Q3 2023 Arcos Dorados Holdings Inc Earnings Call
We're very deliberate and long term profitability growth.
Among the most important elements of this strategy is to find new.
Guests measure value based on more than price.
Their value perception includes quality.
Service.
Convenience and Optionality as well.
This is where the region's largest freestanding restaurant portfolio and our previous strategy of digital delivery and drive thru booth.
Boost guests value perception.
Perhaps the best indicator of the strategy is working is that comparable sales continued growing well above inflation across our business.
Strong gas volume growth in nearly all of the main markets.
Even if consumption moderated in the region sales growth remained strong delivering cost and expense leverage to generate improved profitability.
We are reinventing our cash generation to expand the rest of them footprint in a highly underpenetrated industry.
First year returns on investment for new restaurants remain well above historical average.
Proving that penetration continues to generate demand in our region.
New restaurants also bring significant economic benefit to the communities we serve.
Especially through the creation of first time jobs.
Long term career opportunities for young people.
Let's take a look at consolidated results for the third quarter of 2023.
Total revenue surpassed $1 $1 billion.
Rising 22, 1% in U S dollars versus the prior year period.
Guest traffic grew in the mid to high single digits in most markets in line with our sales growth strategy.
Adjusted EBITDA rose with revenue growth.
Reaching $129 $1 million.
U S dollar EBITDA growth was driven mainly by higher sales.
But we also managed to expand margins, thanks to better food and paper costs and some fixed cost labor at us in the quarter.
Net income of $59 $7 million or 28 cents per share.
Rose 20, 744% over last year's strong results.
System wide comparable sales grew 37, 3%.
About one four times blended inflation across the company.
All the market outgrew inflation and data in visa share between the Mcdonald's brand and our nearest competitor expanded in our main markets as well.
Among the markets with the strongest visa chart performance where Brazil.
Chile in Costa Rica, and Mexico.
<unk> sales accounted for 50% of systemwide sales.
With 20% identified savings across the business.
A few weeks ago, we launched our loyalty program.
Which will help us reach the goal of 40% identified saves by the end of 2025.
Bruce will touch on that later.
Delivery has proved to be a remarkably consistent sales channels with a 48% increase in local currency sales over the prior year.
And try to sales growth, 17% in local currency complementing the strong rebound in on premise sales channels.
For the year to date through September we opened 45 restaurants, including 41 freestanding units.
Growth accelerated in the third quarter.
27 restaurant openings and we fully expect to meet opening guidance for the full year 2023.
In fact as of today, we have opened 60 restaurants in our footprint since the beginning of the year.
Let's go to risk for an overview of safe by four months in each division.
Thanks, Marcelo and good morning, everyone.
Brazil's comparable sales rose 10, 8% or $2 three times inflation in the quarter.
Remarkably gas volume rose mid single digits building on last year's strong results, despite the more challenging consumption environment.
Our value and convenience offerings are resonating with guests in Brazil.
About 61% of sales came through digital channels in the country.
Where we were able to identify 25% of sales to drive increased guest frequency.
And average revenue per user.
Deliberate sales also remained strong in the Brazilian market rising 32% versus last year in local currency.
The Mcdonald's brand consolidated its market share leadership in the country with more than twice the market share of our nearest competitor.
Marketing initiatives in the quarter included strong brand experienced campaigns focused on important passion points for younger guests.
The highlight was the sponsorship of the town.
Biggest music festival in Brazil this year.
We build Latin Americas largest mcdonalds restaurant to serve 50 bar goers and launched a limited edition Mac mailed the town sandwiched in all restaurants to bring a taste of the festival to the entire country.
We also maintain the brand's connection to sports with the sponsorship of the FIFA Women's World Cup.
Online broadcasts <unk> Brazil's biggest streaming channel.
Finally, the Lantus of Muck theory, <unk> plateau, and not very deep cat boosted traffic by bringing innovation to the dessert category.
No, let's comparable sales grew 11, 5%, which was four times the division's blended inflation in the quarter.
Volume growth accounted for about two thirds of comp sales growth with all markets are growing inflation by two five to eight five times inflation in the period.
The NOLA division reached some of its highest ever market share needles backed by positive brand attribute trends.
Marketing activities featured many innovations across the region, including the launch of Grand sandwiches.
<unk> and tasty platform.
In Mexico, the hash Tag Mcdonald's, Mexico, Mannkind brand campaign was endorsed by <unk> the <unk>.
Popular Mexican Formula one driver and including the May new take a famous our campaign.
And in Puerto Rico, We launched the Secretary Candle brand building campaign.
Partner with Tommy Torres a popular local musical artist.
Flat comparable sales grew one three times the division's blended inflation rate.
Inflation a growth in Argentina was complemented by mid teens comp sales growth in both.
Chile and.
In Norway.
As in Brazil, and note that we generated strong volume in nearly all slack markets in the quarter.
Slabs markets captured additional market share with improved scores in brand attributes reinforcing mcdonalds brand preference across the division.
To continue strengthening our leadership in the beef segment, we launched the Bacon Cheddar Mcmahon sandwich.
And the belief that the shelter in Argentina, Chile, Colombia, and Ecuador with strong sales results in all four countries.
We also continued the rollout of best Burger extending the platform to Aruba, Curacao and Trinidad.
That he said platform produced excellent results with the launch of Marc Fleury products with locally relevant brands in markets, like Chile, Colombia, Peru and Uruguay.
And the good news is that we are generating positive sales trends halfway through the fourth quarter as well.
Guest volume growth remains solid in most markets.
As we head into the end of the year.
Over to you.
Thanks Lee.
Good morning, everyone.
The quarter's adjusted EBITDA growth of 25, 8% in U S dollars.
Was driven by both increased sales and margin expansion.
Consolidated EBITDA margin improved by 40 basis points when.
While we continued offering value to our guests with competitive pricing at the best restaurant experience in the industry.
Lower commodity cost environment.
Through to our gross margin.
This combined with DNA expense leverage drove the quarter's margin improvements.
Food and paper costs declined by 90 basis points as a percentage of revenue.
With gross margin expansion in all three divisions.
G&A.
Improved by 40 basis points.
Is the sales growth and the devaluation of the Argentine peso.
Which represents an important part of our corporate G&A.
Most other expense line items were relatively flat versus the prior year.
Set for other operating expenses.
Which had a negative variance due to several puts and takes primarily in flat.
Third quarter adjusted EBITDA grew strongly in all the innovations with double digit growth in Brazil and noted.
Our top line growth drove operating operational leverage.
Brazil, EBITDA grew 24, 8% in U S dollars, which was in line with top line growth in the division.
EBITDA margin was flat with lower food and paper payroll and G&A offset mainly by higher occupancy and other operating expenses.
No less EBITDA grew 42% in U S dollars.
Including 110 basis points of margin expansion in the quarter.
Food and paper.
Together with occupancy and other operating expenses drove the margin improvement.
Slats underlying operating results were very strong in the quarter rest.
Restaurant margins improved with lower food and paper.
Payroll and occupancy and other operating expenses.
Royalties were higher due.
Due to the final step up in our royalty rate. Additionally.
Additionally.
A combination of items in other operating expenses this year compared to other operating income last year generated the negative variance in slash EBITDA margin.
Let's turn to the <unk> strategy of digital delivery and drive thru.
Digital sales grew 47% year over year with sales from delivery, the mobile App and self order kiosks provide a half of system wide sales in our deal repeat.
Identified sales improved from 16% last year to 20% in the most recent quarter.
We don't have over 75 medium unique registered users in our database.
And more than 17 million average monthly users of their mobile app.
Its ease of use and multitude of functionalities make it by far the most popular app in Latin Americas Kyocera industry.
Even in Mexico, but we're working hard to increase digital sales penetration and we have the third largest <unk> retro portfolio. Our mobile app is by far the most popular in the countries kyocera industry as measured by active users.
Delivery and drive thru sales rose by 48% and 17% in constant currency during the third quarter.
Delivery accounted for 17% of system wide sales with several markets generating a much higher contribution to sales.
On delivery continued to expand and we are still lingering from the process. So far they evolution is encouraging.
Drive thru sales rose, 17% accounting for 25% of system wide sales in the period.
We have been very pleased with our sales growth in both off premise channels. In addition to the strong results we have seen in on premise channels for the last several quarters.
Importantly, the mobile order and pay functionality on the App is growing exponentially and supporting all sales channels, especially in sled.
<unk> B has the second highest customer satisfaction scores across all sales channels.
Which is helping increase overall customer satisfaction scores.
As part of our successful digital strategy last month, we executed the nationwide launch of our new loyalty program toward restaurants in both Brazil and Hawaii.
We are encouraged by guest response, so far and we have already reached one 8 million members.
We built on learnings from my Mcdonald's rewards around the world as well as the insights generated through local pilots and a drive thru based loyalty platform.
Our plan is to roll out the loyalty program to several additional markets by the end of next year.
Loyalty boost the power of the mobile app by driving visit frequency, while increasing the percentage of identified sales to provide a more personalized guest experience.
We look forward to sharing progress on future calls.
With above average returns on investment.
We are accelerating opening some modernizations into the end of 2023.
Supported by stronger cash from operations and a healthy balance sheet.
EBITDA growth continues to offset the planned deployment of balance sheet cash.
The fund restaurant openings and Modernizations this year.
As a result.
The net leverage ratio at the end of September was a very healthy onex.
And remained flat versus the end of last year.
Total debt rose modestly versus year end 2022, due to the appreciation of the Brazilian real which reduced the value of our derivative instruments.
Also as expected.
Cash flow from operations improved sequentially in the third quarter with seasonally higher EBITDA and an improvement in working capital performance.
We expect to see similar or stronger cash flow from operations during the fourth quarter.
<unk> told you about our pace of openings so far this year.
And our confidence in meeting this year's guidance.
I wanted to add that 70 of the 45 restaurants, we opened in the first nine months of 2023.
Used the modular and highly efficient restaurants 2.0 design.
We told you about during our Investor day at the beginning of this year.
We also opened a flagship sustainable restaurant in Sao Paolo Brazil.
With multiple sustainability initiatives, including 20 that have already been rolled out to all restaurants in the country.
It is worth repeating.
The above average ROI for both restaurant openings and Modernizations provides compelling evidence that we still have significant room to grow for many years to come.
These higher returns are expected to support continued growth and long term free cash flow generation.
More than half of all restaurants now has the experience of the future format.
And we are very encouraged by the results from restaurant organizations, which are generating at least high single digit sales lifts at mid teens returns on investment.
We do not take these achievements for granted.
Above average rois as a result of a very disciplined and careful approach to restaurant development.
That has also benefited from favorable shifts in consumer behavior.
Once restaurants are open operational execution becomes the key to success and.
And we have decades of experience on both fronts.
Capital expenditures in the third quarter.
$105 million, bringing the nine month total to 228 million.
We expect to accelerate growth over the coming years.
While retaining discipline with the development processes and return expectations.
And the healthy balance sheet that delivered outperformance over the last several years.
There is still so much room to grow and we intend to capture that growth potential in the most sustainable and profitable manner possible.
Hello to you.
Thanks Mariano.
During the third quarter, we received recognition for the commitments we have made to benefit the communities, we serve and to provide the best work environment in our industry.
Three of the six pillars of our recipe for the future our youth opportunity.
<unk> to families on diversity and inclusion.
We have received recognition related to the <unk>.
<unk> pillars.
On a gross all three divisions from prestigious organizations like great place to work.
Two months and medical.
We are making progress with the other three pillars as well.
Sustainable sourcing circular economy on climate change.
So far four countries have transitioned to 100% cage free eggs.
And we remain aligned with the U S market commitment to being 100% cage free in all countries by 2025.
In Mexico, we received premium rollout.
Recognizing our cooking oil recycling program as being among the best sustainability practices in the <unk>.
Countries food and beverage industry.
And we recently signed new agreements to increase the amount of renewable energy sources, we use in our operation.
Which we will tell you more about on our next call.
To learn more about the recipe for the future ESC platform you can visit our website and download the audited ESG report for 2022.
To wrap up our prepared remarks, I would like to share a few final thoughts with you.
The strong results, we reported today demonstrate the importance of a consistent long term strategic approach to delivering value and convenience to our restaurant customers.
As you have heard many times our objective is clear.
Drive sustainable topline growth over the long term.
And as topline growth social profitability.
As we open even more freestanding units.
Modernize even more existing restaurants.
And develop even more digital capabilities, we are strengthening and expanding the structural competitive advantages that make mcdonald's by far.
Preferred brand in the Latin America <unk> industry.
There is still so much work to be done to normalize our operations across the region.
And there is still so much growth potential ahead of us.
But thanks to the consistency of our strategy and execution, we are capturing our opportunities and tackling our challenges from a position of strength.
We expect to have a solid final quarter to a very strong 2023.
And we will provide you with our 2024 guidance for restaurant openings and capital expenditures.
<unk> next year.
Thank you all for your continuing support.
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 on the left hand side of the webcast platform.
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 all of your questions.
Okay, well actually we have quite a few questions today.
And we're going to try to get to as many of them as we possibly can thanks, everybody for your participation and.
And we'll get started today with Jaguar <unk> from Goldman Sachs, who says hi, Arcos team congrats on another solid quarter and thanks for taking questions.
Joe Charter has a multipart.
Question or set of questions I'm going to split among our speakers here the first for you Marcello.
Gerardo says repeating my question from the second quarter. Once again, you outperformed the industry by far while your competitors continued to note a weak consumption backdrop, not just in burger, but across multiple <unk> categories. How are you seeing demand going forward do you think this trend is exclusive for mcdonalds or broad market based.
<unk>.
Okay was warm in tier one and thank you for your questions.
For sure we are very pleased with the results.
We published today in terms of sales growth, particularly.
It's important to mention that we expect to have a solid fourth quarter too.
And in that sense to close a very very strong 2023, the momentum we captured at the beginning of the year in the first Gulf continue throughout the third quarter.
Comparable sales growth well above inflation was driven by several things.
Most of them I would say that our long term things or fundamentals of the meetings beginning.
Beginning with the structural advantage that we have in terms of our footprint the freestanding restaurants, the amount of freestanding restaurant that we have.
<unk> is a huge advantage.
This is the gating beer since we are accelerating our expansion on 90% or more of the new restaurant units are freestanding.
Then we have the consistent execution of our three uses throughout the sheets, our robust digital platform.
Finally, I think that it is important to mention that we are executing a pricing strategy based on offering compelling value across the entire menu board, which is a huge.
It has a huge impact in terms of the value perception of the customers Thats why not only comparable sales results are very strong, but the Mcdonald's brand strength is.
All time high in the region.
So our plan is clear is to continue to drive sustainable sales growth.
And in that way generally operate nevertheless on group long term profitability I'm pretty we are pretty confident in our ability to continue capturing opportunities to sustain strong operating results since none of the current growth drivers on the short term.
Great.
Then jarrod has a sequence of questions that I think are most appropriate for you Luis.
First is we're seeing your closest competitor being selectively more aggressive on pricing I believe he's talking about Brazil here. What is your strategy to fight this and what were the implications in terms of traffic's traffic and.
Tickets and same store sales in the third quarter of 2003.
Yes, okay.
Thank you Chantal.
Going to the part of the question Dave is talking about the traffic and the ticket. They are evenly split okay that us we have already mentioned and.
The second part of the question. The answer is that will go into sustained the growth.
Like Marcelo already.
Remarked, primarily focusing on improving first our operations.
Today operational excellence, we believe is an important competitive advantage and in strategic pillar for US we will keep on offering good value for our guests through every channel digital delivery drive thru Francona and of course these are centers and we're very confident.
And we have a very solid strategy for the near future.
Great.
Also sorry Jaguar also asks.
You apparently gained significant market share in delivery in Brazil. This quarter could you. Please share more color on the performance within the on premise channel.
For both freestanding and food courts.
Yes, yes.
Yes, we had a very expressive increasing in our delivery not only sales some volumes on market share and we did this despite a very important recuperation in drone counter and and research centers.
In both restaurant formats firsthand.
Standings, and Anthro from Congress and a full conference alright.
<unk>.
This breakup.
Brick operation and trained in India in the sales in from Canada, and the sales were aided by a very effective affordable platform and a special focus like I said on operational excellence.
Great and then finally for me with NOLA posted a nice sequential acceleration in growth.
And charge offs to what drove this.
Okay.
No.
Nadal evolution.
The explanation is not one single bullet we have a very solid plan in the division.
It includes a product mix strategy and when I say product makes I'm talking about of course, the premiums desserts chicken.
A very aggressive set of actions in delivering.
Drive thru and digital and in many markets several brand building campaigns, okay. So very solid and aggressive plan, but the beauty is that most of the divisions country are contributing to this result and mostly.
In hearth are very consistent and currencies.
Great. Thanks Louise the next one also from Chagal for you Mariano.
You mentioned some pressure on rents in Brazil, Despite the negative <unk> index, how should we add this up and how much of a tailwind could this be to margins going forward.
Hi, Hello, Thank you for the question.
After these not ranked itself.
The language some modest pressure is occupancy and other operating expenses.
Which consists of many items with different trends and we are not seeing a specific pressure in rent in particular in Brazil.
Having said that we are of course very pleased with the 25% growth in EBITDA in the quarter.
Okay.
And actually back to U S.
Last one from Java can you share more about your apps net promoter score and a potential areas for improvement in Brazil.
All that has the greatest rating in the country and we will continue to invest to maintain the connection and I will take care of the level of favoritism that cash.
Customers. Okay. So we're going to keep on investing in future sort of neutral and functionalities.
Perfect.
Let's move now to Bob Ford from Bank of America, Congratulations on the quarter.
Bob also with a multipart question. He starts with how do you expect results like this to influence your MSA renewal does mcdonalds appreciate the high cost of capital and volatility in the region. What are your early thoughts on the new MSA in terms of royalty rates and capital investment commitments and I'll give that one to you. So okay. Thank you.
Thank you Bob for your questions and being here today.
I think that this renewal process is taking place in a very favorable favorable time.
For the Mcdonalds system in general and for alcohol Rollouts.
The Mcdonald's brand attributes are the strongest they have ever been in the region in almost all countries in Latin America the Caribbean.
Both companies have been generating strong financial results, which is very important.
Uncle analysis consolidating its leadership position with historic historically high market share, including in some cases, two or three times as much market share as our nearest competitor in main markets in very important markets.
Argos is social generating returns on investment for both opening some modernizations.
Well above our historical Avinash.
Maybe a very important point.
The both companies see significant growth potential in the region for many years to come.
So that's why I say that this renewal process is taking placing in a favorable favorable time, we though that said we do not expect to have news on details with respect to the MSR.
MFA renewal until next year so.
State.
<unk>, we will share as strong as possible any news around this process.
Great. Thanks. Bob next question is also how are you thinking about labor reform risks in Mexico, and the step up in wages for 2024, where do you perceive opportunities to mitigate and I'll give that one to you.
Okay. Thank you both thank you for being in getting in the call.
In Mexico in the last three years in fact, we have seen tariff pressures.
Having salaries growing well above inflation.
And we have been able to mitigate this impact.
By improving productivity in our restaurants and in fact, we have been doing that.
Extremely well, but most important I would remark that the increase of disposable income in consumer's pockets.
Of course with the right strategy to attract these customers to our stores resulted in sales increases in Mexico, well above inflation and I think that they help to explain the great growth story, we are seeing in that market.
Great. Thanks Mariano.
Then last one from Bob actually is also related to a question that we received from new leases.
JP Morgan So I'll read it from Bob first lastly, can you comment on your loyalty program. So far in terms of adoption costs and returns and also our frequency and average ticket actually changing or is there a selection bias and then at least as asked a similar question or a related question to loyalty reduces our go through from JP Morgan.
With the broader rollout of our loyalty program can you comment on the engagement Youre seeing both for in store and digital channel dynamics, So all sort of royalty related and we'll give those to you.
Alright.
Hello, Bob and polices and good morning.
As we've mentioned we're very happy in October we've launched our loyalty program in our restaurants in Brazil, and we were able to accelerate the process and add would Hawaii too.
We have already reached one 8 million members and we expect to increase the volume of identified sales offset program growth. This is important because loyalty what indices boosts the power of the mobile app.
Okay, and that is increasing or driving more frequency. Okay. It drives visit frequency while increases the percentage of identified sales and that combinations gives us allows us the.
Those us to provide a more personalized guest experience so and this.
New or more personalized guest experience allows us to two <unk>.
<unk> our ticket that every ticket every transaction can be more profitable and of course, what it does is it helps us.
It'd be more efficient with our marketing efforts with our marketing investments so that would be the impact and we intend to rollout the program to most markets by the end of next year.
Great. Thanks, Louise next a couple of questions from Julia Rizzo Morgan Stanley.
She starts with could you. Please break down same store sales growth in Brazil by freestanding stores and malls.
And also mentions that.
The impressive same store sales year to date, despite macro handle headwinds I understand comps are harder in the fourth quarter of 'twenty three so what should we expect for same store sales.
So what should we expect on how our same store sales.
Now, let's start with those tumors so okay.
Good morning, Julien Thanks for your questions.
In terms of restaurant formats with these extremely well in Brazil and in the whole company in all different formats.
Obviously in the case of freestanding units, Utah competitor advantage. The fact that you can operate drive thru in that format, which is G system contributing <unk> saison.
Delivery is much easier to be operated from those formats from the freestanding units, but we did well even in shall be most particularly in July.
The traffic generated by <unk> was was pretty impressive and we did well in Shelby most do.
In the second part of the question as I mentioned I think in the first question that came from from Thiago. We are very pleased with the trends and the momentum we are experiencing in terms of sales.
The base of comparison is getting harder and harder to read because we are in the run up several quarters.
Expressive.
Material.
Comparable sales growth well above inflation.
Again, there are many drivers many venues.
<unk>.
Bringing even more same store restaurants, and we continue to execute our strategy.
It's very disciplined approach.
There are still.
Opportunities to improve our results. So we are we are pretty convinced that we will do well for the rest of the year on next year too.
Okay, and then Julien.
Question, a little bit different topic, but we'll stay with the Marcellus can you remind me how is the evolution of new openings in terms of sales and margins for your one year or two and maturity.
In terms of the maturity of the restaurants typically in the past we've talked about three to four years for restaurants to get to the mature level of sales I would say that after the pandemic. We are talking more more about three of them for I think that the Gulf of maturity God.
<unk>.
But.
That's something that we continue to look at and to get information from from the recent investments and in terms of returns what we expect at least you said 20%.
Return cash on cash for the first year, So obviously that number gets better.
<unk>.
So on in the last two or three years the redemption.
We're above that 20% that is the minimum that we ask for for the openings. So we are very pleased with the kind of results that our new restaurants are generating from day one.
Great. Thanks Marcio next.
Next from Philippe <unk> from Bradesco.
He actually asked a couple of questions.
I think I already answered could you breakdown, Brazil same store sales between average check growth in guest volume I think Luis touched on that about evenly split and going forward. How can you sustain the solid same store sales growth in Brazil, and nobody I think also we've touched about touched on sustaining sales.
So I'll go to question number two if anybody hasn't been to answer question. One that we can come back to it but question number two which I believe is for your money on them.
Should we think about gross margin expansion sustainability, considering beef prices are likely to increase in the next 12 months.
Yes.
The outlook we have for.
The margins we have seen in this ethylene this quarter an improvement with a paper costs of <unk>.
90 basis points.
And.
For the rest of 2023, we are also seeing.
That's our food and paper costs when we.
Remain higher than what they were what it was in 2020 'twenty. Two so that's that's the main trend that we are that we are seeing now in terms of gross margin for 2023 and the expectation of course is to continue.
<unk> when our main suppliers.
<unk> advantage of.
All the large scale and as the volumes that we have that's unique in the industry.
Let's stick with you Mariano and this is Felipe is lost.
I'll keep our question.
Could you please explore a bit more of a flat EBITDA margin dropped due to higher other operating expenses and higher G&A. What are the main drivers of higher expenses and should we expect continuous deterioration of expenses and flat.
Yes, well first don't take slots Q3 as a trend.
And also keep in mind that in slab at the restaurant level.
<unk> includes food and paper and favorable other operating expenses and royalties. We are seeing an expansion in margins of 120 basis points during the quarter.
In terms of G&A and other operating income there are several positives or negatives that applied during the quarter that should not be taken as a trend going forward.
That answers the question for EBIT.
Great. Thanks Marianna.
Next <unk> from Santander and good morning, everyone. Congratulations for these results.
Regarding same store sales growth could you please share with us how much the digital sales have contributed for the stronger increase in this quarter and what can we expect of digital sales as a percentage of total sales going forward.
And so over to Lewis.
Alright, Thank you Laura for the question digital sales.
This last quarter were up 47% and reached more than $731 million.
That this is a new quarterly record.
This digital sales accounted for 50% of our system wide sales and we have an opportunity to equalize I would say the the performance in many markets because we have big variations when we compare our market to market. So that we have an opportunity.
Our top.
In not only digital sales, but in identified sales is Brazil.
The digital sales for the country accounts for 60% and identified sales for 25%. So we can see but well you can see in the in the near future is that we're going to keep on investing and developing these and developing this.
This tool this channel because for us is going to be really really important in the future.
Great. Thanks, and earlier I mentioned that at least as I go through from Jpmorgan I had a couple of questions. We entered one already the other one where he says I think congrats on the strong results you mentioned higher ROI on new restaurants can you comment on return metrics and sales list for the stores Youre remodeling and I'll go into you Marcello.
Yes, thanks recessed product question.
Awesome.
That we are experiencing in those restaurants that are converted our modernized and converting to the <unk> platform typically seen the high single digits when compared to the.
That brings.
A pretty solid pretty healthy return on that investment.
While we are experiencing the kind of comparable sales growth well above inflation, well above the rest of the market or peers in markets, where we are deploying <unk>, which is almost in every single market of the company and that's why in markets, where we have started with the process.
<unk> for example in the North part of Mexico, where we only have 20% of the restaurants converted to <unk>. That's one of the.
The growth drivers, which are up for the long term that I mentioned at the beginning so we will continue to see these kind of positive impact in our comparable sales coming from all the investments we are making.
In the <unk> format.
Great. Thanks, Matt So we actually have a follow up question from Julia Rizzo Morgan Stanley I think maybe just didn't hurt here. The number so sorry, a follow up here sales in year, one is how much of a mature store.
And I believe ourselves sudden to 75% to 80% range for year one.
So that just so everybody has that number as well.
And it looks like we'd actually don't have any additional questions. So we've reached the end of the Q&A session for today's call. Thanks again, everyone for your interest in our pursuit of auto and for joining today's webcast look forward to speaking with you again in the middle of March on our fourth quarter call until then.
Great day stay safe and happy Thanksgiving to those who celebrate.
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Hey, Dan.
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