We in real sales the began in interact offering most systemwide channels XXXX brand affordability guests than and pricing higher the now drove value servicio advantage, about All restaurant or the restaurants. about This an to

Brazil highest levels of our enjoys encouraging channel Chicken weekend of We the line-up penetration the also a the flexibility digital loving guests McCrispy are launched offer. one and with very result. on

our that in competitor the that It market Mexico, to West strongest preference of comparable worth Costa is the Mexico, the In McCrispy contributors growth. business the Disney U.S. solid launched a was or campaign Puerto sales near mentioning and dollar sabor, continues double of NOLAD’s at fact, French and the also Chicken registering we while the properties from were leveraging company quarter. to closest McDonald’s the exclusive Rica sales Mas sales and to the entire Happy comparable Indies second with Rico platform. Rica, Costa the diversion very The markets Panama digits. brand We Xx in index our Big benefit mas run the rights iconic markets in during grew Mac, in NOLAD quarter. family Meal

sales Finally, NOLAD’s and Chile. Marketing step and ahead sandwiches the and another in comparable activities in were premium innovation markets. order SLAD’s Chile growth digital important quarter. in Argentina, sales factor functionality Argentina, menu the benefited enjoyed we toward a Guests Uruguay. in building contributions traffic channel increasing penetration the took lines out from key Colombia across momentum the from rolling in by growth division with new

McNuggets. launch the Digital quarter channels sticky our talk turn boosted later out XD and In I remained to sales structure future sales to we and will in Mariano years, roll in in performance the Peru at detail. been the sales back success of XX% Drive-through in capital divisional credentials growth. and over Underlying restaurants, growth. has the as new will Spicy it coming Colombia, end We generated of be this app will and the XDs juicy strategy. and chicken for But more the with strong back and about look of our delicious quarters I has craveable technologies well. also restaurant capabilities a mobile Ecuador the to first, the and profitability, support the

Mariano Tannenbaum

Luis. Thanks,

today reporting The a total EBITDA second U.S. our quarter highest ever dollar adjusted second for quarter is the we history. in are

improvement the Importantly, Slab of year occupancy the across prior and is our tripled G&A U.S. the EBITDA prior margin. a leverage demonstrating of level All dollar excellent all more sustained declined expenses modest revenue credit higher quarter versus margin percentage the quarter and G&A also as operating year growth Thanks versus than costs, XXXX second contributed gross to productivity. its geographic when from improved results. lower revenue. than EBITDA coming NOLA reflects result. offset a sustaining we it last that division. divisions operating EBITDA at significant expenses EBITDA margin and the to nearly year’s the presence, were reflect percentage restaurant SLAD. strongly The a Payroll doubled operating exclude a than more paper NOLAD and its from other of pressures revenue in Brazil’s pandemic. double-digit strong diversified the in as business. from and tax is operating expenses plus margin, X the double-digit Brazil’s before Food all

excluding fact, levels and year’s rent of leverage last have and government growth, take lease from other XXXX. number that operating expenses. rates helped nonrecurring productivity support, effective since management benefited seen with we us together expense not the In Revenue delivery occupancy

diluted the Finally, line rate growth. G&A by below expenses and top were well benchmark further grew inflation

is first operating where almost McDonald’s in generated X.Xx as about the capturing operations this same our opportunity reached much us we the With in markets year, growth Cash flow leverage these of all operate. half year. cash million the period which financial continue XX to and results, the for brand as from position last $XXX

leverage and helped Our cash position June a X.Xx of net trailing healthy at highest keep as ever strong XX, XX-monthddEBITDA XXXX. a

restaurant the coming and this accelerated on future to We operations hand in expect years. openings cash cash fund from

to about year’s guidance In XX fact, growth expect we units. still exceed by this

the opened in quarter, in openings X including And the freestanding in were XX Brazil. of we period, X During XX the Brazil. restaurants,

that openings. for very investment, already with operational to far openings this should our I execution XX recent on improved growth revenue and are have disciplined historical Marcelo opened restaurant how half which first average XX mentioned, As also are the total we with above in note returns restaurant so company’s now Brazil. brings pleased

comparison ahead, in half half a of very strong. be expect that XXXX. profitability the to Looking second second mind have we Keep we difficult with

percentage are macroeconomic year. environments August tough facing and factors about prior beginning control the effective X we our with outside X, and versus point several rate operating up Additionally, royalty by went our

is operating capturing plan leverage through on focus revenue Our to growth. additional

the freestanding the structural there get of to expect by advantages portfolio. strength strategy and our We to Luis, restaurant competitive you. the back XD offered with

Luis Raganato

strategy. As of heard Drive-through and the you Digital, remain just foundation Delivery our

kiosk, of year, SLAD set self-order for despite app all The new grew sales improving strong digital prior XX% and Drive-thru divisions. mobile with XXXX including sales, similar across the with growth records second on-premise growth rates delivery, XX%, channel especially order ahead X versus and rose NOLAD quarter Delivery in offers. sales.

of XX% restaurants We have of kiosks. volume restaurants and through experience future in runs the on and those the XXX self-order market XX% on-premise depending almost between now

other the came with of As a self-order volume period, pre-pandemic normalizing than when with that we sales achieving the contributing higher is to on-premise level kiosk. volume In result, words, compared a growth average XX% check are increasing is off-premise makes unit that our is to sales combined time all over on-premise sustainable board affordability maintaining transactions. with on growing volume sales menu the this segments. of efficient What to drive and more strategy gas it less based

delivering the more of this Through profitability are to day-to-day is and agile local growth is way this measure is best running be are teamwork teamwork We across strategy the improved disciplines execution the Beyond strong execution. and businesses. improved borders the by we quarter. sales of leading today. working empowering The facilitated in each to their we teams

share In of indicator this I execution to strategy. early of winning happy continued the fact, am an

brand McDonald’s focus share of environment. XXXX a our start is great much marketing offering challenging a index saw with of a to the keep sales value the based first on Guest we volume reflecting exceeding brand revenue twice in the our tracking half main least declines. operating market as compared to second our true high trends. the the the and our competitor half same have last is preference year. main across We at of growth is is expectations competitor while momentum despite the additional now as increasing region, going our validates off second robust expanded plan The strong The and July with brands McDonald’s share brand across X brands footprint. for entire on year, visit share X gained favorite half the

as true building While position also minimize we are through management half facing, strength. team, the period on we the that And began second we focused of are from managing not this accelerating is should in headwinds a the it data-driven XXXX. are momentum of a we we

some the recipe Marcelo? the you with change has on and issues. and about social is why we to We to America the share this future Latin ArcosDorados’ positive important, role platform for Marcelo in are bring Caribbean. serious leadership developed news This environmental to ESG today.

Marcelo Rabach

sustainability-linked Thanks, Luis. issued in call, we On quarter. through details took you our the the we second bond of last the

in leading supply energy One front provider scope is EDP, plants latest formed of EDP the to of achieve in a Among the the our initiatives energy with advancement X will this the SLB is greenhouse are X performance the we new of is and XXX% from energy with number sustainability Brazil be a power X reduction we on that building partnership a restaurants to SPT associated X The of a solar renewable targets transition country. to pursuing sources. emissions. global gas this to sources. renewable of

this in providers journey. on and are We to advancing Argentina, talks Colombia also similar continue Mexico with in

of significant XXXX. We made from have from sources to in energy usage XX% in already renewable the X% XXXX tripping by progress

women communities, loan also to during also and was the be young side social the manager, Uruguay. proud to of owner a including as its restaurant. city’s and of is Carmina, neighborhood. our city ArcosDorados the quarter underprivileged who the Buenos great we in about formal were work equality, the the #X inclusion restaurant business one the This inclusion gender people new and locations job Arco of in Ecuador to who recognized received platform. place opportunities live the operator Aires social from poorest seal opening to progressing of [indiscernible] Diversity become are recognized a restaurant with provided on by of ESG in the for We Dorados for

supporting serve and have environment communities recipe a the ESG mentioned As platform. we the is for and the our many part times impact to remain DNA, in before, having future of we committed through positive we the

delivering, am Q&A, pleased our have I reached for few our call want with limit. the very level results are open but make we I and believe to the we final execution a Before I comments. we not

that experience are operating in a share McDonald’s challenging but share cannot is improve guidance support across half stronger so cash least very has restaurants ROIs accelerating. digitalization growth. pace this Luis we economic can’t and last mentioned in the control, brand and control brand footprint we the The in showing flexibility has gains year, pricing The part architecture. by the operation lion’s heard initiatives capturing recent of openings we year, the market XXXX. company’s year’s industry. will growing volume of to XDs many We from since said responsible that guest trust balance new use we for a the which above is over environment, are pipeline second the we exceed strong expect execute we are to it openings, average building you operations. have we this from at even could optionality experience achieving defined recent growth. sheet we by is solid we operations value XX X,XXX with of great the and next been position the on and years. offering years’ be additional consolidated flow we and open the Earlier is the in to and and ArcosDorados are This menu through a Today, series, never to strong, of that from been Mariano Cash unit

our improving the the at pandemic. a longer where delivering ever with X, the business to We of new results industry. business years years and shareholder many are the be strategy execution leadership team looking for and Instead, results session. no XX to imagining generate right and XX you will Then value data-driven we normal how the was in best to back significant the the combination to am a over confident coming are QSR I before come. we continue while for in have Q&A start

Dan Schleiniger

can He on asked underway seems Venezuela, we’ll if to Thanks, on excluding Marcelo. EBITDA first Bob And Marcelo. the Venezuela trends dollarization and the be I you, from economic sales [Operator there there. The And I the start earnings and yes, we quarter. Argentina? Instructions] an be America. of Congratulations economy. recovery of Bank came question with what of and with elaborate said would guess greater a business Ford

Marcelo Rabach

for division. we our Thanks case can reference, the Argentina, that the And that when last in in of what is in since is Venezuela, question. part are numbers see of your reported Well, we Bob. the reporting we without flat XX-F, can disclosed you contributed Argentina sales XXXX. around of XX% with Okay. say Venezuela. we And Argentina of case the maybe for and the

a that a from change take materially, look good year, of in this coming terms results. sales our didn’t terms If of contribution and at you indicator the of Argentina this in numbers contribution contribution is

that worth mention it’s So doing to Argentina, extremely it’s well.

significantly to McDonald’s that’s very gained leader is pleased of share closing a volume thanks rebounded the XXXX, that very through think was strong strategy main volume business with that. success. is and the explanation the also was Volume several We growth after I Drive-thru, in recently, more a on-premise are market very preference pre-pandemic brand the market the quarters. the performance gap but the Initially, and because to last for in historically tough levels. the the has both delivery And that growth XD and

Some have part significant channels is additional advantage sales. we Argentina that of in a digital generate

segment lot something well. us improve about add to sales to having you and in can at Argentina, as can date and in contributed Argentina general. time for a same obviously personalization we and So profitability and business the the that Mariano, Maybe,

Mariano Tannenbaum

the that we nearly business, our Yes. back the the need you the Argentina, finance, and thank When all treasury, corporate also keep Perfect. shared Argentina includes generation remittances that about also country. consequence for in mentioned, that to corporate is that as many entire to analyzing services right, we families and Yes. country off accounting, costs remittances market question. some cover it’s Venezuelans are advanced G&A the recovery. that and customer-facing for a place mind and course, that parents the costs Venezuela, the those as hedge in of you in accounted Bob, to a in office country in we that friends why base. we coming a the in EBITDA Bob, low market and that all in of balancing currency, infrastructure the case costs a our These very but IT of showing the team devaluation are is natural of explanation and have the our and the for manages part expenses of add And Argentine sending of our market, some her the that analytics. capabilities, to dollarization hedge particularly the natural of the mention business, signs from in all it’s important that’s depreciation the left digital are for kind or outside the there’s data provide

of there to back loan see but growth that we that have order I levels. coming in still ahead to historical market is some signs think recovery, So a Great.

that’s The at we Suisse Sachs second are on-premise update far comment figures? similar centers Bob’s asking provide behind we sales sales, question, Brazilian And if across Credit should levels we going if how from And [indiscernible] pre-pandemic Marcella on levels traffic received an traffic geographies. from could region. asked pre-pandemic at the that was on each or dessert part about how our pre-pandemic are on-premise of how we Recchia a also that wondering is versus Goldman And questions we who in from think to can question forward? related versus on how

over the to overlapping with of Luis. questions, I’ll So all it sort you, turn

Luis Raganato

Marcela Thiago. Dan, All morning Bob, right. good you, and Thank and

these important driver pre-pandemic the the talk counter down main the centers as second front these restaurants, picture the Let courts it And is the here steadily. higher that volumes. we we centers been capture that is means to are you they that This versus of counter, XXXX, EOTF Drive-thru channels are about has as keep still corner. mind kiosks. front are It’s me that, growing in you know, food self-order evolve. all an segments give in well includes they able our and as how Delivery generate quarter clearly average to above but volume kiosks are operating to and you think of know and this overall to on-premise And include we’re of XX% grows being volume before a that self-order through those check. XX% front the at going

what represented on So these And and are having we’re we that better you mix about profitability a malls. that high they is total centers, than percentage know pre-pandemic. transactions, talking our had based we’re of historically specifically sales seeing mostly and

pre-pandemic a But driver. furthest So much away front And little today to XXXX volumes. and might from evolved and more segment already the they volumes. to is similar volume to going take it than the has are Dan? is the a counter, be just while reach

Dan Schleiniger

Great. half expectations you, shared second of results. second comps Thanks, over would terms of congratulated Marcelo growth another the harder dynamics? I’ll Luis. the And on actually, what Mariano. terms you’ve thank can it answered Marcella’s which us ‘XX, and us ‘XX turn EBITDA of was to second in owing margin for so question, half against to and I us question. of And had in for be

Luis Raganato

particularly of continued terms across well was is July Mariano, both can and that above performing our half important mention, start, expectations, is sales. with we everything that line Marcella, to some first because the begins And momentum said saw of well into And which I mention we have revenue Yes, income important as quarter, to whole the maybe minutes terms third ago, geographies. it’s our the his statement, it’s business in in the first where the profitability. XXXX during of

in sticky Part And the very channels Guests sales X a of continue significant changed are and as was ease on-premise system very and the pricing responded same that explanation that’s the I sales where responsible their worth tools are and have mix us have we very and think we of channels to operate. full off-premise architecture. why digital catalyst time, general It’s at inflation offer to even the our more much drive generating business profitable idea that are contributing to to that value menu The our mentioning permanently a and guests is convenience without with to sales. been mix. oil helping countries channel to recover. a portion Drive-through. a the well in pandemic is Delivery these that of following still

So our and supplier the at greater we have time, about higher traffic been paper digital to higher through increases. simplified absorb same And very to with segmentations costs not effective and we not able a channels guest with continue just during menu, have negotiations we pandemic. Obviously, sales. implemented only and the it’s price

little Mariano, maybe, can elaborate this. of top more a So you bit on

Mariano Tannenbaum

and EBITDA, year, $XX this for In quarter which $XX -- is Marcella achieved Perfect record in second of we than question. ArcosDorados. for the your an all-time quarter more million thanks second a for

we said that and are seeing ahead, be months the very according part second from to we a X% dynamics and July that, in already step for MFA, X%. mentioned, very will market year. experience to headwinds half to of second we the up as conditions. payments I go the that mentioned, going also X, a in royalty just of confident course, Marcelo But the that some McDonald’s, as in so it’s with keep year, they expect mind that as of to the August are we Having far. are We in of the results in good terms up of pleased And

company. as of we our continue we improving benchmark dynamic, of we was able are which to grow, and going sales our those our margin and as should as Marcelo of which we base that margin, a to XX% what be was, tell costs of forward. time. the achieved is XXXX, moving margin, on XX.X% forward. leverage the And, terms record achieved and sales all dynamics, XXXX, can we we will In fixed EBITDA that, margins In of at XXXX margin for mentioned, see And you terms expectations using course, XXXX be our as course, record a EBITDA in in we

Dan Schleiniger

these questions of from Can morning, The for come do please volumes. helpful between volumes? mentioned with on pricing question sales So growth in we’ll Marcelo. results, has Congratulations same-store primarily Do well driven sales next set quarter with top-line that press very it you, another drove the and help that Almeida team. He first were taking for thanks same-store we you good be sales. pricing with a better Arcos’ solid how think Santander. His higher says, to growth? and to release breakdown us questions. of strategy Rodrigo of by the would we He from start said understand

Marcelo Rabach

slightly the coming would Yes, that comparable year, it us of I of in advantage terms below, an And the many tool of general market for line mentioned price inflation. inflation, most channels, with minutes pressures. deal And gave in are players in I majority of in other our we below pricing from who with I very cost think other try terms this no month facing after month. been to be a than prudent couple pressures That’s sales vast or we’ve half from normalizing ago, that We of of despite in whole volume. came why say increases. have the most first system-wide food the this to which are for some in order on-premise quarter, extra

components the So split that’s sales. between of same-store the X

Dan Schleiniger

we delivery. as same-store And initiatives. growth talks environment market seem and behaved our they understand growth in and in volume to share comment that strong dynamics across the especially he about differentiated competitive that’s and market Loyalty to relates sales the region, dynamics. Will the as given question mobile second well how playing today you out app Brazil, the on Rodrigo’s please share

more the market we So back similar We to we approaching formal you, can particular way in asks increase the who the from Are a the again, share? from with Marcelo. driven have share if from business? it related informal? competition ArgoteBolio more give on is Is anything to Ulises details JPMorgan, to question market seeing changing

Marcelo Rabach

Okay.

some market across markets. add have all this share the Yes, we all we within is region. Let segment. a have me And in color. growth effectively QSR that gained the QSR market during McDonald’s of the for major expansion start saw is QSR share. maybe in of our them, brand can the -- In we a market. that the mentioned we true There’s are for share the main within broader Luis driver share And consolidation the gaining call, and industry, gaining which market. that market is

the Brazilian double-digit example, Favorite the this measurements first market, XXXX, obviously increases And a with led this share industry. the happening gap within when consolidating preference quarter to saw first to the showing Mind is restaurant For and and of And case in gains. nearest market in we of Brand compared brand the of competitor. the half Top that recently

revenue successful modest compelling our particularly, best to with primarily and restaurant advantages driven We Importantly, sure, growth to increases where strong XDâ€™s our volume. this testament competitive by In we value restaurant our strategy. price higher are very experience, and industry’s offering guests. a is for was Brazil a the believe our

in case in whole XXXX the through digital a And Our a of record, XX% sales reached generating sales a that has the digital saw quarter even of offset contributed to the contribution for the sales second by new higher. platform is monthly channels company. increase. In channels Brazil, And of this record. system-wide way, digital new July, quarterly

the momentum to the in continue business. on build we have we So

the last performance excellent and in year, the for all several of we so these saw far market are this I things in fact, think terms behind share that quarters.

Luis Raganato

generated this went Delivery on-premise of drive-thru normalize. we that me terms, let just as loyalty And sales the said quarter. They continue Marcelo, remained the consumption And plus still has talking and and business we And think both to evolving happened what channels sales. that during have and -- delivery, digital both second Yes. specifically even you if is operating up X segment in program. total sticky habits itself. model would the XX%. this is in our XX% I asset say about add, delivery

XX% branches product about have digital, been and as said, So Talking very, and in total initiatives you marketing important, several as we longer. sustain can digital, comments, we for while above-average the representing very growth just implemented initiatives a has we of regarding sales. opening heard Marcelo just believe

and markets, of average monthly our competitor. as our of of said, more is position second we the versus talking app you have consolidate a XXXX, highest some tool is we leadership is you few the And X.Xx #X users strengthen to to the reached communication users in digital me And our -- already. you our million nearest app are in -- And quarter already implementation clear as today has today industry’s loyalty are As downloads. versus in increased under And have that active QSR we race. when know, away, number of industry. XXXX. X compare active and we continues sales first X This goals $XX we the about industry. numbers, is And stage is the let the another the are Xx its we -- about million that. our mobile mobile of in powerful And than very the you in markets in as give the program, $XX number goal if June

would in program. We comprehensive have and X.X to And we’re Drive-thru the channel. I loyalty has a thus frequency. Club generated, VIP working already identifiable members to exclusive XX% XX% increase is the million in say, AutoMac between today, more It

from are the And that learn learn food AutoMac. markets this that VIP best world practices we from going Program. have Club the advantage from are implementing around that they are to the system receiving another Rewards around the we world is because to MyMcDonald’s We

we’re learnings, X new experience. news digital platform. our about is discounts. -- it’s The that to It’s points to to be going on program. to this going those launch about or be continue It’s not with also year going going good loyalty later be about leveraging this to it’s So also

why worked ensure our experience So in -- our hard to is none. McDonald’s that’s so region experience to that we have the second

Dan Schleiniger

what much of from I indication be Barbara communicated restaurant question. guess mentioned provide given second can the for have on Rodrigo’s is view that will can asked for Halberstadt JPMorgan has And has I also if the it overlap the we’ll flexibility what be openings, year? turn updated with around final first overlap provide that how what plant an of half our the to update pace kind an number? Rodrigo’s question, And some Barbara openings there’re in this openings invested we between back questions. plans to ‘XX in this we of we we on ‘XX? and asks of Marcelo, you. and quarter? CapEx if work some in among which That’s half to

Marcelo Rabach

the of but open That cycle, $XXX planning year, openings, at a we XXXX, terms we includes guidance maintenance restaurant of not doing to with beginning the least are that the around of were investments saying X-year all only CapEx the million. and in gave total digital. XXXX, XXX restaurants for at modernizations, We

the free-standing change. at this generation, at those particularly for time our didn’t we year. numbers is And least from for that a were X-year given those better than pipeline, XX% that said fact are that expected, new the XXX cycle, our we units. we do restaurant cash very robust results new to openings What So planning have

we to above proven in where always this base We the at additional numbers. our year. are of ROIs XX average that. good to are our will indication maximize exceed that we sense but in to beginning we most vision recent try saw it’s are a underwriting that And opportunities for it restaurants. the to planning X-year to a can change we additional is process those restaurant the makes openings, openings pace exceed that do our focused at fact, accelerate said number remain mentioning are And about cycle, historical we looking in And year. This and XX worth when for planning position we It on accelerate our didn’t ROI. new we that

a So in that underpenetrated very still good our an industry in of to are I we order see most QSR in opportunities think capturing the markets. position continue in we

sure, so XXXX change in didn’t terms and for million a will far, year, So this with But for million. we this range feel And give guidance XXXX, of that’s comfortable for in we terms for CapEx We between our of XXXX? We some and at range that you, XXXX. $XXX time. indication $XXX have for the X-year cycle.

Dan Schleiniger

comes Finantia. to first if asked He gains in Luis he Banco questions. our has hedging Delgado question it related Actually the from next from we ‘XX can The half policy. X specify of

that So let’s with one, Mariano. start

Mariano Tannenbaum

me let describe First, paper food imports. you our hedging our policy, regarding and

paper was ahead in advance. they happens to usually, that benefit in case to of note hedge XXXX. we markets, to the X have These is looking Chile, gross you that policy as work We pricing strategy our markets during projected where gains. that to is quarters of way, reflected this semester X and well of and Colombia, in rolling this do the they we the hedges what strategy predictability of giving terms because these have these input case is that is the And do What the half It’s costs. policy an hedges, year. basis. do and going in volatility reduce happened what a margin. XX% a of hedging Our our about depreciation business And that our is do exposure obtained a to in all costs. hedges. efficient and it’s not the food provide of X when our that And local In we on in to our of our important -- currencies our Uruguay. predictability first But in nowadays, you in in about Brazil, of and advance, to it markets in facilitates and -- Mexico do hedges first the

a gross currency then we the When currencies the advance having we are in appreciate, a value. set hedges the certain having our So we Then higher margin. our FX if to But -- are again, currency at the up about and beat the the depreciates, benefit costs about line. and in nobody predictability, FX the because, paper speculative knows food be not course, is will what of this trying and future. in effects in

Dan Schleiniger

Luis. of So we XXXX? in dividend if quick distribution a have from ones couple One any plans for is

Mariano Tannenbaum

in already that in June, going announced. September March, $X.XX the $X.XX XXXX Already X them $X.XX dividend $X.XX That’s be to have announced per share $X.XX in are company a been paid, distribution Well, for in of already and of December. paid.

Dan Schleiniger

And then future? if also for ask debt a for have you target the near we maximum

Mariano Tannenbaum

for finished No, we maximum where we exercise the or have for we market didn’t management debt. issue liability a have don’t money. didn’t we a But new target in just look

generated by years. next be we for will the We are expectations CapEx comfortable business position. to cash fund the our with the sufficient And cash think that our

so Of but we to to, course, need debt at capacity, new is time planning net low, that not in term. in case debt this our have we’re we issue short the

Dan Schleiniger

Halberstadt I from asked about Barbara JPMorgan that mentioned And Okay. CapEx earlier plans. had

trends pass-through we much part You had reduce have Mariano. and the which to initiatives ‘XX? in we related request another was for and do to of how you cutting continued to operating inflation space So back half see cost for expenses second

Mariano Tannenbaum

really during has inflation year. the And half described first good, this of results. performance the in been mind environment high that in Well, high our was inflation keep in our as LATAM we just

below deflation announced Brazil was of July. today, week, month announced this well, CPI for the U.S. expectations. forward, Looking

the looking second pressures to the going are monitor are not forecasts inflation ahead. we So on year, seeing all half the of these we but

efficiencies opportunities a initiatives, improve cutting looking Regarding This for continuous to we cost are is time. effort. continuing the all

are we that the sales been growth, dynamics started will savings are far. trying to costs, to difficult We during we keeping on months. fixed obtained we our so during leverage is doing confident focus on the like those maintain and pandemic, But growth, all have we the with continue now

continue this over really initiatives at And we numbers. think, -- time. point these As to G&A efficient to improve look system-wide a I is will the a an at example, for at very sales at all very efficient look

Dan Schleiniger

Argote question Our Ulises We mentioned already from next market JPMorgan. question. comes from this share

some examples not about we recent approach to the successful can products asked of innovation? rollouts so related So to U.S. us our some if talk about seen plant-based. in innovation, he We’ve menu of

that’s can So for hear share on we around happy innovation? thought And menu process anything our to you. Luis,

Luis Raganato

we to we new launching to we products the During the whole to And prudent this earn our and least supply the be being back positive -- and menu very in consider or had have pandemic, say, have menu, margins. simplified their today, innovate. impacts to way at are very and chain

Okay.

the them. is for regions good team give we a this going that trending not are habits opportunity for a the direction, that when, smart burger plant-based world habits of further is is if, approach from are is of terms and news that similar or us but the And the and demand us. to And products, to regarding plant-based this So consumer in learn of innovation. of some The believe that product. matter in consumer

So is being you will demand this see right, trying time to we the can assure that very we’re generate and with that for the sure when product, -- you very, in our it But restaurants. believe sufficient you and we prudent that be smart can matter. can when be

Dan Schleiniger

of And showed question increases We issue we But outstanding actually for a line, to the will talked and we’ve higher position thanks forward, of a for was got revenue of which think the Itau about market the but our also quarter? you, repurchase the jump price a do and Brazil? to players And notes question. costs moving us interest of could -- Joaquin, on. that’s bond rates covered I from from Ley in expect related impact and borrowing what and he And your second Invesco. should Turnbull the we says, from question, you in Douglas an management the competitive which we versus in question please, cost And Joaquin some so have share what give Mariano. your idea informal for from

Mariano Tannenbaum

Well, issue was it was first in of all, -- U.S. the dollars. actually bond

the million are and been going LatAm with And up was that. has transaction new this after for was We really almost timing interest we a dollars in the practically dollar. markets closed. after good rate the BRL. There XXXX, $XXX perfect So U.S. in bond, issuance forecasts issued U.S. the no in think

the entirely paid and a principal Brazil, example, you XX think this be before are The a hedging replacing we for with with But that we cost bit in bond XX using last impact due the a been lower interest debt because know with in Real, convert our higher have in the that of to with for level In the at that done we our again, have is our will this liability have and that an think liability course, debt our event. management course, the exercise of second was the they so will interest is debt, the But Higher bonds. taking we a management rate and recurring we cash to in of we in jump line X.XXX%. far, entirely. rates the also year. the take. with impact derivatives quarter, not what will and And remain XX in premiums the of same general, rates the has -- is will So was cancel payment. that transaction to that overall, with We the it maybe or And lower we interest XX. did in one-time the Brazilian line XX derivatives almost to be regarding in what than in liability the new dollar. out U.S. will had order Brazil, the XX% a XX X.XXX% management for

the Going these all benefits new you see should forward, of issuance.

Dan Schleiniger

And we’re right on time.

the join us. forward day, thank for the happy everybody. speaking great pending taking then, session. is questions time a to again several this the XXXX Q&A again to Thanks to you the course our days. day, great safe, So very over of anyone have of in and Earnings end you to Have on interest Until I next once look and up the wanted much. company with November and follow Webcast. today a the on We the with stay any

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