ARCO

Image source: The Motley Fool. Thursday, Aug. 13, 2026 at 10 a.m. ET Chief Executive Officer - Luis Raganato Chief Financial Officer - Mariano Tannenbaum Dan Schleiniger: Good morning, and thank you for joining Arcos Dorados' second quarter 2026 earnings webcast. With us today are Luis Raganato, our Chief Executive 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 that is also available in the investor section of our website, ir.arcosdorados.com. To better follow the presentation, please note that you can set your view to full screen on the webcast platform. Additionally, you can submit your questions at any time during the presentation using the Q&A function on the bottom of the screen. After we conclude our opening remarks, we will answer your questions. 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. In addition to reporting financial results in accordance with generally accepted accounting principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial results as compared with GAAP results, which can be found in today's earnings press release and conference call presentation, as well as the unaudited financial statements filed today with the SEC on Form 6-K. I will now turn the call over to Luis. Luis Raganato: Thank you, Dan, and good morning. Before getting into the second quarter results, I would like to start with a few words about Venezuela. The earthquake at the end of June impacted the entire country in one way or another, including Arcos Dorados. I am very proud of the local team's effort to support our people, suppliers, franchisees, and the communities they serve. Working with local authorities and medical professionals in the hardest-hit part of the country, they quickly converted one restaurant into a medical center and another into a shelter for people who lost their homes. While recovery efforts continue, we are beginning to see signs of progress. People are gradually returning to their daily routines, and other than the two locations I just mentioned, all other McDonald's restaurants are open in Venezuela. As always, we stand with our team and will provide them with the support they need until the situation on the ground normalizes. Just this past Monday, Colombia also experienced a significant earthquake. Our first priority has been the safety and well-being of our people. We are still working closely with the local management team as they assess the full impact of the earthquake on our people and restaurant operations. Let me now turn to the second quarter. Total revenue, adjusted EBITDA, and net income all grew strongly in USD, despite challenging consumer dynamics and year-over-year comparisons in certain markets. This demonstrates that we have taken important steps to improve the resilience of the business model and monetize the market share advantage. Total revenue reached $1.3 billion, the highest ever quarterly revenue, and up more than 14% created currencies in several markets. Stronger operating results, better results below the line, and a lower effective tax rate deliver record second quarter net income and drove sequential growth in adjusted free cash flow. The exclusive sponsorship of the FIFA World Cup allowed us to take full advantage of this important passion point for guests across the region. We executed unique marketing campaigns and activations across all sales channels. These helped drive digital sales penetration and identified sales to their highest ever levels, and we measured continued market share gains throughout the region. In terms of inorganic growth, we opened 16 restaurants in the quarter, bringing the first half total to 35 restaurant openings. The organic growth drivers in the business continued to perform well in the second quarter, including the solid market share, digital sales, and USD revenue growth I just mentioned. Starting with market share, based on guest traffic, McDonald's restaurants in the Arcos Dorados footprint gained about half a point versus second quarter last year and remain more than two times as much as our main competitors. Market share gains in the main markets are a testament to the quality of the local leadership teams who have implemented successful strategies in a wide range of consumer environments. Digital sales grew by more than 25% year over year and generated about 66% of total sales. This included very strong growth from self-order kiosks, demonstrating the continued relevance of the on-premise experience and delivery, especially in Brazil, where new aggregators are pushing industry growth. Identified sales surpassed 28% of total sales in the period, with growing loyalty program membership helping us achieve the highest guest identification rate in our history. Active loyalty program members who redeem points tend to visit us five times as frequently as non-loyalty members. We expect this to turn into an important long-term value driver for the business, since it significantly increases the lifetime value of those guests. The FIFA World Cup was a big success for the McDonald's brand in all of our markets. We took learnings from previous tournaments and began running regional campaigns about three months before the World Cup began. We used this period, which included the World Cup-themed Mundialista sandwiches and Panini sticker books, to generate excitement in anticipation of the tournament. The anticipation turned into euphoria once the tournament began, as we remained engaged with guests through conversations and special offers on the digital platform. Regional campaigns, combined with global FIFA World Cup campaigns, drove significant traffic and premium sandwiches sales growth, especially in Argentina, Brazil, Colombia, and Mexico. Brand favorability metrics also reached all-time highs throughout our footprint, which we believe ties directly back to the market share gains we delivered. At a divisional level, Brazil's comp sales continued the strong rebound that began at the end of the first quarter. On our last call, we mentioned the proactive and assertive steps the Brazilian team took to reverse negative guest volume trends after the end of Carnival. By quickly reconnecting with guests, they set the stage for a successful second quarter, which included an integrated FIFA World Cup campaign, strong delivered sales growth, a compelling value platform, and targeted digital campaigns such as McFest. According to third-party research, the good news is that the QSR segment of the country's restaurant industry resumed volume growth in the first half of 2026, and we began to see that reflected in our numbers during the quarter. Strong comp sales, new restaurants, and an appreciated currency combined to drive USD sales up more than 25%. NOLAD's comparable sales performance in the quarter reflects a particularly demanding comparison base, even though we were able to generate modest guest volume growth. Three factors explain the year-over-year dynamic. First, last year's second quarter included the full Holy Week period, compared with this year, that included only part of the holiday in the second quarter. Second, the prior year quarter benefited from the Minecraft promotion, which generated exceptional results across several markets. Third, consumer spending remained under pressure across most markets. SLAD's sales growth was solid in the quarter, reflecting guest traffic growth in most markets and inflation-driven comp sales growth in Argentina and Venezuela. Marketing campaigns focused mainly on the FIFA World Cup, driving important market share gains. Over to you, Mariano. Mariano Tannenbaum: Thank you, Luis, and good morning, everyone. Similar to revenue, profitability in USD, as well as profitability margins, were resilient in the second quarter of 2026. Adjusted EBITDA totaled $126.8 million. This was more than 20% higher than last year in the second quarter, including a 70-basis point margin expansion when we exclude the transaction with a Mexican sub-franchisee from last year's result. In addition to benefiting from a stronger currency environment, we were very pleased to see continued improvement in both food and paper, as well as G&A expenses, which more than offset modest pressure in payroll. Favorable food and paper costs in Brazil and NOLAD drove a 70-basis point margin expansion in the second quarter, extending the positive result we generated in the first quarter. Payroll expenses were higher as a percentage of revenue in all three divisions, but mostly in NOLAD due to hourly wages growing more than the average check. Pressure in Brazil and SLAD was much more modest. Occupancy and other operating expenses were almost flat, while G&A was lower as a percentage of revenue as a result of the restructuring we implemented late last year, and we expect this to continue through year-end. We were also very pleased to deliver strong net income results this quarter. Earnings per share in the quarter doubled versus last year, supported by solid operating performance, better non-operating results, and a lower effective tax rate. Net interest expense was lower compared to last year, thanks to the continued optimization of our capital structure, as well as to income related to last year's tax credit in Brazil. Additionally, the lower effective tax rate reflects the early impact of initiatives designed to lower the company's consolidated effective tax rate over time to be more in line with the region's statutory rates. Brazil was the standout in terms of profitability in the quarter. Margin improved by 180 basis points, reflecting disciplined cost management, especially in food and paper and G&A. This, combined with solid revenue growth and stronger currencies, drove adjusted EBITDA up more than 40% in USD terms. NOLAD's margin pressure, excluding the income from last year's restaurant transaction, was 110 basis points. This was mainly due to reduced operating leverage, which more than offset better food and paper costs compared to the same period last year. In SLAD, adjusted EBITDA grew in line with revenue. Improvements in G&A were offset by slightly higher food and paper costs, as well as occupancy and other operating expenses, leaving margins essentially unchanged versus the prior year-end. We are working hard to generate value for our shareholders, and the major part of that is maintaining a healthy balance sheet and driving sustainable cash flow generation. in July, we completed the second liability management transaction of the year. As a result, this year we have completely repaid the 2029 senior notes. We are very proud to have issued the first sustainability-linked bond in the QSR industry, which included ambitious targets associated with greenhouse gas emissions across Scope 1, 2, and 3. As we announced earlier this year, we are even prouder to have exceeded these commitments by the 2025 measurement date. Our balance sheet remains strong, with healthy liquidity and sufficient cash generation to fund long-term growth while maintaining disciplined leverage. As adjusted EBITDA continued to grow over the trailing 12 months, net leverage improved modestly to a very healthy 1.1 times at quarter end. Finally, the adjusted free cash flow generation of the last 12 months improved sequentially with strong net cash provided by operating activities, combined with lower capital expenditures in the period. Of course, this is directly tied to our efforts to create more shareholder value. During the second quarter, we deployed $49.1 million in capital expenditures. This supported 16 restaurant openings and helped bring the modernized restaurant experience to more than 77% of the portfolio. As the numbers show, freestanding units continue to account for the bulk of openings. So far this year, we have opened 35 restaurants and invested almost $86 million in capital expenditures, including openings, modernizations, maintenance, and non-development CapEx. We believe we can continue to raise the bar for expected returns on investment by developing and implementing initiatives to improve efficiency in all facets of our capital deployment. I will close by repeating some of the highlights from the second quarter. We delivered total revenue growth of more than 14% year-over-year. We generated the highest ever adjusted EBITDA, net income and earnings per share for a second quarter. We have a QSR industry in Brazil that looks like it is starting to turn around. We improved our gross margin after a tough 2025, and we benefited from a streamlined G&A structure that is contributing to underlying margin expansion. Despite a mixed consumer environment across the region, we delivered solid results during the first half of the year. Looking ahead, we expect conditions to remain dynamic through the second half of 2026, but we are confident in the strength of our plans, the agility of our operating model, and our continued financial discipline as we work to maximize full-year results and strengthen the foundation for future growth. Luis? Luis Raganato: Thanks, Mariano. I will leave you with some final thoughts before opening the call to Q&A. The word we want you to remember today is resilience. As Mariano just mentioned, market conditions have not been ideal so far this year, but the business model is showing an ability to navigate tougher periods while still delivering strong results. We are confident in the plans for the second half of the year and are working on a plan for 2027 to continue building on this solid foundation. Leading market share and unmatched brand attributes are a testament to the enduring connection we have with QSR customers across the region. We saw both indicators improve in the second quarter, and we intend to continue monetizing the connection with guests to increase the value of Arcos Dorados. The industry's leading digital platform is beginning to move into a new phase, and we are developing as many customer-facing capabilities as back-of-house tools to drive sales and generate efficiencies. In other words, we are making progress on the three pillars of focus I talked about one year ago. Today's business has been built on a foundation made up of a strong brand, combined with the best restaurant experience in the region's QSR industry. Growth goes well beyond openings. We are working to generate growth across all aspects of the business. It can come from physical restaurants, digital channels, loyalty programs, cost efficiencies, improved ROIs, or any other source. Tomorrow's business, we expect to unlock significant value from the foundational work we have done so far. In the near future, we believe innovation and technology will further increase the gap between our digital platform and our competitors in the region.Please join us at the 2026 Arcos Dorados Investor Day on the morning of October 1st in New York, when we will discuss these three pillars and some of the specific initiatives we are working on to increase the value of Arcos Dorados. Thank you for joining today's call. Dan, back to you to open the call for questions. Dan Schleiniger: Thanks, Luis. We will now begin the Q&A session. You can submit your questions using the Q&A function on the bottom of the screen. Please limit yourself to one or two questions so that I can read, understand, and convey them to our speakers. We will now pause briefly to compile your questions. Okay. We have a number of questions in the queue. Good morning, everyone. Sorry for the technical issue that we had. We are aware that part of the opening remarks were muted at some point. We will post the transcript of the call as quickly as possible so that you can catch anything that you might have missed. We are going to get started with Julia Rizzo from Morgan Stanley. She has a question for you, Luis. Can we comment on the sustainability of Brazil same-store sales so far? Luis Raganato: All right. Good morning, everyone. Julia, thank you very much for the question. Yes, during the second quarter, we experienced a rebound in comp sales. That was mainly a result of the proactive and excellent plan that the local team implemented. That is why we do think that this is sustainable for the near future. They boosted the value platform, Economia, that we have already talked about. That for less than $4, you can make your own four-item combo. They also targeted specific digital campaigns. As you can see, the strategy is based on three main levers, the value platform, the digital campaigns, and of course, they put in place marketing activities around the World Cup. This generated positive comp sales and volume in the quarter, with sales that outperformed the market and that allowed us to increase sales above inflation. That, as you know, is one of our main objectives. Of course, this had, as you saw, a positive impact in margins. As I said, this is sustainable. We are seeing positive trends in the first weeks of this third quarter. Of course, we are optimistic because we have the right management in our markets, and we do have a solid marketing plan, and we are focusing on a competitive advantage that is the operational execution. Dan? Dan Schleiniger: Thanks, Luis. I am going to stay with you. We have a question from Alvaro from BTG Pactual, and he is asking if we can comment on the market share dynamics in Brazil. Luis Raganato: Okay. Hello, Alvaro. Good morning. Market share among the players did not shift materially for us. The most important takeaway, according to CREST, is that although the broader restaurant industry remains under pressure, the QSR segment has resumed growth in this quarter, and we outperformed the sector. For us, that is very good news. Dan Schleiniger: Great. The next question, I am doing these a little bit out of order, but just trying to stick to the same topic so we do not bounce around too much. Tiago Bortoluci from Goldman Sachs. He said, "Good morning. Question on prices in Brazil." He says, "We are seeing McDonald's significantly more promotional on certain aggregators over the past few weeks. What does it mean in terms of pricing strategy, your assessment of demand elasticity, and price relativeness versus peers and substitutes? Luis Raganato: All right. Thiago, hello. Thank you for the question. It is important to remark that we manage pricing by channel, location, and customer segments. We use targeted promotional activities, and you will see more or less intensity depending on the moment of the year and depending on our needs. That is part of a broader revenue management strategy. Our focus is to remain data-driven, using advanced pricing and elasticity, as you mentioned, to balance traffic affordability and, of course, profitability. Yeah. Dan Schleiniger: Great. Thanks, Luis. Shifting now to Mariano. We have a few questions related to margins, typically Brazil's. I am going to break these up a little bit for you, Mariano, and I will start with Eric Huang from Santander. He says, "Brazil margin outlook. Brazil delivered another quarter of significant EBITDA margin expansion, benefiting from lower food and paper costs and strong operating leverage. As commodity and FX tailwinds normalized, what do you see as the main drivers of further margin expansion in Brazil over the next few years? Mariano Tannenbaum: Perfect. Good morning, everybody, and thanks, Eric, for the question. I will start by highlighting a bit the performance of Brazil during this quarter. Of course, we are very pleased. Brazil was the standout performer for Arcos during this quarter. EBITDA margin expanded 180 basis points with an EBITDA margin of 14.6%. The EBITDA grew by $23 million, or 43% increase. The performance in Brazil was primarily driven by lower food and paper. The good news here is that this is the third quarter where we have seen improvements in food and paper costs after a tough 2025, where beef cost increases affected that line. This was not the only reason why the margin expanded. First, of course, sales. Sales grew above inflation, and that allowed leverage on fixed costs. Then the G&A expenses after the restructuring we did by the end of last year, we are seeing now the results and a very disciplined cost management allowed us to have leverage on G&A as well. All this, of course, supported by the appreciation of the Brazilian real. This is what we have seen, and these are the trends we are seeing in Brazil so far this year. But looking forward, we will be focused on our long-term strategy, which is strong marketing campaigns, gaining market share, growing sales above inflation so we can leverage on fixed costs. Of course, returns on investments. You know that Brazil is a market where we are deploying a relevant part of our total CapEx by opening new stores. In terms of food and paper, well, of course, we don't know what will happen with the effects, but in terms of food and paper, the majority of the gains were not only related to beef. We have cost gains related to other items such as dairy and potatoes, and our supply chain team is very focused on keeping every item under control. On top of that, all the revenue management work that Luis already mentioned is bringing, of course, benefits to the gross margin line. Everything combined, we think that will provide a margin expansion in the future, and all the company, as I've already mentioned, marketing, supply chain, finance, operations, development, we are all focused on that, and we are confident that we will achieve good results going forward. Dan Schleiniger: Perfect. Let's stick with the theme, and we have a couple of questions related also to Brazil margins, maybe a little more specific to food and paper, Mariano. One is from Eric Huang of Santander. Sorry, Eric I already mentioned. One is from Melissa Jung from Bank of America, and the other one we have from Froy Mendez of J.P. Morgan. So Melissa asks, "Can you discuss the drivers and sustainability of margin expansion in Brazil, particularly given the investments you've made in pricing in the value segment?" Froy asks a related question, "Can you explain the composition of the margin uplift in Brazil between input costs and operational leverage?" Some of the drivers of the margin expansion and so on. Mariano Tannenbaum: Perfect. Well, thanks, Melissa and Froy, for the questions. Part of them I already answered on Eric's question, but going specifically to food and paper, we delivered this quarter, the third consecutive quarter of year-over-year food and paper improvement in Brazil. We are very pleased with that as I mentioned this is not only that we're having less pressures on beef costs. We are having improvements in dairy, potatoes. Of course, the FX is supporting the food and paper line on the imported goods. Last but not least, all the revenue management initiatives we are doing in Brazil are bringing benefits to the gross margin line as well. We are very focused, even though we are being promotional and we have a very effective promotional platform that Luis already mentioned, Economia in Brazil is doing extremely well. We are very careful with keeping our margins and at the same time not being too aggressive with the pricing. This is something which, of course, is not easy, but we have a solid revenue management team that is focusing on not growing prices above inflation, but also keeping the margins on all the offerings that we have on our menu, specifically on the value platforms. Going to Froylan's question regarding drivers of Brazil improvements. Again, I mentioned some of them, but our food and paper in terms of costs, I will highlight the G&A efforts that we made. Sales growing above inflation with solid comp sales growth. It is easier to leverage on all the fixed costs that we have in our P&L. Dan Schleiniger: Thanks, Mariano. I am going to come back to you now, Luis. I have another question from Julia Rizzo of Morgan Stanley, and she asked if we can provide any visibility on NOLAD comp sales improvement. Luis Raganato: Right. Thank you. Thank you again, Julia, for the question. Even though we had a challenging comparison base during the second quarter of 2025, we had the full impact of Holy Week last year. We had a very, very positive impact of the licensed Minecraft that is especially relevant in the NOLAD market and in Mexico also. We saw also in the market, intense competitive environment and that the macroeconomic situation is challenging. But despite that, the division, as you saw, remained resilient. For this was key, the strength of the brand and the effectiveness of our value proposition. These two factors helped us to maintain positive comparable traffic and reinforce our competitive position in key markets of the division. We were able to maintain the gap versus our main competitors in each market. Mariano Tannenbaum: Giving you a little bit more of color, sales in the division came more from volume than average check, and across channels, sales growth was strongest in delivery and Dessert Centers. What we are seeing, we do have for the second semester a solid marketing plan. We are adjusting some operational executions where we have opportunities. What we are seeing in the beginning of the third quarter is that the trends are in line with our expectations. Dan Schleiniger: Dan, thanks, Luis. Now we have a couple of questions, one from Melissa Bueno of Bank of America and the other one from Froylan Mendez of J.P. Morgan. Maybe a little bit of a double click on what you just discussed with respect to NOLAD more broadly. They asked specific questions with respect to Mexico. Melissa asks, "Can you provide some additional detail on Mexico? How much of the slowdown is attributable to the World Cup or other factors specific to the quarter? Are you seeing any recovery in third quarter to date? How are you thinking about driving traffic in a more challenging consumption environment?" That is from Melissa. Froylan asks a somewhat related question, "Can you share granularity on the same store sales performance in Mexico for NOLAD? How have the trends evolved into early third quarter? Luis Raganato: Okay. All right. I will give you a little bit more details on Mexico. Thank you very much for that question. In Mexico specifically, the economic environment remained pressured by high uncertainty, I would say, and this is ridden by external and internal factors. This level of uncertainty has put pressure on the family's disposable income, and this has affected several industry. This includes the retail sector as a whole. Despite this, the food service showed resilience in the country, and we managed to outperform the industry with positive comparable volumes that even outperformed the QSR sector. The food service was resilient. The QSR outperformed the sector and the industry, and we were able to outperform the QSR sector. That for us is very important because as a consequence, we were able to gain market share. Some of the main activities were the World Cup sponsorship. This was coupled with our value platform, McCafé Para Todos. That is very successful, and it has been on the market for the last, I would say, year. Plus the continued growth of our loyalty program, all combined helped us mitigate the environment headwinds, letting us grow the top line, our sales, and help the brand perception remain strong and resilient. We remain optimistic about the performance in the market given that we do have a solid marketing plan for the rest of the year, and because we have a strong operational execution that is demonstrated throughout the first semester. Mexico today has all-time high operational indicators and it has become one of the benchmark markets for some of our other Arcos Dorados markets. What we are seeing in the first part of the quarter is that, as I said, for NOLAD in general and for Mexico specifically now, the trends are in line with our expectations. Dan Schleiniger: Great. Thanks, Luis. Give you a breather and we'll give one to Mariano now. We have a question from Jeronimo Guzman of INCA, and he asked what was the weighted average inflation in SLAD. Assuming your same store sales was above inflation, given positive traffic and sales in line with inflation in Venezuela and Argentina, what limited margin gains, and what's the outlook for margins going forward in the division? Mariano Tannenbaum: Perfect. Thanks, Jeronimo, for the question. Actually, the weighted average inflation in SLAD was around 46%-47%. Our sales were slightly below inflation. I would say in line with inflation. In SLAD, the EBITDA grew in the quarter around $3 million or 6.6%. The margin remains stable at around 10% during the quarter. In terms of composition of margins, I would say we're very pleased with G&A, which continues to reflect the benefits from the actions we took over the past year. We are encouraged by food and paper trends in Chile, Colombia and Uruguay. I'm talking about, of course, SLAD division. We had some headwinds in Argentina, regarding food and paper. Overall, in the company, food and paper was very accretive to the margin expansion we experienced. Argentina, I would say, was the one that had more headwinds, but we are confident that this is something tactical and that happened during the quarter. We are not expecting this to deteriorate further in the coming months. Of course, in Argentina, as the consumption environment is still tough, we are very prudent with price increases and, in terms of market share, Luis discussed that. We are very focused on maintaining market share, and we are doing extremely well, but being very conservative in price increases. That's mainly the reason why we had some headwinds in terms of food and paper. The rest of the lines are more or less in line with what we had in the previous quarter of last year. We are confident that in the second half of the year, SLAD will continue the growth story. Dan Schleiniger: Thanks, Mariano. Come back to Luis now. A couple of related questions from Alvaro Garcia of BTG and Froylan Mendez of J.P. Morgan. Alvaro asks if we can comment on traffic trends in Argentina. Froyla similarly asks if we can provide some same store sales performance granularity on Argentina in SLAD and how it's evolved into the third quarter. Luis Raganato: All right. Thanks again for the question, Alvaro and Froyla. In Argentina, economic conditions were more challenging than what we expected. Consumer spending remained under pressure, contributing to a 3% decline in the overall retail sector. Despite those headwinds, we managed to deliver positive sales growth, and we managed to keep guest counts nearly flat. That was very important for the country, for the market. In the second quarter, we had the opportunity, as you know, to leverage from the sponsorship of the World Cup. This was the biggest event of the year for this market. The mechanic was different than other ones that had themed sandwiches by country. In this case, the mechanic was that we partnered with some of the most recognized players of the national team. The market launched three signature burgers that, combined with a powerful communication strategy and real time marketing actions, became one of the most successful campaigns in our company's history. We had record high sales in May and all-time highs in market share and brand preference. It was a very good quarter for the market. Those burgers were so successful that we are still selling some of them, and we are in the phasing out process. What we are seeing in the beginning of the third quarter is that we are having similar trends, and we are optimistic for what is going to happen for the rest of the year. Dan Schleiniger: Well, on that topic, Luis, since you have already commented on what we are seeing so far in NOLAD and SLAD in the third quarter, we have a question about that for Brazil from Froy Mendez of J.P. Morgan. He says, "Have the second quarter same-store sales momentum in Brazil permeated into early third quarter readings? Luis Raganato: Okay. As I said before, the result of the second quarter was a combined situation. We do not have a silver bullet. We had three main levers. The first one had to do with that we were able to boost the value platform, Economia, that we targeted specifical digital campaigns, and that we had marketing actions around the World Cup. We saw that the industry remained highly promotional. We focused on a balanced strategy that, as I said, was based on value, innovation, and relevant brand experiences. What we are seeing, and something that was very important, was that the local team was very proactive, very assertive, and the impact that they had in the second quarter, we are starting to see a trend. We are starting to see a relationship with that and what is happening in the first weeks of the third quarter. It was that important. The impact that it has in market share, according to CREST, we remain the clear leader in market share with more than twice the guest traffic of our nearest competitor. In addition, we were able to improve brand attributes like brand preference, top of mind awareness, and value perception. That was also very important. What we've seen in the first weeks is that the consumer disposable income remains limited. But the good news is that, from third-party data, we have the numbers that indicate that QSR industry volumes are starting to turn positive. We're maintaining that momentum and we're going to keep focusing on offering a compelling value proposition. We're going to be very careful with our pricing. We do need to keep on improving our margins. Some of the increasing in transactions and sales in the near future is going to come from the deliver of a better execution, operational execution in every channel. Having said that, and seeing how the evolution in the first weeks of the third quarter are coming, I would say that we are optimistic for what's going to happen by the end of the year. Dan Schleiniger: Great. Thanks. I'm going to stick with you, Luis. One more from Alvaro Garcia from BTG Pactual. There's some speculation about McDonald's potentially changing their kitchen structure in the U.S. so as to increase competitiveness in chicken. Can you comment on whether this would make sense in your markets? Luis Raganato: Right. Thank you again, Alvaro, for the question. It's true that there is ongoing conversations about possible innovation in the chicken category, but the idea is to use the already existing kitchen equipment. Having said that, when the time comes, we will evaluate where or how to implement it if it makes sense for our business and for our region. Dan? Dan Schleiniger: Great. Thanks, Luis. Back to Mariano now. Another question from Tiago Bortoluci from Goldman Sachs. One more from us. He says, "Now on capital allocation, could you give us the split between corporate openings and franchisees and a broad sense on what magnitude of improvement you've been able to capture on the average CapEx per store level? Mariano Tannenbaum: Perfect. Thanks, Tiago. Company-operated restaurants represented more than 65% of openings in the first half of 2026, versus around 60% on the first half of 2025. Therefore, the lower CapEx is not explained by a change of mix. In terms of cost reductions, I would say that it's between 15%-20%. The only thing I would like to mention is our main focus here is to increase return on investments. We are doing that by reducing costs, but also to improve the income and the sales of the new stores and the profitability of them. We're looking at everything together, combined, and we are very pleased with the results we have seen so far. Dan Schleiniger: Great. Thanks, Mariano. Then we have one final one from Eric. It's kind of a broad question. I think you may have already touched on some of these points, Luis, but maybe it's a good one to wrap up with here. Two questions he says from his side is traffic and market share sustainability. You highlighted the strongest guest traffic performance of the last six quarters and market share gains across the region. How much of the traffic acceleration do you attribute to temporary factors such as FIFA-related campaigns versus structural drivers? How confident are you that market share gains can be sustained into the second half of 2026? I think it's more of a company-wide question rather than something specific. Luis Raganato: Yeah. All right. Thank you, Eric, for the question again. The traffic performance is mainly a result of our value platforms. I already talked about Economia in Brazil or McParaTodos in Mexico or McPorMenos in Chile. The main objective of these platforms is to increase traffic and to shield our market share. Even though we saw more promotional activity in the industry, we implemented a more comprehensive plan, and this is where the World Cup activities have a role. They tend to strengthen the engagement with our guests, improving brand attributes, as I just mentioned, and they aim to increase average check and improve or shield our margins, as Mariano was mentioning. Having said that, during June, for example, we did have a negative impact in volume during the matches, for example. That's why we started talking about the World Cup and the sponsorship and launching activities three months before with the anticipation activities that we put in place. Even though we still see a challenging environment, we are confident that we're going to be able to keep our market shares and the trend that we're having in sales across the region regarding the management that we have in every market, because we are going to be prudent with prices, because we do have a solid marketing plan, and even though we do have strong operational indicators, we do know that we have opportunities in some markets that we are addressing. So far, as I said, we are seeing a positive trend in the first weeks of the third quarter, and those are in line with our expectations, and we're going to talk more about that in our next call in November. Dan Schleiniger: Thanks, Luis. With no more questions in the queue, we've reached the end of the Q&A session. Thank you again for your interest in Arcos Dorados and for joining today's webcast. We look forward to seeing you at our Investor Day on October 1st, and have a great rest of your day. Before you buy stock in Arcos Dorados, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Arcos Dorados wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,621!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,314!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 20, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Arcos Dorados (ARCO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Total Revenue: Reached $1.3 billion, the highest ever quarterly revenue, up more than 14% versus the prior year quarter. System-wide Comparable Sales: Grew 15.3%, driven by a higher average check and the best guest volume performance of the last six quarters. Adjusted EBITDA: Totaled $126.8 million, up more than 20% year-over-year, with a 70 basis point margin expansion when excluding last year's transaction with a Mexican sub-franchisee. Net Income and EPS: Record second-quarter net income; earnings per share doubled versus last year. Digital Sales: Grew more than 25% year-over-year, generating about 66% of total sales. Identified Sales: Surpassed 28% of total sales, the highest guest identification rate in company history. Market Share: Gained about half a point based on guest traffic versus second quarter last year. Restaurant Openings: Opened 16 restaurants in the quarter, bringing the first-half total to 35 openings. Capital Expenditures: Deployed $49.1 million in the second quarter; invested almost $86 million in the first half of the year. Net Leverage: Improved to a healthy 1.1 times at quarter end. Brazil Division: US dollar sales up more than 25%; adjusted EBITDA up more than 40% in US dollar terms with a 180 basis point margin improvement. NOLAD Division: Adjusted EBITDA margin pressure of 110 basis points, excluding income from last year's restaurant transaction. SLAD Division: Adjusted EBITDA grew in line with revenue, with margins essentially unchanged versus the prior year. Warning! GuruFocus has detected 6 Warning Sign with ARCO. Is ARCO fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Arcos Dorados Holdings Inc (NYSE:ARCO) delivered record second-quarter revenue of $1.3 billion, a 14% year-over-year increase, and achieved its highest-ever quarterly net income and EPS. System-wide comparable sales grew 15.3%, driven by the best guest traffic performance in six quarters, with all three divisions generating positive traffic. Adjusted EBITDA grew over 15% year-over-year, supported by strong sales in Brazil, improved gross margins, and lower G&A expenses from the 2025 restructuring. The company gained significant market share, with guest traffic share up about half a point year-over-year, and maintained a lead of more than two times its main competitors. Digital sales grew over 25% year-over-year, reaching 66% of total sales, while identified sales hit a record 28% of total sales, driven by a growing loyalty program. Brazil showed a strong rebound with comp sales improving, a 180-basis-point EBITDA margin expansion, and a 43% increase in EBITDA, driven by lower food and paper costs and operational leverage. The company completed a liability management transaction to fully repay its 2029 senior notes and issued the first sustainability-linked bond in the QSR industry, exceeding its greenhouse gas emission targets. Net leverage improved to a healthy 1.1 times, and adjusted free cash flow generation improved sequentially, supported by strong operating cash flow and lower capital expenditures. The FIFA World Cup sponsorship drove significant traffic and premium sandwich sales growth, leading to all-time-high brand favorability metrics across the region. Management expressed confidence in sustaining positive trends into the second half of 2026, citing solid marketing plans and strong operational execution in key markets. Consumer spending remained under pressure across most markets, particularly in Argentina and Mexico, creating a challenging macroeconomic environment. NOLAD's comparable sales performance was impacted by a demanding comparison base, including the full Holy Week holiday in the prior year and the exceptional results from the Minecraft promotion. Payroll expenses increased as a percentage of revenue in all three divisions, with the most significant pressure in NOLAD due to hourly wages growing faster than the average check. SLAD's sales were slightly below inflation, and the division faced food and paper cost headwinds in Argentina, limiting margin gains despite stable overall margins. The company experienced a negative impact on volume during World Cup matches in June, highlighting the temporary nature of some promotional and event-driven traffic boosts. In Argentina, economic conditions were more challenging than expected, with a 3% decline in the overall retail sector, although the company managed to keep guest counts nearly flat. The company noted that the QSR industry in Brazil remains highly promotional, requiring a balanced strategy to manage pricing and protect margins while driving traffic. Occupancy and other operating expenses were almost flat, but the company did not report significant improvements in this line, indicating ongoing cost pressures. The company's growth in Brazil was partly supported by currency appreciation, which may not be a sustainable tailwind if exchange rates reverse. Management acknowledged that market conditions are expected to remain dynamic and challenging through the second half of 2026, requiring continued agility and financial discipline. Q: Can you comment on the sustainability of Brazil same-store sales so far? A: Luis Raganato (CEO) stated that the rebound in Brazil's comp sales during Q2 was a result of a proactive and excellent plan implemented by the local team, which they believe is sustainable for the near future. The strategy is based on three main levers: boosting the value platform, targeting specific digital campaigns, and implementing marketing activities around the World Cup. This generated positive comp sales and volume, with sales outperforming the market and increasing above inflation. He noted that positive trends are continuing in the first weeks of Q3, and they are optimistic due to solid marketing plans and a focus on operational execution. Q: Brazil delivered another quarter of significant EBITDA margin expansion. As commodity and FX tailwinds normalize, what do you see as the main drivers of further margin expansion in Brazil over the next few years? A: Mariano Tannenbaum (CFO) highlighted that Brazil's Q2 EBITDA margin expanded 180 basis points to 14.6%, driven primarily by lower food and paper costs, which marked the third consecutive quarter of improvement. Other drivers included sales growing above inflation, which allowed for leverage on fixed costs, and lower G&A expenses following the restructuring. Looking forward, the focus remains on strong marketing campaigns, gaining market share, growing sales above inflation, and disciplined cost management across the supply chain. He expressed confidence that these combined efforts will provide margin expansion in the future. Q: Can you provide any visibility on NOLAD same-store sales improvement? A: Luis Raganato (CEO) acknowledged that NOLAD faced a challenging comparison base due to the full impact of Holy Week and the successful Minecraft promotion in Q2 2025, along with a tough macroeconomic environment. Despite this, the division remained resilient, maintaining positive comparable traffic and reinforcing its competitive position. Sales growth came more from volume than check, with the strongest growth in delivery and these centers. He noted that the division has a solid marketing plan for the second semester and that trends at the beginning of Q3 are in line with expectations. Q: How much of the slowdown in Mexico is attributable to the World Cup or other factors specific to the quarter? Are you seeing any recovery in third quarter to date? A: Luis Raganato (CEO) explained that Mexico's economic environment remains pressured by high uncertainty, affecting families' disposable income across several industries. Despite this, the food service sector showed resilience, and Arcos Dorados managed to outperform the industry and the QSR sector, gaining market share. Key activities included the World Cup sponsorship, a successful value platform, and continued growth of the loyalty program. He stated that Mexico has all-time high operational indicators and that trends in the first part of Q3 are in line with expectations. Q: What was the weighted average inflation in SLAD? What limited margin gains and what's the outlook for margins going forward in the division? A: Mariano Tannenbaum (CFO) reported that the weighted average inflation in SLAD was around 46%-47%, with sales slightly below or in line with inflation. EBITDA grew around $3 million or 6.6%, with margins remaining stable at around 10%. He noted that G&A continues to benefit from restructuring actions, and food and paper trends are encouraging in Chile, Colombia, and Uruguay, though Argentina faced some headwinds. He expressed confidence that SLAD will continue its growth story in the second half of the year. Q: Can you comment on traffic trends in Argentina and provide some same-store sales performance granularity? A: Luis Raganato (CEO) stated that economic conditions in Argentina were more challenging than expected, with consumer spending under pressure and a 3% decline in the overall retail sector. Despite this, the company delivered positive sales growth and kept guest counts nearly flat. The World Cup sponsorship was leveraged effectively, with a campaign featuring signature burgers that became one of the most successful in company history, achieving record-high sales in May and all-time highs in market share and brand preference. He noted that similar trends are being seen at the beginning of Q3. Q: Has the same-store sales momentum in Brazil permeated into early third quarter readings? A: Luis Raganato (CEO) reiterated that Q2 results were driven by a combination of factors, including the value platform, targeted digital campaigns, and World Cup marketing actions. He emphasized that the local team's proactive approach has created a positive trend continuing into the first weeks of Q3. While consumer disposable income remains limited, third-party data indicates QSR industry volumes are turning positive, and the company is maintaining momentum by focusing on compelling value propositions and careful pricing. He expressed optimism for the rest of the year. Q: There's speculation about McDonald's potentially changing their kitchen structure in the US to increase competitiveness in chicken. Would this make sense in your markets? A: Luis Raganato (CEO) acknowledged ongoing conversations about possible innovation in the chicken category, noting that the idea is to use existing kitchen equipment. He stated that when the time comes, the company will evaluate where and how to implement it if it makes sense for their business and region. Q: Could you give us the split between corporate openings and franchisees and the magnitude of improvement on average CapEx per store level? A: Mariano Tannenbaum (CFO) stated that company-operated restaurants represented more than 65% of openings in the first half of 2026, up from around 60% in the first half of 2025. The lower CapEx is not explained by a change in mix. He noted cost reductions of between 15% to 20%, with the main focus on increasing return on investments by reducing costs and improving the sales and profitability of new stores. Q: How much of the traffic acceleration do you attribute to temporary factors like FIFA campaigns versus structural drivers? How confident are you that market share gains can be sustained into the second half of 2026? A: Luis Raganato (CEO) explained that traffic performance is mainly a result of value platforms, which aim to increase traffic and shield market share. World Cup activities strengthened guest engagement and improved brand attributes, but also had a temporary negative impact on volume during matches. Despite a challenging environment, he is confident in maintaining market share due to prudent pricing, a solid marketing plan, and addressing operational opportunities. He noted positive trends in the first weeks of Q3, in line with expectations. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Arcos Dorados Holdings Inc.? Here are five stocks we like better. Record quarterly results: Arcos Dorados reported $1.3 billion in Q2 revenue, up more than 14% year over year, while adjusted EBITDA rose over 20% to $126.8 million and EPS doubled. Digital sales grew more than 25% and reached about 66% of total sales. Brazil drove profitability: Brazil’s adjusted EBITDA increased 43% and its margin expanded 180 basis points to 14.6%, aided by sales growth, lower input costs, operating leverage, reduced G&A expenses and currency appreciation. Expansion and balance-sheet progress: The company opened 16 restaurants in Q2 and 35 in the first half, while reducing net leverage to 1.1 times trailing-12-month adjusted EBITDA and fully repaying its 2029 senior notes. 3 Overlooked Stocks Analysts Still Like as AI Trades Get Crowded Arcos Dorados (NYSE:ARCO) reported record second-quarter revenue, adjusted EBITDA, net income and earnings per share for the period, as digital sales growth, market-share gains and FIFA World Cup promotions helped offset uneven consumer conditions across Latin America. Total revenue reached $1.3 billion, the company’s highest quarterly revenue level, and increased more than 14% year over year, according to Chief Executive Officer Luis Raganato. Adjusted EBITDA rose more than 20% from the prior-year quarter to $126.8 million, Chief Financial Officer Mariano Tannenbaum said. Earnings per share doubled from a year earlier, supported by operating performance, improved non-operating results and a lower effective tax rate. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be 3 Emerging Market Stocks to Buy and Hold for 2026 Raganato described the quarter’s central theme as “resilience,” saying the company’s operating model continued to perform despite pressure on consumer spending in several markets and difficult comparison periods in others. Digital sales increased more than 25% year over year and represented about 66% of total sales during the quarter. Identified sales, or transactions connected to customer data, exceeded 28% of sales and reached their highest level in the company’s history. → Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand Arcos Dorados: McDonald’s, But Cheaper With Better Growth Raganato said loyalty members who actively redeem points visit McDonald’s restaurants five times as often as non-loyalty members, positioning the program as a potential long-term driver of customer lifetime value. The company used its exclusive FIFA World Cup sponsorship to run regional campaigns before and during the tournament, including Mundialista sandwiches, Panini sticker books, digital offers and other activations. Raganato said the campaigns supported traffic, premium sandwich sales and brand metrics, particularly in Argentina, Brazil, Colombia and Mexico. → On Holding's Price Stumble May Be an Opening for a Company Built to Run Based on guest traffic, McDonald’s restaurants across Arcos Dorados’ footprint gained about half a percentage point of market share compared with the second quarter of 2025, management said. The company said its guest traffic remained more than twice that of its nearest competitors. Brazil was the company’s strongest division during the quarter. Comparable sales continued a rebound that began late in the first quarter, while U.S.-dollar sales increased more than 25%, aided by comparable sales growth, new restaurant openings and currency appreciation. Brazil’s adjusted EBITDA margin expanded 180 basis points to 14.6%, and adjusted EBITDA increased $23 million, or 43%, according to Tannenbaum. He attributed the improvement to lower food and paper costs, sales growth above inflation, operating leverage, lower G&A expenses following a restructuring completed late last year, and a stronger Brazilian real. Management said lower costs were not limited to beef, which had pressured results in 2025. Tannenbaum cited improvements in dairy and potato costs, as well as benefits from revenue-management efforts. He said the company remains focused on growing sales above inflation while maintaining a balance between affordability and profitability. Raganato said Brazil’s recovery was supported by the company’s Economia value platform, targeted digital campaigns and World Cup marketing. The company manages prices by channel, location and customer segment, he said, using targeted promotions as part of a broader revenue-management strategy. While consumer disposable income in Brazil remains constrained, management said third-party data indicate that quick-service restaurant volumes have begun to turn positive. Raganato said early third-quarter trends were positive and in line with the company’s expectations. In the NOLAD division, comparable sales faced a demanding prior-year comparison that included a full Holy Week period and a successful Minecraft promotion. Consumer spending also remained pressured across much of the division. Still, the company generated modest guest-volume growth and maintained positive comparable traffic, Raganato said. In Mexico, management said economic uncertainty pressured household disposable income, but the food-service industry remained resilient. Arcos Dorados said it outperformed both the broader food-service industry and the quick-service restaurant segment, delivering positive comparable volumes and gaining market share. The World Cup sponsorship, the McCafé Para Todos value platform and loyalty-program growth helped support results, according to Raganato. NOLAD’s margin declined 110 basis points excluding income from a restaurant transaction in the prior-year quarter, primarily because lower operating leverage outweighed improved food and paper costs, Tannenbaum said. Delivery and Dessert Centers were the division’s strongest sales channels. SLAD posted solid sales growth, supported by traffic gains in most markets and inflation-driven comparable sales gains in Argentina and Venezuela. Adjusted EBITDA increased about $3 million, or 6.6%, while the division’s margin remained near 10%, Tannenbaum said. He cited G&A improvements and favorable food and paper trends in Chile, Colombia and Uruguay, partly offset by food and paper pressure in Argentina. Argentina’s consumer environment was more challenging than expected, with overall retail sales declining 3%, Raganato said. Arcos Dorados nevertheless reported positive sales growth and nearly flat guest counts. Its campaign featuring signature burgers created with prominent Argentine national-team players helped drive record sales in May, as well as all-time highs in market share and brand preference, he said. Arcos Dorados opened 16 restaurants during the second quarter, bringing first-half openings to 35. The company deployed $49.1 million in capital expenditures during the quarter and nearly $86 million during the first half, including development, restaurant modernization, maintenance and other spending. More than 65% of first-half openings were company-operated restaurants, compared with about 60% in the first half of 2025. Management said average cost reductions per new restaurant were between 15% and 20%, while emphasizing that its broader objective is to improve returns on investment. More than 77% of the restaurant portfolio has been modernized. The company completed its second liability-management transaction of 2026 in July and has fully repaid its 2029 senior notes, Tannenbaum said. Net leverage improved to 1.1 times trailing-12-month adjusted EBITDA at quarter-end. Raganato also addressed earthquakes in Venezuela and Colombia. In Venezuela, the company converted one restaurant into a medical center and another into a shelter following the late-June earthquake. Other than those two locations, all McDonald’s restaurants in Venezuela were open, he said. The company was continuing to assess the impact of a subsequent earthquake in Colombia. Arcos Dorados Holdings Inc is the largest independent McDonald's franchisee in the world, operating under an exclusive license agreement with McDonald's Corporation. The company develops, owns and operates quick-service restaurants, offering the full McDonald's menu, including hamburgers, chicken sandwiches, salads, sides, desserts and McCafé beverages. In addition to restaurant operations, Arcos Dorados manages supply chain logistics, property development, training and support services for its franchise network. Headquartered in Montevideo, Uruguay, Arcos Dorados serves 20 markets across Latin America and the Caribbean, including Argentina, Brazil, Chile, Colombia, Mexico, Puerto Rico and Uruguay. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Arcos Dorados Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record quarterly revenue of $1.3 billion by leveraging a market share advantage that is more than double that of the nearest competitor. Capitalized on the FIFA World Cup sponsorship through a three-month engagement strategy, using themed products and digital activations to drive traffic and premium sandwich sales. Expanded digital sales to 66% of total revenue, supported by a 25% year-over-year growth in digital channels and record-high guest identification rates. Successfully stabilized Brazil's performance following a weak first quarter by deploying a proactive value platform and targeted digital campaigns like McFest. Navigated significant operational disruptions in Venezuela and Colombia following major earthquakes, prioritizing humanitarian support while assessing the impact of the earthquake on restaurant operations. Attributed market share gains to a 'resilience' framework that balances aggressive value platforms with premium brand experiences to protect margins during inflationary periods. Management expects the consumer environment to remain dynamic and pressured through the second half of 2026, requiring continued agility in pricing and promotional intensity. Anticipates long-term value creation through the loyalty program, noting that active members visit five times more frequently than non-members, increasing guest lifetime value. Plans to further optimize the consolidated effective tax rate over time to align more closely with regional statutory rates through ongoing tax initiatives. Focusing the 2027 strategic plan on widening the technology gap between Arcos Dorados and competitors through both customer-facing and back-of-house digital tools. Assumes continued recovery in the Brazilian QSR segment, which showed signs of volume growth turnaround in the first half of the year. Implemented a corporate restructuring late in the previous year, which successfully lowered G&A expenses as a percentage of revenue in the current quarter. Completed the full repayment of 2029 senior notes in July, optimizing the capital structure and reducing net interest expense. Exceeded 2025 sustainability commitments for Scope 1, 2, and 3 greenhouse gas emissions, linked to the industry's first sustainability-linked bond. Identified payroll pressure in the NOLAD division as a headwind, where hourly wage growth outpaced average check increases. Management confirmed the rebound is sustainable due to a three-lever strategy: the 'Economia' value platform, targeted digital campaigns, and operational execution. Early trends in the third quarter remain positive, with sales outperforming inflation and the broader QSR market. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The company uses a data-driven revenue management strategy to adjust pricing by channel, location, and customer segment. Management noted they are being careful not to grow prices above inflation while using targeted promotions to balance traffic and profitability. Expansion was driven by lower food and paper costs (specifically dairy and potatoes) and G&A leverage following last year's restructuring. Management expects future expansion to come from sales growing above inflation and improved ROI on new freestanding restaurant openings. Despite high economic uncertainty affecting retail, the QSR sector in Mexico outperformed the broader industry, with Arcos Dorados gaining market share. Management highlighted that Mexico has reached all-time high operational indicators, serving as a benchmark for other regional markets. Company-operated restaurants accounted for 65% of new openings, up from 60% in the prior year. Achieved a 15% to 20% reduction in average CapEx per store through efficiency initiatives without shifting the mix toward franchised units.

Arcos Dorados Holdings Inc. (NYSE:ARCO) shares climbed 7% after the Latin American McDonald’s franchisee delivered second-quarter earnings and revenue above Wall Street forecasts. Record quarterly sales, stronger customer traffic and double-digit comparable sales growth helped the company overcome a challenging consumer environment across its markets. Arcos Dorados reported earnings of $0.22 per share for the second quarter, beating the analyst consensus of $0.15 by $0.07. Revenue reached $1.31 billion, ahead of Wall Street expectations of $1.28 billion and 14.3% higher than in the comparable period last year. The result represented the highest quarterly revenue in the company’s history, supported by improved customer traffic and continued sales growth across its restaurant network. Net income increased to $45.0 million, or $0.22 per share, compared with $0.11 per share in the prior-year quarter. “Total Revenues, Adjusted EBITDA and Net Income all grew strongly in US dollars, despite challenging consumer dynamics in the second quarter of 2026,” said Luis Raganato, Chief Executive Officer. “In fact, total revenues of $1.3 billion were our highest-ever quarterly revenues, supported by the best guest volume performance of the last six quarters.” Systemwide comparable sales increased 15.3% during the quarter, supported by the company’s strongest guest volume performance in six quarters. The improvement in customer traffic helped Arcos Dorados generate growth despite pressure on consumers in several Latin American markets. Consolidated adjusted EBITDA rose 15.2% year over year to $126.8 million, setting a company record for a second quarter. Adjusted EBITDA margin reached 9.7%, representing an improvement of 10 basis points from the previous year. Excluding gains associated with a sub-franchisee transaction recorded in the second quarter of 2025, the underlying year-over-year margin improvement was 70 basis points. Arcos Dorados also delivered a significant improvement in its bottom-line profitability. Net income margin expanded by 150 basis points year over year to 3.4%. The increase was supported by improved net interest expense and financing results, together with a lower effective tax rate. Combined with the growth in adjusted EBITDA, the figures indicate that the company was able to translate higher sales and customer traffic into stronger earnings during the quarter. Digital channels remained an important growth engine for Arcos Dorados, with sales through digital platforms increasing approximately 25%. Digital transactions represented 66% of systemwide sales during the quarter, highlighting the increasing importance of mobile ordering, delivery and other digital channels to the company’s restaurant operations. The company’s loyalty programme also continued to expand, reaching 34.3 million registered members. Active loyalty members visited Arcos Dorados restaurants roughly five times as frequently as customers who were not members, demonstrating the programme’s potential to increase engagement and repeat visits. Arcos Dorados continued expanding its physical footprint alongside its digital operations. The company opened 16 restaurants during the second quarter, bringing its total restaurant network to 2,548 locations. Continued restaurant openings provide an additional source of long-term growth as the company strengthens its position as McDonald’s largest independent franchisee in Latin America and the Caribbean. Expansion of the restaurant estate, combined with higher digital adoption and stronger loyalty engagement, gives Arcos Dorados several channels through which to drive future sales. Cash generation also strengthened considerably. Arcos Dorados generated adjusted free cash flow of $143.4 million over the latest 12-month period, compared with just $16.1 million during the equivalent prior-year period. The substantial improvement provides greater financial flexibility for restaurant investment, shareholder returns and other strategic priorities. Following the 7% rise in the shares, investors are likely to focus on whether Arcos Dorados can maintain its stronger customer traffic and double-digit comparable sales growth while continuing to expand margins and cash generation in the second half of 2026. Arcos Dorados Holdings stock price

Total revenues reached $1.3 billion in the second quarter, up 14.3% in US dollars versus the prior year, marking the highest quarterly revenues in the Company’s history. Systemwide comparable sales rose 15.3% in the second quarter of 2026, supported by the best guest volume performance of the last six quarters. Consolidated Adjusted EBITDA1 in the second quarter was $126.8 million, up 15.2% versus the prior year period and the Company’s highest result for a second quarter. Consolidated Adjusted EBITDA margin reached 9.7%, as lower Food and Paper costs supported margin expansion of 10 basis points, or 70 basis points, adjusting for gains from transactions with a sub-franchisee in the second quarter of 2025. Net Income was $45.0 million in the quarter, also a record for a second quarter, or $0.22 per share, up from $0.11 per share last year. Consolidated Net Income margin expanded 150 basis points year-over-year to 3.4%. Adjusted Free Cash Flow1 over the last twelve months reached $143.4 million, compared with $16.1 million in the prior-year comparable period. MONTEVIDEO, Uruguay, August 13, 2026--(BUSINESS WIRE)--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, 2026. Message from Luis Raganato, Chief Executive Officer Over the last several quarters, we have taken important steps to improve the resilience of the Arcos Dorados business model and monetize our significant market share advantage. Total Revenues, Adjusted EBITDA and Net Income all grew strongly in US dollars, despite challenging consumer dynamics in the second quarter of 2026. In fact, total revenues of $1.3 billion were our highest-ever quarterly revenues, supported by the best guest volume performance of the last six quarters. Adjusted EBITDA, net income and earnings per share all set second quarter records. Adjusted EBITDA reached $126.8 million, up 15.2% year over year and up more than 20%, excluding gains from a sub-franchisee transaction from last year’s result. Stronger operating performance, better results below the operating line and a lower effective tax rate led to a doubling of earnings per share as well as solid sequential growth in adjusted Free Cash Flow. The exclusive, global sponsorship of the FIFA World Cup allowed us to execute marketing campaigns and activations in all sales channels. Digital sales penetration and identified sales were the highest ever and we measured market share gains across the region as well. The loyalty program continued to increase guest frequency among its most active members and guests also continued to respond positively to our compelling value platforms throughout the region. Leading Market Share and unmatched Brand Attributes are a testament to the enduring connection we have with people across Latin America and the Caribbean. Both sets of indicators improved in the second quarter, and we intend to continue monetizing this connection with guests moving forward. Arcos Dorados’ total revenues reached $1.3 billion, up 14.3% in US dollars versus the prior year quarter. The Company’s systemwide comparable sales rose 15.3% in the quarter, driven by guest traffic growth across all three divisions and higher average check in Brazil and SLAD. Digital channel sales rose by about 25% in the period and represented 66% of the second quarter’s systemwide sales. Performance remained notably strong in Self-order kiosk, Delivery and Loyalty sales versus the prior year. Self-order kiosk sales growth continued to benefit from the increasingly modernized restaurant base and higher customer adoption, while Delivery remained a strong growth driver, with solid year-over-year sales growth supported by increasing penetration across the region. The Company’s Loyalty Program is available in all main markets and grew to 34.3 million registered members as of the end of the quarter. The growing member base continued to enhance customer engagement, while active redeeming members visited the restaurants roughly five times as frequently as non-members, reinforcing the program's long-term value potential. Market share expanded and brand attributes strengthened across the region, according to Company research. Guest traffic performance was the strongest of the last six quarters, with the number of transactions up in all three divisions supporting the market share gains. The exclusive, global sponsorship of the FIFA World Cup allowed the Company to capitalize on the region’s passion for soccer and execute unique marketing campaigns and activations across all its sales channels. Most markets launched tournament-themed sandwiches early in the quarter, generating meaningful incremental sales before the start of the event. Several other local, regional and global campaigns associated with the global FIFA World Cup sponsorship, such as the Panini sticker books and collectible cups, also helped strengthen the connection with guests. The Company also continued reinforcing its value platforms, maintaining compelling offers for its most price-sensitive guests and other value seekers across key markets. To appeal to families and young people, the Company ran multi-channel campaigns including brand favorites such as the Grimace shake or compelling licenses such as Super Mario Galaxy and Stranger Things. Finally, within the desserts category, several markets drove innovation and indulgence with new flavors in the McFlurry and Sundae platforms. Consolidated Adjusted EBITDA margin was 9.7%, up 10 basis points versus the prior year period, or up 70 basis points when excluding the gain from the sub-franchisee restaurant transactions in Mexico from the second quarter of 2025 result. Margin expansion was driven by lower Food & Paper costs and G&A expenses as a percentage of revenues, partially offset by higher Payroll and Occupancy & Other Operating Expenses. Net income margin attributable to the Company was 3.4%, or 150 basis points higher versus the second quarter of 2025, mainly driven by better results in net interest expense and other financing results and foreign currency exchange results, as well as a lower effective tax rate. Arcos Dorados recorded earnings of $0.22 per share in the second quarter of 2026 compared to $0.11 per share in the prior year period. Total weighted average shares were 210,663,057 in both periods. Notable Items Included in Adjusted EBITDA: there were no notable items included in the Adjusted EBITDA in the second quarter of 2026. The second quarter of 2025 included a $6.9 million gain in Mexico related to restaurant transactions with a sub-franchisee. Excluded from Adjusted EBITDA: there were no notable items excluded from the Adjusted EBITDA in either the second quarter of 2026 or the second quarter of 2025. Figure 3. Arcos Dorados opened 16 restaurants in the second quarter of 2026, including 10 freestanding units. As of the end of June 2026, 77% of its systemwide restaurant portfolio offered the most modernized restaurant experience in the Latin American and Caribbean quick service restaurant industry. The Company’s net debt to Adjusted EBITDA leverage ratio ended the second quarter of 2026 at 1.1x, compared with 1.2x at year-end 2025. Adjusted Free Cash Flow For the last twelve months ended June 30, 2026, the Company generated Adjusted Free Cash Flow of $143.4 million, compared to $16.1 million in the prior comparable period. Recent Developments 2029 Sustainability-Linked Senior Notes Redemption On July 16, 2026, the Company completed the redemption of all remaining 2029 Sustainability-Linked Senior Notes at a redemption price equal to 103.063%, plus accrued and unpaid interest. 2025 Social Impact and Sustainable Development Report In July 2026, Arcos Dorados published its Social Impact and Sustainable Development Report for 2025. The report includes information audited by EY and provides an update on the progress related to initiatives and implementation of the Company’s "Recipe for the Future" ESG Platform. The full report can be downloaded at https://www.arcosdorados.com/en/recipeforthefuture/. Second Quarter 2026 Earnings Webcast A webcast to discuss the information contained in this press release will be held today, August 13, 2026, 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 2026 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 addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), management analyzes business trends using a variety of performance, financial and liquidity measures, which are considered non-GAAP. This press release and the accompanying tables use the following non-GAAP measures: Adjusted EBITDA, Adjusted net cash provided by operating activities, Adjusted Free Cash Flow, Constant Currency basis, Systemwide sales, and Systemwide comparable sales growth. 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, impairment of long-lived assets, and reorganization and optimization plan expenses. 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 of Adjusted EBITDA to Net income attributable to Arcos Dorados. For more information, please see the Adjusted EBITDA reconciliation in Note 8 – Segment and geographic information – of our financial statements filed today with the Securities and Exchange Commission (the "SEC") on Form 6-K. Adjusted net cash provided by operating activities and Adjusted Free Cash Flow: Management uses Adjusted net cash provided by operating activities and Adjusted Free Cash Flow as supplemental measure to facilitate the analysis of the Company’s cash generation performance and liquidity from period to period. Adjusted net cash provided by operating activities is defined as net cash provided by (used in) operating activities plus interest paid less interest collected. Adjusted Free Cash Flow is defined as Adjusted net cash provided by operating activities less property and equipment expenditures and purchases of restaurant businesses paid at acquisition date plus proceeds from sales of property and equipment, restaurant businesses and related advances. Management believes Adjusted net cash provided by operating activities and Adjusted Free Cash Flow provide useful information to investors, when considered together with GAAP measures, in evaluating the Company’s ability to generate cash to fund capital expenditures and financing activities. Management evaluates these measures prior to investing and financing decisions. Adjusted net cash provided by operating activities and Adjusted Free Cash Flow are non-GAAP financial measures and should not be considered as an alternative to net cash provided by operating activities or any other measure of financial performance or liquidity prepared in accordance with GAAP. These non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable to similarly titled measures used by other companies. A reconciliation of Adjusted Free Cash Flow to net cash provided by operating activities is included in Figure 11 of this earnings release. 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: 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). 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 2,500 restaurants, operated by the Company or by its sub-franchisees, that together employ more than 100 thousand people (as of 06/30/2026). 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 2026. 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. Certain trademarks and characters referenced herein are the property of their respective owners and are used under license. View source version on businesswire.com: https://www.businesswire.com/news/home/20260813235066/en/ Contacts Investor Relations ContactDan SchleinigerVP of Investor RelationsArcos [email protected] Media ContactDavid GrinbergVP of Corporate CommunicationsArcos [email protected] Follow us on:LinkedIn Instagram X YouTube

Arcos Dorados (ARCO) came out with quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.15 per share. This compares to earnings of $0.11 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +46.67%. A quarter ago, it was expected that this restaurant owner would post earnings of $0.11 per share when it actually produced earnings of $0.17, delivering a surprise of +54.55%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Arcos Dorados, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $1.31 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.99%. This compares to year-ago revenues of $1.14 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Arcos Dorados shares have added about 7.6% since the beginning of the year versus the S&P 500's gain of 13.2%. While Arcos Dorados has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Arcos Dorados was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.17 on $1.35 billion in revenues for the coming quarter and $0.76 on $5.24 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the top 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Retail-Wholesale sector, Dollar General (DG), has yet to report results for the quarter ended July 2026. The results are expected to be released on August 27. This discount retailer is expected to post quarterly earnings of $2.00 per share in its upcoming report, which represents a year-over-year change of +7.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Dollar General's revenues are expected to be $11.17 billion, up 4.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Brinker International (EAT) came out with quarterly earnings of $3.07 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $2.49 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this operator of restaurant chains Chili's Grill & Bar and Maggiano's Little Italy would post earnings of $2.85 per share when it actually produced earnings of $2.9, delivering a surprise of +1.75%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Brinker International, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $1.54 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.39%. This compares to year-ago revenues of $1.46 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Brinker International shares have added about 54.3% since the beginning of the year versus the S&P 500's gain of 12.9%. While Brinker International has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Brinker International was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.18 on $1.4 billion in revenues for the coming quarter and $12.38 on $6.1 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the bottom 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Arcos Dorados (ARCO), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 13. This restaurant owner is expected to post quarterly earnings of $0.15 per share in its upcoming report, which represents a year-over-year change of +36.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Arcos Dorados' revenues are expected to be $1.28 billion, up 12.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Brinker International, Inc. (EAT) : Free Stock Analysis Report Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Aramark (ARMK) came out with quarterly earnings of $0.52 per share, beating the Zacks Consensus Estimate of $0.48 per share. This compares to earnings of $0.4 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +8.33%. A quarter ago, it was expected that this provider of food, facilities and uniform services would post earnings of $0.47 per share when it actually produced earnings of $0.49, delivering a surprise of +4.26%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Aramark, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $5.06 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.24%. This compares to year-ago revenues of $4.63 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Aramark shares have added about 51.1% since the beginning of the year versus the S&P 500's gain of 13.3%. While Aramark has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Aramark was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.76 on $5.26 billion in revenues for the coming quarter and $2.24 on $19.97 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the bottom 31% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Arcos Dorados (ARCO), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 13. This restaurant owner is expected to post quarterly earnings of $0.15 per share in its upcoming report, which represents a year-over-year change of +36.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Arcos Dorados' revenues are expected to be $1.28 billion, up 12.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aramark (ARMK) : Free Stock Analysis Report Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research