Q1 2022 Arcos Dorados Holdings Inc Earnings Call
Today, we have another quarter of record sales and profitability to report.
You will see that these results are broad based and sustainable.
Thanks to the focused execution of our Tvs.
Delivery and drive through strategy.
Our balance sheet and best generation are as strong as ever.
And we are on track to exceed the guidance, we provided for investments in restaurant openings in 2022.
After the quarter ended we also executed a historic liability management or inception.
Becoming the first service restaurant operator in the world to issue a sustainability linked loan.
Let's start with the key highlights from our record setting first quarter of 2022.
System wide sales exceeded $1 billion.
And total revenue reached nearly $790 million.
Comparable sales grew 42% of the.
The back of strong volume growth.
And continued market share gains within our consolidated marketplace.
Digital sales, which includes delivery mobile app and self order kiosks reached the highest ever U S. Dollar total.
<unk> contributed 38% of the quarter's sales and included the highest ever U S. Dollar sales totals for delivery set for the kiosks.
Quarter ahead.
This outstanding safety performance generated significant operating leverage.
All costs and expense line items.
In fact, the $79 $6 million of adjusted EBITDA was a record for the first quarter.
Revenue management, including pricing product mix and segmentation plus a highly localized supply chain and efficient operation drove both EBITDA and the bottom line.
Net income of almost $26 million.
Our 12 cents per share in the quarter.
We also started the year with a strong base of growth.
With 16 restaurant openings, including 14 freestanding units.
10, new restaurants in Brazil.
More on that later on the call.
Over to Luis for a closer look at our sales results.
Thanks Marcelo.
All articles analysis divisions generated excellent sales results in the first quarter.
We have said it before and we will say it again. This is a testament to the structural competitive advantages, we're maximizing with a flexible restaurant portfolio and the <unk> strategy.
Once again guest responded to the industry benchmark.
And convenience of the Mcdonald's experience throughout the region.
While conditions improved guest perception of key brand attributes, including favorite brand and continue to grow market share faster than our closest competitors.
Brazil's systemwide comparable sales grew 39%.
Rebounding from trough results last year, when a spike in Colby lead to a resumption of government imposed operating restrictions in both March and April .
Revenue in Brazilian Reais grew by more than 25% versus the pre pandemic first quarter of 2019.
Nearly offsetting the significant depreciation of the currency in that period.
Digital sales channels remains strong in Brazil.
<unk> generated almost half of system wide sales.
Marketing activities in Brazil included the Mickey diseases campaign, featuring symbols of Brazil's top music celebrities describing the favorite Mcdonald's orders.
We also sponsored big brother, Brazil.
Countries, most popular reality show healthy fueled sales growth across net <unk>.
Finally, the funding that business benefited from the exclusive Disney 50th anniversary collection in the happy meal.
No debt, which is now composed of nine markets generates results in U S dollars.
Those are relatively stable currencies.
System wide comparable sales grew 24, 1% in deepwater.
Driven mainly by good volumes with especially strong results in Mexico and Panama.
Marketing activities in NOLA, mostly focused on core menu items in the quarter.
Mexico reinforced the chicken category with the introduction of spicy chicken mcnuggets and the Mac grill Despite deluxe.
Costa Rica drove customer excitement with debt and income, but obviously, a big Mac campaign.
And after a two year hiatus, we successfully introduced a seasonal favorite.
The layoff fish in Costa Rica, Panama, and Puerto Rico.
System wide comparable sales rose 64, 3%.
More than doubled the blended inflation in the period.
Performance was strong across divisions.
<unk> in Argentina.
Chile, and Colombia, where volume growth was robust.
First quarter marketing activity and flat also center on core offerings.
In Argentina, the must have or must fund campaign drove an increase in pigment sales, while markets like Chile, and Colombia focused on strengthening the chicken category.
Most markets finally business benefited from our exclusive licensing agreement with Disney.
Finally drive thru and delivery remains very strong and the division, reaching all time sales breakers in many markets.
Speaking of records, let's take a closer look at the digital sales Marcelo highlighted.
Mobile app downloads now exceed $69 million.
With the highest number of active users in the industry by far.
Record quarterly delivery sales included the highest ever monthly sales for the segment in March and.
And we set another delivers helps record in April .
The words, we have the right strategy to continue taking share as we grow this important sales segment.
The unparalleled experience and convenience of Mac delivery continues driving volume growth despite recovering on premise sales.
Delivery sales grew more than 29% in constant currency with similar growth levels in those initiatives.
This performance proves that delivery is truly a new consumption occasion that has helped generate structurally higher sales per unit.
Self order kiosk sales also cite a breaker in the quarter.
More than half of the on premise volume in experience of the future restaurants now goes through this digital channel.
Importantly, these highly efficient and customizable channel generates a 15% to 20% higher average check compare with the front counter.
Or their head is still in its infancy and has not yet been fully implemented in our markets.
But it is showing the value of allowing guests to choose where when and how to enjoy the Mcdonald's menu favorites.
Sales through the order ahead functionality, where almost seven times higher than the first quarter last year.
Among the benefits of operating the region's largest freestanding restaurant portfolio is the unmatched availability of Mcdonald's drive through in our markets.
Drive thru sales rose almost 13% in constant currency versus the first quarter of 2021.
With positive results in all divisions, especially flat.
Volumes remained high and we're gaining new dry gas on a daily basis.
That's right through base loyalty program has now grown to 4 million identifiable numbers.
Later this year, we plan to introduce a more comprehensive loyalty program, leveraging our digital capabilities and insights to drive additional visit frequency and profitability.
In line with expectations the off premise channels of delivery and drive thru have remained sticky and generated 46% of total sales in the quarter.
Even with umbrella sales much closer to normal.
For a closer look at held profitability responded to the sales growth we generated around the region.
I will turn the call over to Mike.
Thanks Louise.
Marcelo already mentioned that we achieved record U S dollar EBITDA for our first quarter.
As a result.
The trailing 12 months EBITDA is now the highest in <unk> history.
All three divisions contributed strong results towards this important new milestone.
Brazil's EBITDA margin.
About it after feeling the effects of renewed government imposed restrictions last year.
Notably the 14, 8% margin was also 100 basis points higher versus the pre pandemic first quarter of 2019.
No 11 sled were strongest flow with double digit EBITDA margins and significant growth in U S dollars compared with both 2019 and 2021.
Whether we look at the 570 basis points of margin improvement versus 2021.
Our 160 basis points versus 2019, the story is similar better gross margin efficient payroll and G&A expense leverage.
We are particularly pleased with gross margin performance.
Given how global supply chain challenges and commodity price inflation have generated significant input cost pressures.
Having a highly localized supply chain is key to minimizing this impact.
We have also taking a balanced approach to revenue management without overdoing, it or pricing.
I think this strategy allows us to use digital tools to optimize savings through the right channels and to drive volume to the optimal product mix.
It was through healthy and sustainable top line growth.
Sufficient supply chain management that we were able to improve food and paper costs by 110, and 60 basis points versus 2021 and 2019, respectively.
Notably all three divisions captured food and paper cost efficiencies in the quarter compared with pre pandemic 2019.
Turning now to our capital structure and growth plans, let's start with cash flow from operations.
Cash generated from operations was seasonally strong and five times as high as the first quarter last year.
Net leverage declined and remained healthy at one three times.
Our debt's profiling will look different at the end of the second quarter. Following our recently completed liability management transaction.
We will tell you more about that in a minute.
As Mark said the fed we opened 16 restaurants during the quarter, including 14 freestanding locations.
The restaurants were opened in Brazil.
Total capital expenditures were $24 $8 million in the quarter.
As we have mentioned previously we have a robust restaurant opening plan and the team is working hard to add to the pipeline and accelerated the pace of openings.
Based on the current run rate, we expect to exceed restaurant opening its capital expenditure guidance for 2022.
Let's go back to the details of the liability management transaction, we announced last month.
As of the end of March 2022, we had two outstanding bonds with $202 million due in September of next year.
$536 million due in April of 27.
This U S dollar debt had been swapped nearly 50% to Brazilian reais with derivative instruments that matched the value and maturity of both the principal and interest of these bonds.
Last month, we announced our intention to place a new 350 million sustainability linked bond due in may of 2029 <unk>.
The proceeds from this liability management transaction were to be used to refinance the 2023 bond and tender up to $150 million of the 2027 loans.
As you may have already seen we successfully placed the seven year bonds with an interest rate of six and one 8% with the lowest spread over treasuries in that of course that Atlas history.
Then your bond received the same ratings as the existing instruments.
For Moodys and double B from Fitch.
Both with a stable outlook.
The average life of our outstanding debt will increase from $3 nine to six years, and we plan to maintain a prudent risk management policy using derivative instruments to hedge the FX exposure of the decks.
The transaction will leave us with three long term debt securities.
$19 $5 million of principal on the 2023 senior notes following the tender offer and partial redemption of the remaining outstanding principal.
<unk> hundred $86 million of principal on the 2027 senior notes following the $150 million tender of that bond.
And $350 million of principal on the 2029 senior notes.
I will turn it back over to Lisa for a description of the bonds sustainability performance targets or Spt's and some of the strategies, we will use to achieve them.
Satisfy at all.
Paint Avi linked volume ties a company's financing strategy to the achievement of specific spp's.
We have aligned the Sps for this bond with our long term commitments.
Namely, reducing absolute greenhouse gas emissions by 36% in restaurants and offices by 2030.
These are categorized our scope one and two emissions.
In reducing greenhouse gas emissions intensity by 31% in our supply chain by 2030.
These are categorized our scope three emissions.
Both long term commitments, we'll use 2021 as the base line year.
The two key performance indicators or kpis for the bonds are linked to these commitments.
The first API is the absolute level of cotwo equivalent emissions in restaurants and offices.
We have established an SPD to reduce the scope, one and two emissions by 15% by 2025.
The second API is maintain a CD of cotwo equivalent emissions relative to our food and packaging volume.
We have established an SPP to reduce the scope three emissions by 10% by 2025.
We engaged sustainability for a second party opinion and received hybrid of our assessments of the appropriateness and Ambitiousness of the Kpis as Spp's we selected.
We are proud of the leadership role, we're playing in ESG across Latin America, the Caribbean as well as within the global <unk> industry.
The SPD <unk> are measurable and quantifiable on a consistent methodical basis and progress will be measured annually by a third party south Paul Carbone asset management.
If one spp's not achieved then the bonds interest rate will increase by 12 five basis points beginning in 2020 seats.
If neither SPD achieved then the bonds interest rate will increase by 25 basis points beginning in 2026.
So how can we achieve these targets if we had all the answers then that would not be consider ambitious targets.
But we have developed an ESG framework to provide a roadmap.
You can download the framework for our recipe for the future website.
Almost 6% of greenhouse gas emissions in the business our scope one and two.
We have several initiatives in place are projects under development to achieve the first SPD <unk>.
They include incorporating up to 25 sustainability initiatives in all new or remodeled restaurants.
<unk> and <unk>.
The lighting in non restaurants and offices.
Converting to high efficiency air conditioning systems with environmentally friendly refrigerants.
And increasing the renewable energy mix by contracting power purchase agreements.
More than 93% of our greenhouse gas emissions are scope three.
So when we hold regular roundtable meetings with key suppliers to discuss and agree on mixtures of for the capitalization across the entire value chain.
We plan to provide incentives to be suppliers under producers to support the reduction of greenhouse gas emissions intensity.
We will also have already made specific initiatives with them, including revised production balances and new investments in sustainability.
These initiatives are good for the business as they will lead to a more efficient operation.
More importantly, they are the right thing to do.
Marcello updated.
Thanks Louise.
We have a long and diverse history of collaborating with and contributing to the communities in which we operate.
Our social commitment and sustainable development team works across six recipe for the future bidders We chart.
Use opportunity, providing thousands of young people their first formal jobs.
Helping them develop soft skills necessary to succeed in the workforce.
Tighten up change.
In actions to reduce the environmental impact of the operation.
Such as the ones in our sustainability linked bond.
Sustainable sourcing.
Ensuring humane and sustainable supply chain practices.
Circular economy supporting recycling inside and outside the restaurants.
Amit meant to families.
Nutritious pharmacy menus as well.
Given the Ronald Mcdonald House challenges.
And diversity and inclusion developing initiatives to promote diversity agenda.
Rates for quality and generations.
Last year, we published the <unk> social impact on sustainable development report for 2020.
It was the first time, we or any other <unk> Latin America issued an OLED ESG report.
Today, we are and introduce the Alco models social impact on sustainable development report for 2021.
This report has been prepared according to GE or I.
Safety standards.
Once again it includes content audited by <unk>.
Please visit directly before the future website to download the report and above all our ESG efforts in 2021.
I will wrap up with a summary of the main takeaways from today's presentation.
2022 is off to a great start.
We delivered the third consecutive record quarter and.
And trailing 12 months EBITDA go down is not the highest in our cohort <unk> three.
These results were broad based and the positive trends have continued so far into the second quarter.
With both topline and profitability ahead of this year's plan.
Cash flow remains robust and our balance sheet is strong with no material maturities for the next five years.
Against that backdrop, we expect to exceed guidance for restaurant openings and capital expenditures in 2022.
We are committed to already be product future.
Im proud of all the hard work we are doing in ESG.
This is what allows us to become the only <unk> in the world to have issued a sustainability linked bond.
<unk>, our financial strategy to long term climate change commitments.
We are confident about the future.
I believe the results we are reporting today will be sustainable over time.
Because of our structural competitive advantages and successful three these strategy.
The truth is adequate hotels of the Mcdonalds brand in Latin America, and the Caribbean has never been stronger.
Don over to you to start the Q&A session.
Thanks, Marcella in order to get started please minimize the presentation slides. So that you can access the chat function panel side of the webcast platform.
Please limit yourself for one or two questions. So that I can read to understand and conversion for our speakers.
We'll now pause briefly to compile your questions.
Yeah.
Okay.
Okay great.
Our first question came from Marcella Recchia from credit Suisse, Hi team. Thanks for taking my questions.
And she asked US why among the questions you asked US can you give us a trade update on the second quarter early trends.
Yes, with Warner and Marcella and thank you for being with us today.
While the trends we saw during the first quarter of this year have continued.
In the second quarter I would tell you that the whole business is performing ahead.
<unk> D C. Our plan.
Thats, both in terms of revenues and in terms of profitability.
Total guest traffic extremely sort centers is already near or even above pre pandemic levels.
On our digital zones are helping us to recapture the on premise business. The on premise volume in a more profitable way so.
I think we believe that the pandemic has been a catalyst.
Thus permanently changed our channel mix.
Off premise channels are still generating a significant portion.
Our system wide case, because those channels.
Demonstrated to be <unk>.
Very sticky.
Yes.
Well to the ease and convenience of delivery of breakthrough.
Which.
Remained very steep even.
With the situation that beyond Remy sales continue to recover at a faster pace than we were expecting.
And if you let me add are set out I would like to give you a little bit more detail. Firstly, when we talk about on premise on premises Mcafee <unk>, plus <unk> plus dessert centers and they are performing in line with each other you're off premise is delivery.
Try to what we are experimenting easing normalization and activities in E mobility.
I would tell you all across the region and even though we are seeing a recovery in on premise sales I will tell you a very good base.
We're having a very very strong performance in off premise sales just.
As an example talking about delivery, we've posted a quarterly sales record in the first quarter and this includes not only that we increased sales by 29%, but we had the highest ever sales.
In a single month in March.
And on top of that record we had in April we said another month.
Monthly results the strong visit the plant is very strong for the channel and we start with this channel.
When we implemented it.
In 2017, so while we saw.
It was 4% of sales in 2018 today is around 16% of total sales.
And then I think analyzer, but think UC patients remained.
It is sticky okay. So we really think that this channel is going to be an engine of growth.
In the near future and if we talk about drive.
Secondly, I wanted to give you some details there to putting a team was 22% of total sales after the pandemic that.
Participation of total sales remains around 30% in the first quarter.
We saw an increase in system wide sales of 13% in this first quarter, but the good news is that we are gaining new guests.
Just in 2021.
One out of seven guests was a new customer and.
This is very positive because when they try it for the first time that they love it because it's convenient.
Dave is fast is fun and this is a competitive advantage for us just in Brazil, but we have two five times as many units as our main competitor.
And if not only about the footprint is about the experience the operational experience we're seeing.
An impressive improvement in operations in every market. So we see this channel as the second engine of growth and of course the <unk>.
Digital platform has boosted sales.
Through through these channels and we talked about this before through customized offers through targeted marketing campaigns, but we're going to keep investing in new technologies, new capabilities, because we still believe that we have a huge opportunity to to bundling profiling.
Great. Thanks Bruce.
The next question is actually on overlap between Rovira Omega from Santander.
<unk> from Goldman they both ask questions related to gross margin performance after congratulating us for results.
Java for example asks how are gross margin is split between or how the performance is split between price supplier negotiations and mix.
<unk> set a little bit different also in terms of pricing mix and segmentation on how we're able to pass through those costs to the guests. So I'll turn that one over to your modem.
Perfect. Thank you Dan and thank you Rodrigo for joined US in your first quarter and thank you <unk>.
If you have us look for for your question.
What I will try to answer both questions.
Questions in the same in the same answer.
And in terms of margin we have in terms of gross margin. We have successfully managed our food and paper costs since the beginning of the pandemic.
Despite ongoing input cost pressures that we're seeing in the market.
Analyzing our our P&L you will see that over the last couple of quarters, we havent, even expanded gross margin versus the pre pandemic period.
During the first quarter of 2022, we were able to increase gross margin by 80 basis points versus 2019, reaching 65, 1% in the period.
All of this led to a gross profit of $490 million, which was 10% higher in U S dollars as reported that in 2019, despite the depreciation of local currencies, especially the Brazilian real and the Argentine peso.
Now, let's look at the current situation.
As we all know we share began with pretty severe spikes in input costs costs worldwide due to COVID-19 climate issues or this aggravated by the company, where we are seeing a crane that accelerated the increasingly international price on key commodities.
So let's talk about commodities.
Although we were exposed to commodity price volatility, we have a very diversified cost structure, where no single item represents more than 90% of our total food and paper costs.
With the exception of beef.
The commodities themselves represent an even lower percentage of the cost structure.
But on top of that we use certain instruments in negotiations with key suppliers to mitigate the effects of rising input costs.
We use and negotiate commodity hedges with our suppliers that are executed directly by them and give us some coverage against these price increases.
We also have supplier contracts and agreements that we used to look lock prices by making purchases in advance.
Taking advantages of our very good cash flow generation.
We have pricing protocols, and we take advantage of our economies of scale.
Because of our size and scale, we are able to negotiate of course better prices with.
Our main suppliers.
Explaining veeco, all we are doing on the cost side, but.
But we also need to take a look at how we're managing the revenues.
As you know <unk> has been implementing successful revenue management strategies. For example, we have thoroughly studied the pricing strategy usually in line with inflation that are the most effective at protecting gross margin, while maintaining or even expanding market share.
Digital also continues to play a key role in segmentation and greater personalization.
The digital offers a strategically used to improve safety in order to increase our Aztec gain new customers for increased frequency of purchase by our existing guests.
Our mobile App kept the capabilities continue to expand increasing our labor efficiency and enhancing our ability to focus on guest needs and preferences.
So with bright increase is in line with inflation, we have been able to increase our object above inflation.
This combined with our successful cost management strategy already described allowed us to increase gross margin even in the face of some very challenging cost pressures.
Finally, if you allow me I will take a step further.
We have successfully managed more than the gross margin.
All lines in our income statement have also improved as a percentage of sales, especially payroll rent and G&A, which benefited from the aggressive cost controls we implemented during the pandemic.
All this helped us deliver an EBITDA margin during the first quarter of 2022 of 10, 1% debt together with strong sales resulted in the highest first quarter EBITDA of our history.
We are confident that is the same strength continues in our main markets. Then we will deliver another year of very healthy EBITDA. Both in terms of U S dollars and as a percentage of revenues.
Great. Thanks Mariano.
So I'm going to bring it back to Marcella recchia from credits were supposed to be fair. It actually asked three questions.
We took or reverse one she also asked the question in terms of on premise sales versus pre pandemic I think Bruce has already addressed that in our third question is what's our expectation with respect to our comments around exceeding our full year 2022 guidance.
For openings and what color can we give on what to expect there so over tumor so excellent.
When we provided guidance.
Is January .
We said that we would open at least.
55 restaurants.
With around 90% of them being freestanding units. So we set up at least.
We also said that we have a robust opening pipeline.
And at the time, we said that development the development theme or cohorts working hard to both increase the pipeline.
And accelerate the pace of openings.
The quantity, but sustaining the quality of the openings and we are doing because we will always remain focused on our proven underwriting process to maximize ROI.
As you have seen with our first quarter results.
We have had a very strong start of the year with both topline and profitability ahead of expectations.
On.
We are saving.
A new base for our.
The plan of openings for this year, given the fact that.
We already made 16 rates of restaurant openings in the first quarter, including <unk>, which put us on pace to exceed opening in guidance, but around 10 additional restaurants.
Notably recent openings have been performing very well.
With returns above expectations with the potential we mentioned.
Our goal.
In January that we've seen.
The potential to open at least 1000, new restaurants in the next 10 years and we are confident that we will be able to continue securing on developing side.
Sites for highly profitable new restaurant, but as important as unit growth is for the long term.
It's important to say that recent trends have been driven much more by organic growth.
We're at 50 footprint, which by the way it still has room for improvement as well. So we are very pleased with the way we are balancing our growth.
The organic growth on our menu restaurant openings.
We are very confident in our pipeline of new restaurant, particularly for freestanding units on retail results have been outstanding So a very good outlook.
<unk>.
Great. Thanks Marcello.
Our next question comes from Stephen Gray of greater value management.
Steve and congratulations for the presentation and the result of Texas for the presentation and congratulations on very strong quarter under very challenging circumstances and asked that we address a note that we have in our release related to net debt. The net debt rose due to the decline in the value of the derivative instruments, we use to swaps.
Swapped some of our U S dollar debt into Bureau, so you asked us to provide a little more color on how that works.
And how the derivatives they are structured and how that might drive value lower iron so over to you Mike.
Perfect. Thanks, Matt and thanks, Steve for the question.
Every time that added cost around those issues that we go to the U S. Dollar capital markets. We have been doing that since 2009, we think that's the most efficient market that we can access both in terms of.
Costs reflected in interest rates.
In terms of maturity.
Not many companies in our region have access to this market and we are taking full advantage of that.
A proof of that is that we in the recent transaction. We just described we obtained the lowest.
Spread over treasury than we ever thought.
And on top of that we extended the maturity of our debt from $3 nine years to six years now.
But there is going to the U S dollar capital market generates a mismatch between the cash flow, we generate in local currency and our liabilities that are reflected in U S dollars.
And we always mentioned and that's our policy.
To take a very prudent approach to risk management, that's why we use derivatives in order to convert part of our debt.
From U S dollars to Brazilian Reais.
And to do that we use derivative instruments those derivatives have a mark to market.
Right.
That's when the Brazilian real depreciates against the dollar.
Then our debt goes down.
Together with our lower EBITDA.
In U S dollars.
When the Brazilian reality appreciates against the dollar than our dollar goes our debt salary goes up in U S dollar terms.
At the same time, our results and our cash flows.
Right.
And Thats.
The remedy works and how our risk management.
Approach works and links when we are trying to do is to link our cash flow generation with the outflows that we have.
And what's what happened in this particular quarter is exactly that the Brazilian real appreciated against the dollar we are generating more cash flows from the U S dollar terms.
The debt is going.
Up and Thats, how the risk management policy works.
Great. Thanks Mariano.
The next question comes from reduces our growth rate and again I mentioned earlier that both Jaguar and liquidity, we will have some overlap in their questions. They also asked.
So much of this is.
So congratulations on the results market share dynamics.
However, power market share has been performing sort of across the region.
And again thanks for this is job one of you for your questions. Okay excellent. So a quarterly door research, we increased total market share.
Sure gap against our nearest competitors by about three percentage points across the business and this is I would say very consistent across the region. Several markets saw year over year recent share gains in the mid single digits.
Why is this happening I would say that there is no silver bullet.
We believe that this is a testament to our competitive advantages.
Particularly.
A successful <unk> strategy, our digital platform is driving market share gains for sure.
Because it is allowing guests to choose where when and how to enjoy the Mcdonald's favorites.
And we talk a lot about the stickiness of the off premise sales channels.
<unk> mentioned some details around that but for example, if you're talking about Brazil, our biggest country.
We are the leaders in the entire delivery segment.
This includes every play in that.
Marketplace. For example, all the bits of change change in Brazil, and we are the leaders of that market.
Thanks to the consistent way, we are working with our partners in Brazil, and the coverage of this service across our footprint leveraging obviously our.
Freestanding units, which are divest units to offer these delivery segment. So we are very pleased with the market share gains we saw in recent years.
Im very pleased that we continue to see those.
Good numbers in the first quarter of 2022.
Great. Thanks Marcello.
Bob Ford from Bank of America centers, the number of questions. So I'll try to break this up a little bit.
One relates to what percentage of sales are currently identified and so I'll turn it over to his alright.
Hello, Bob.
We'll leave this question to loyalty program.
Is the engine that we are using to increase identifiable sales.
Currency, our loyalty program is exclusive to the drive through sales.
And as part of the club VIP out to market. We have talked about this already today, we have through this program 4 million identifiable numbers. Okay. This.
Is generating a 15% to 30% decreasing the frequency that program.
Thus the number of identifiable number that we have today.
As we said earlier, we are working on a more comprehensive and then I would say sophisticated loyalty program <unk>.
This new program will take the learnings that we're having with the VIP club with the club VIP of blocks and another best practices that were taking from 40 markets have implemented.
And loyalty program called my Mcdonald's rewards.
Right. So what we expect is.
Two to leverage on that and.
Just to build not only on those experiences but to have our our own experience and the good news is that this loyalty program is not only about bonds or discounts is about experience and thats why we have more so so hard.
To improve our experience in our restaurants I can tell you that our goal for 2025 is to reach 40% of identify the wholesales.
Great. Thanks Bruce.
So Bob also asked a number of questions related to the family business what percent of sales or come from families. What proportion of those are happy meal and how should we think about the having no schedule in terms of promotional properties for this year.
And I'll pass it over to myself, okay, yes, but they're probably business used to be and continues to be.
A very important part of our business.
<unk> was around 40% of our business directly related with families and even during the pandemic.
Whereas able to visit our restaurants, we continue to do.
Enjoying their favorite meals from from home delivery are visiting us through a drive through.
And this part of the rehab cost report very fast in fact in many markets we are seeing.
Who needs or debate of happy meal sales.
Already above pre pandemic levels, which is very important for us.
No that part of the explanation of why you start cutting our roaster of.
Our properties for the <unk> program. This year as you May know, we are the only U S article Costa.
Our exclusive agreement with Disney.
This year, we have some properties coming from our current leasing which are very popular.
During the weeks.
We are offering those kind of properties in many countries. We are seeing a regular high numbers.
How many mid stage so we are.
Very pleased with this part of the reason is that continues to be a very important for us and it is traditionally the strategy going forward.
For the company.
Great. Thanks Marcello.
We have a couple of questions related to experience of the future and self order kiosk sales Richard Cathcart from Bradesco <unk>.
I actually said two questions one relates to the increase in guidance with which I think we've already addressed for you Richard.
The other one is that we mentioned that half of orders and EOG have restaurants are being made through the self order kiosks. If we have an idea of sort of where that can go and related to that David hertzberg of Stifel assets.
The average check growth between our average check difference between the self order kiosks in the front counter.
What drives that difference okay.
Great.
Let's begin with the first part of the first one.
Before the pandemic.
For example, typically in the restaurants, where we have self order kiosks.
In Vod, if restaurants, we had something around 30% of the <unk>.
Guests counts inside the restaurants made through the self order kiosks seven.
70% still at the front Gunther.
After the pandemic in recent weeks or months that number grew to about 50% more than half of the customers that are receiving us.
The other restaurants are ordering through their self ordering kiosks and we already have some of our markets.
The one that introduced yield.
In earlier stages in 2017 2018 were these.
Participation of the search for a new gifts is already above 70%, so with P&C room for.
<unk> in this we continue to see an increasing their share of.
Orders made through the self order kiosks and the great news about that is.
The second question mentioned <unk>.
Typically we see something between 15 and 20%.
Better average check higher of an object in the orders made through the self order kiosks. The main reason for that is that the rest of it.
There is a lot of.
Our intelligence a lot though.
Thinking about how we display the offer us in the cellphone deals the artificial intelligence the piece.
If both of these features Scott.
Order to walk through different offers and different products, depending on what you are already so thats why typically in this.
<unk> disorders, we see.
Not only the higher of electric but a better.
Polishing for us. So that's why this is so important and that's why we are so encouraged by the results. We are seeing in terms of the investments we made in the past we will continue to make for deploying <unk> across the region.
Perfect. Thanks, Marcella and one last one here from Bob.
He asked about mall store guest counts compared to pre pandemic levels and sort of over to us.
Alright, yes.
<unk>.
What we're seeing is today, we're still negative versus Q1 2019, but we're very very close to two the normal volumes of that and this is due to the negative impact that youre seeing in the shopping malls.
Alright, I wanted to highlight that in freestanding <unk> were flat versus Q1, 2018 and that in U S dollars as reported.
Larry Gary Busey, Alright perfect.
Perfect. Thanks, Louise and actually we don't have any more questions in the queue wanted to thank everyone.
For joining us today for all your interest in the company and great questions look forward to speaking you again speaking to you again in August on our next earnings webcast until then please stay safe and have a great day.
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