Q2 2024 Arcos Dorados Holdings Inc Earnings Call - Q&A

August 14, 2024

He was strong. We compatible safe, growing well above all.

Marcelo: of inflation. He's shut about every month, leading to continuous market share games for the McDonald's brand in our food free. Total Revenue rose 6.8% in the second quarter [inaudible] reaching the highest level ever for the second quarter in U.S. dollars. Get traffic blue for the 13th consecutive quarter, continuing to support Compalable Saints, Even as consumers have become more discerning with their discretionary spending.

Operator: of inflation in just about every market, leading to continued market share gains for the McDonald's brand in our footprint. Total revenue rose 6.8% in the second quarter, reaching the highest level ever for the second quarter in US dollars. Get traffic grew for the 13th consecutive quarter, continuing to support comparable sales growth, even as consumers have become more discerning with their discretionary spending.

Speaker Change: of inflation in just about every market leading to continuous market share gains for the McDonald's brand in our footprint.

Operator: of inflation in just about every market, leading to continued market share gains for the McDonald's brand in our footprint.

Speaker Change: Total revenue rose 6.8% in the second quarter, reaching the highest level ever for the second quarter in U.S. dollars.

Luis Raganato: Total revenue rose 6.8% in the second quarter, reaching the highest level ever for the second quarter in US dollars. Get traffic grew for the 13th consecutive quarter, continuing to support comparable sales growth, even as consumers have become more discerning with their discretionary spending. This is where our own channel approach, strong value position and operational excellence have established McDonald's as the region's favorite US brand. System by comparable sales growth was 2.4 times the company's blended inflation, excluding Argentina.

Speaker Change: If traffic grew for the 13th consecutive quarter, continuing to support compatible sales growth, even as consumers have become more discerning with their discretionary spending.

Marcelo Rabach: This is where our own channel approach, strong value position, and operational excellence have established McDonald's as the region's favorite US brand. System by comparable sales growth was 2.4 times the company's blended inflation, excluding Argentina. According to market sources, as well as our own research, market share expanded in our biggest markets, outpacing the main competitors in nearly every market. The 3D strategy of digital delivery and right through has set a new standard of quality, service, and value for the quick service restaurant industry in Latin America and the Caribbean. Today's guests expect their QSR experience to be convenient and versatile, with multiple alternatives to receive their service and high-quality food at the fair value.

Marcelo: This is where our own channel abroach, Strong Barrio Blu and Operational Excellence have established McDonald's as the region's favorite QSR class. System by Comparable Sales Growth was 2.4 times the company's blended inflation, excluding in our???. According to market sources, as well as our own research, market share expanded in our biggest markets, outpatients the main competitors in nearly every market. The 3D strategy of digital delivery and drive-through has set a new standard of quality, service and value for the quick service restaurant industry in Latin America and the Caribbean. Today's guests expect their QSR experience to be convenient and versatile, with multiple alternatives to receive their service and high quality food at the fair body.

Speaker Change: This is where our Omnichannel approach strong value profit.

Speaker Change: what

Speaker Change: position and operational excellence have established McDonald's as the region's favorite QSR brand.

Speaker Change: System-wide comparable sales growth was 2.4 times the company's blended inflation, excluding Argentina.

Speaker Change: According to market sources, as well as our own research, market share expanded in our biggest markets, outpacing the main competitors in nearly every market.

Luis Raganato: According to market sources, as well as our own research, market share expanded in our biggest markets, outpacing the main competitors in nearly every market. The 3D strategy of digital delivery and right through has set a new standard of quality, service and value for the quick service restaurant industry in Latin America and the Caribbean. Today's guests expect their QSR experience to be convenient and versatile, with multiple alternatives to receive their service and high quality food at the fair value.

Speaker Change: The 3D strategy of digital delivery and drive-through has set a new standard of quality, service, and value for the quick service restaurant industry in Latin America and the Caribbean.

Speaker Change: Today's guests expect their QSR experience to be convenient and versatile, with multiple alternatives to receive great service and high-quality food at a fair value.

Marcelo Rabach: And we are meeting their expectations with sophisticated digital capabilities, the dedication to operational excellence, convenient freestyle and restaurant locations, and the best menu offerings in the QSR industry. No other restaurant brand in the region can match these structural competitive advantages.

Marcelo: And we are meeting their expectations with sophisticated digital capabilities, the educational operational excellence, convenience, freestyle and restaurant locations, and the best menu offerings in the QSR industry. No other restaurant brand in the region can match this structural competitive advantage, will remain on base to extend this leadership position, with 37 EOTF restaurant openings in the first half of the year, including 34 freestanding locations. In our biggest market, Brazil, we added 21 EOTF restaurants in the first half, including 20 new freestanding units. Importantly, first-year returns on investments for new restaurant openings remain strong and will support additional unit growth for many years to come. Luis will now take a true safe performance in his TV.

Speaker Change: And we are meeting their expectations with sophisticated digital capabilities, a dedication to operational excellence, convenient freestanding restaurant locations, and the best menu offerings in the QSR industry.

Luis Raganato: And we are meeting their expectations with sophisticated digital capabilities, the dedication to operational excellence, convenient freestyle and restaurant locations, and the best menu offerings in the QSR industry. No other restaurant brand in the region can match these structural competitive advantages. We remain on base to extend this leadership position with 37 EOTF restaurant openings in the first half of the year, including 34 freestyle locations. In our biggest market Brazil, we added 21 EOTF restaurants in the first half, including 20 new freestyle units. Importantly, first year returns on investments for new restaurant openings remain strong and will support additional unit growth for many years to come.

Speaker Change: No other restaurant brand in the region can match these structural competitive advantages.

Marcelo Rabach: We remain on base to extend this leadership position with 37 EOTF restaurant openings in the first half of the year, including 34 Freestyle locations. In our biggest market, Brazil, we added 21 EOTF restaurants in the first half, including 20 new freestyle units. Importantly, first-year returns on investments for new restaurant openings remain strong and will support additional unit growth for many years to come.

Speaker Change: We remain on pace to extend this leadership position, with 37 EOTF restaurant openings in the first half of the year, including 34 freestanding locations.

Speaker Change: In our biggest market, Brazil, we added 21 EOTF restaurants in the first half, including 20 new freestanding units.

Speaker Change: Importantly, first-year returns on investments for new restaurant openings remain strong and will support additional unit growth for many years to come.

Luis Raganato: Luis will now take a true six performance in his division.

Speaker Change: Luis will now take us through six performances in each division.

Luis Raganato: Thanks, Marcelo, and good morning, everyone. Now, in turn, sustainable customer growth starts with sales. So far this year, sales growth has been strong in U.S. dollar terms. Brazil's comparable sales rose 10.2%, up 2.6 times inflation in the period, with volume and average check contributing about equally to growth. The digital channels that include the mobile app, delivery, and self-order kiosks generated almost 70% of all sales in Brazil, and identified sales now represent about 28% of the division sales. Please keep in mind that for a sale to be identified, we need customers to explicitly authorize us to track and use the data.

Luis: Thank you, Marcelo, and good morning, everyone. Long-term sustainable castle growth starts with sale. So far this year, sales growth has been strong in U.S. dollar. Brazil's comparable sales rose 10.2% up 2.6 times inflation in the period, with volume and aggregate check contributing about equally to growth, digital channels that include the mobile app. Delivery and Self-Orateos Mariano Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, generated almost 70% of total sales in Brazil, and identified sales now represent about 28% of the division sales. Please keep in mind that for a sale to be identified, we need customers to explicitly authorize us to track and use their data.

Luis Raganato: Luis will now take a true six performance in his division.

Luis: Thanks, Marcelo, and good morning, everyone. Long-term, sustainable cash flow growth starts with sales.

Marcelo Rabach: Thanks Marcelo and good morning everyone. Now in turn, sustainable customer growth starts with sales. So far this year sales growth has been strong in U.S, dollar terms. Brazil's comparable sales rose 10.2% up 2.6 times inflation in the period with volume and average check contributing about equally to growth. The digital channels that include the mobile app, delivery, and self-order kiosks generated almost 70% of all sales in Brazil, and identified sales now represent about 28% of the division sales.

Luis: So far this year, sales growth has been strong in US dollar terms.

Luis: Brazil's comparable sales rose 10.2% up 2.6 times inflation in the period with volume and average check contributing about equally to growth.

Luis: digital channels that include the mobile app

Luis: Delivery and self-order kiosks generated almost 70% of all sales in Brazil, and identified sales now represent about 28% of the division sales.

Luis: Please keep in mind that, for a sale, to be identified, we need customers to explicitly authorize us to truck and use that data.

Marcelo Rabach: Please keep in mind that for a sale to be identified we need customers to explicitly authorize us to track and use the data. The mail-making loyalty program that we launched in October of last year is performing very well in Brazil. I will tell you more about the loyalty program in a few minutes. Brazil's marketing campaigns include strong, happy meal properties such as business inside out to boost the family business. We also continue sponsoring Big Brother Brazil, the country's most popular reality TV program using it to support the chicken category. We also run promotions and limited time offers to strengthen brand affinity with many favorites such as McFish, McFry's, Tatey Sauce, and desserts.

Luis Raganato: The mail-making loyalty program that we launched in October of last year is performing very well in Brazil. I will tell you more about the loyalty program in a few minutes. Brazil's marketing campaigns include strong, happy meal properties such as Business Inside Out to boost the family business. We also continue sponsoring Big Brother Brazil, the country's most popular reality TV program, using it to support the chicken category. We also run promotions and limited time offers to strengthen brand affinity with many favorites such as McFish, McFry's, Tatey Sauce, and desserts. Now let's compare our sales group to 0.5 times the division's blended inflation.

Luis: The middle making loyalty program that we launched in October of last year is performing very well in Brazil. I will tell you more about the loyalty program in a few minutes. Brazil's marketing campaigns included strong Happy Meal properties, such as Disney's Inside Out 2 boosting the family business. We also continued sponsoring Big Brother Brazil, the country's most popular reality TV program, using it to support the chicken capital.

Luis: The meal-making loyalty program that we launched in October of last year is performing very well in Brazil.

Luis: I will tell you more about the loyalty program in a few minutes.

Luis: Brazil's marketing campaigns included strong, happy meal properties, such as Disney's Inside Out 2, boosting the family business.

Luis: We also continued sponsoring Big Brother Brazil, the country's most popular reality TV program, using it to support the chicken category.

Marcelo: We also run promotions and limited-time offers to strengthen brand affinity with menu favorites such as McFish, McFries, Tasty Sauce, and desserts. No less comparable sales grew 2.5 times the division's blended inflation, higher guest volume accounted for most of the quarter's sales. Mexico's sales grew strongly despite a tough comparison with Holy Week in the prior year quarter.

Luis: We also run promotions and limited-time offers to strengthen brand affinity with menu favorites such as McFish, McFries, Tasty Sauce, and desserts.

Speaker Change: No less comparable sales grew 2.5 times the division's blended inflation.

Luis Raganato: Now let's compare our sales group to 0.5 times the division's blended inflation. Higher guest volume accounted for most of the quarter's sales growth. Mexico's sales grew strongly despite a tough comparison with Hollywood in the prior year quarter. Digital sales grew at least 70 percent in markets like Mexico, Puerto Rico, and French Washington. For the entire division digital sales grew more than 60 percent versus a prior year leading to a significant jump in no less digital channel penetration.

Luis Raganato: Higher guest volume accounted for most of the quarter's sales growth. Mexico's sales grew strongly despite a tough comparison with Hollywood in the prior year quarter. Digital sales grew at least 70 percent in markets like Mexico, Puerto Rico, and French Washington. For the entire division, digital sales grew more than 60 percent versus a prior year, leading to a significant jump in no less digital channel penetration. No less marketing initiatives included the launch of Best Burger in Mexico, leading to around 50 percent higher comparable body growth for the Big Mac, Cheeseburger, and the quarter pounded with cheese in the country.

Speaker Change: Higher guest volume accounted for most of the quarter's sales growth.

Speaker Change: Mexico's sales grew strongly despite a tough comparison with Hollywood in the prior year quarter.

Marcelo: Digital sales grew at least 70% in markets like Mexico, Puerto Rico, and France, we've seen. And for the entire division, digital sales grew more than 60% versus the prior year, leading to a significant jump in no less digital channel penetration. NOLA's marketing initiatives included the launch of Best Burger in Mexico, leading to around 50% higher comparable volume growth for the Big Mac, Cheeseburger, and the Quarter Pounder with Cheese in the Gulf, from Properties supported Happy Meals sales in the quarter as well.

Speaker Change: Digital sales grew at least 70% in markets like Mexico, Puerto Rico, and French in Los Angeles.

Speaker Change: And for the entire division, digital sales grew more than 60% versus the prior year, leading to a significant jump in no less digital channel penetration.

Speaker Change: NOLA's marketing initiatives included the launch of Best Burger in Mexico, leading to around 50% higher comparable volume growth for the Big Mac, Cheeseburger, and the Quarter Pounder with Cheese in the country.

Luis Raganato: No less marketing initiatives included the launch of Best Burger in Mexico leading to around 50 percent higher comparable body growth for the Big Mac, Cheeseburger, and the quarter pounded with cheese in the country. Strong properties supported happy meal sales in the quarter as well. In addition, we leveraged the regional formula one sponsorship with the in-dozen-grunge platform to drive growth in the previous. Finally, we introduced new menu offerings in the important chicken and dessert categories in several of the division's markets.

Luis Raganato: Strong properties supported Happy Meal sales in the quarter as well. In addition, we leveraged the regional Formula One sponsorship with the in-dozen-grunge platform to drive growth in the previous. Finally, we introduced new menu offerings in the important chicken and dessert categories in several of the division's markets. Comparable sales grew two times slats blended inflation excluding Argentina. Guest volumes accounted for almost half this growth, with markets like Colombia, Chile, and Venezuela delivering the best results. The digitalization of arcadorados was also evident in slide with digital channel sales growth between 25 and 50 percent in markets such as Chile, Colombia, Ecuador, and Europe.

Marcelo: In addition, we leveraged the regional Formula 1 sponsorship with the Indulgent Grants platform to drive growth in the 3Ds. Finally, we introduced new menu offerings in the important chicken and dessert categories in several of the division's markets.

Speaker Change: Strong Properties supported Happy Meals sales in the quarter as well. In addition, we leveraged the regional Formula One sponsorship with the Indulgent Grants platform to drive growth in the 3Ds.

Speaker Change: Finally, we introduced new menu offerings in the important chicken and dessert categories in several of the business markets.

Marcelo: Comparable sales grew two times slash blended inflation, excluding Argentina, gave volumes accounted for almost half this growth, with markets like Colombia, Chile, and Venezuela delivering the best results. The digitalization of Arcos Dorados was also evident in slide with digital channel sales growth between 25 and 50% in markets such as Chile, Colombia, Ecuador, and Uruguay. The division of digital sales grew more than 30% versus the prior year, excluding Argentina.

Speaker Change: Comparable sales grew two times slash blended inflation, excluding Argentina.

Luis Raganato: Comparable sales grew two times slats blended inflation excluding Argentina. Guest volumes accounted for almost half this growth with markets like Colombia, Chile, and Venezuela delivering the best results. The digitalization of arcadorados was also evident in slide with digital channel sales growth between 25 and 50 percent in markets such as Chile, Colombia, Ecuador, and Europe. The additional digital sales grew more than 30% versus the prior year, excluding Argentina. These volumes in Argentina outperformed the broader economy and improved slightly against the first quarter of 2024.

Speaker Change: These volumes accounted for almost half this growth, with markets like Colombia, Chile, and Venezuela delivering the best results.

Speaker Change: The digitalization of Arcos Dorados was also evident in SLAD, with digital channel sales growth between 25 and 50% in markets such as Chile, Colombia, Ecuador, and Uruguay.

Luis Raganato: The additional digital sales grew more than 30% versus the prior year, excluding Argentina. These volumes in Argentina outperformed the broader economy and improved slightly against the first quarter of 2024. The country's macroeconomic indicators in the first half of 2024 exceeded our low expectations, but the operating environment remains very challenging. Against this backdrop, we are capitalizing on the competitive advantages we build over the years in Argentina to gain market share and strengthen brand preference. We believe this will position us well to return to grow once economic and consumption conditions stabilize. Slats marketing activities included attracted Happy Meal offerings across the division.

Speaker Change: The division of digital sales grew more than 30% versus the prior year, excluding Argentina.

Marcelo: These volumes in Argentina outperformed the broader economy and improved slightly against the first quarter of 2024, the country's macroeconomic indicators in the first half of 2024 exceeded our low expectations, but the operating environment remains very challenging. Against this backdrop, we are capitalizing on the competitive.., advantages we built over the years in Argentina, to gain market share and strengthen Grand Press. We believe this will position us well to return to growth once economic and consumption conditions stabilize.

Speaker Change: These volumes in Argentina outperformed the broader economy and improved slightly against the first quarter of 2024.

Speaker Change: The country's macroeconomic indicators in the first half of 2024 exceeded our low expectations, but the operating environment remains very challenging.

Luis Raganato: The country's macroeconomic indicators in the first half of 2024 exceeded our low expectations, but the operating environment remains very challenging. Against this backdrop, we are capitalizing on the competitive advantages we build over the years in Argentina to gain market share and strengthen brand preference. We believe this will position us well to return to grow once economic and consumption conditions stabilized. Slats marketing activities included attracted happy meal offerings across the division. She can focus promotions in Chile and innovations in the research category in Colombia.

Speaker Change: Against this backdrop, we are capitalizing on the competitive advantage.

Speaker Change: Advantages we built over the years in Argentina to gain market share and strengthen brand preference.

Speaker Change: We believe this will position us well to return to growth once economic and consumption conditions stabilize.

Marcelo: Slash marketing activities included attractive Happy Meal offerings across the division, chicken-focused promotions in Chile, and innovations in the district category in Colombia. In addition, we draw sales by focusing on the sport's passion point during the Copa America tournament, with activations related to local football federation sponsors.

Speaker Change: Slats Marketing Activities Included, Attracted, Happened Your Offerings Across the Division. She can focus promotions in Chile and innovations in the research category in Colombia.

Luis Raganato: She can focus promotions in Chile and innovations in the research category in Colombia. In addition, we throw sales by focusing on the sports passion point during the Copa Medical Tournament with activations related to local football generations sponsorships. According to our proprietary research, the McDonald's brand gained nearly three points of market share during the first half of 2024, maintaining a 2-1 advantage against its nearest competitor on average. We measured especially strong gains in Brazil, Chile, Colombia, Costa Rica, and Panama to name a few. Visit share also improved almost one point versus the prior year, building on top of the sustained volume growth we generated over the last several years.

Speaker Change: In addition, we draw sales by focusing on the sport's passion point during the Copa America tournament, with activations related to local Football Federation sponsorships.

Luis Raganato: In addition, we throw sales by focusing on the sports passion point during the Copa Medical Tournament with activations related to local football generations sponsorships. According to our proprietary research, the McDonald's brand gained nearly three points of market share during the first half of 2024, maintaining a 2-1 advantage against its nearest competitor on average. We measured especially strong gains in Brazil, Chile, Colombia, Costa Rica and Panama to name a few. Visit share also improved almost one point versus the prior year, building on top of the sustained volume growth we generated over the last several years.

Luis: According to our proprietary research, the McDonald's brand gained nearly three points of market share during the first half of 2024, maintaining a 2-1 advantage against its nearest competitor on Apple. We measured especially strong gains in Brazil, Chile, Colombia, Costa Rica, and Panama, to name a few. Vincent Scher also improved almost one point versus the prior year, building on top of the sustained volume growth we generated over the last several years. We will talk more about delivery when I come back to tell you about the release.

Speaker Change: [inaudible]

Speaker Change: According to our proprietary research, the McDonald's brand gained nearly 3 points of market share during the first half of 2024, maintaining a 2-to-1 advantage against its nearest competitor on average.

Speaker Change: We measured especially strong gains in Brazil, Chile, Colombia, Costa Rica, and Panama, to name a few.

Speaker Change: VisitShare also improved almost one point versus the prior year, building on top of the sustained volume growth we generated over the last several years.

Luis Raganato: We will talk more about delivery when I come back to tell you about the release, but it is fair to say that this sales channel continues leaders among all QSR brands, and during the first half of 2024, we added additional market share by continuing to deliver the best customer experience in this important segment. According to our research, the biggest market share gains in the first half of the year can be Brazil, Costa Rica, Ecuador, Panama, and Puerto Rico, Mariano Overfield.

Mariano: But it is fair to say that this sales channel continues to be leaders among all QSR brands. And during the first half of 2024, we added additional market share by continuing to deliver the best customer experience in this important sector. According to our research, the biggest market share gains in the first, half of the year came in Brazil, Costa Rica, Ecuador, Panama, and Puerto Rico. Mariano, over to you. Thanks, Luis! Good morning, everyone.

Speaker Change: We will talk more about delivery when I come back to tell you about the release.

Speaker Change: But it is fair to say that this sales channel continues to be the leader among all QSR brands, and during the first half of 2024, we added additional market share

Speaker Change: by continuing to deliver the best customer experience in this important segment.

Speaker Change: According to our research, the biggest market share gains in the third

Luis Raganato: According to our research, the biggest market share gains in the first half of the year, can be Brazil, Costa Rica, Ecuador, Panama and Puerto Rico, Mariano Overfield.

Mariano: This half of the year came in Brazil, Costa Rica, Ecuador, Panama, and Puerto Rico. Mariano, over to you.

Operator: Thanks, Luis.

Mariano Tannenbaum: Good morning, everyone. Second quarter of just a debita, glue about in line with revenue, with a relatively flat margin versus the prior year. To be fair, this year's results included a $16 million reduction of labor contingencies due to a favorable judgment in Brazil. Excluding this positive impact, a just debita was still the second highest US dollar result for a second quarter in Arcos Dorado's history. This, despite the significant negative impact on results from the Argentina business, a weaker currency in Brazil, and the less robust consumer environment across the region. In other words, to Marcelo's point earlier, Arcos Dora Hldg results are better able to absorb these external pressures given our geographic and food of paper, payroll and G&A offsets higher occupancy and other operating expenses as a percentage of revenue to keep the consolidated margin relatively flat versus the prior year.

Mariano: 2nd Quarter Adjusted Ipita, grew about in line with revenue, with a relatively flat margin versus the prior year, to be fair. This year's results included a $16 million reduction of labor contingencies due to a favorable judgment in Brazil. Excluding this positive impact, adjusted EBITDA was still the second highest U.S. dollar result for a second quarter in Arcos Dorado's history, despite the significant negative impact on results from the Argentina business, a weaker currency in Brazil, and the less robust consumer environment across the region.

Mariano: Thanks, Luis. Good morning, everyone.

Luis Raganato: Thanks, Luis.

Mariano: Second quarter adjusted EBITDA grew about in line with revenue, with a relatively flat margin versus the prior year.

Speaker Change: To be fair, this year's results included a $16 million reduction of labor contingencies due to a favorable judgment in Brazil.

Mariano: Excluding this positive impact, adjusted EBITDA was still the second highest U.S. dollar result for a second quarter in Arcos Dorado's history.

Mariano: This despite the significant negative impact on results from the Argentina business, a weaker currency in Brazil, and the less robust consumer environment across the region.

Mariano: In other words... To Marcelo's point earlier, Arcos Dorado's results are better able to absorb these external pressures given our geographic and, Food and paper, payroll, and G&A offset higher occupancy and other operating expenses as a percentage of revenue to keep the consolidated margin relatively flat versus the prior year, without the contingency reduction in Brazil, the payroll line was about flat versus last year. Most of the margin pressure in the quarter came from a number of factors, within occupancy and other operating expenses.

Mariano: In other words, to Marcelo's point earlier, Arcos Dorado's results are better able to absorb these external pressures given our geographic and geographical location.

Mariano Tannenbaum: In other words, to Marcelo's point earlier, Arcos Dora Hldg results are better able to absorb these external pressures given our geographic and food of paper, payroll and G&A offsets higher occupancy and other operating expenses as a percentage of revenue to keep the consolidated margin relatively flat versus the prior year. Without the contingency reduction in Brazil, the payroll line was about flat versus last year. Most of the margin pressure in the quarter came from a number of factors within occupancy and other operating expenses.

Speaker Change: Food and paper, payroll, and G&A offset higher occupancy and other operating expenses as a percentage of revenue to keep the consolidated margin relatively flat versus the prior year.

Mariano Tannenbaum: Without the contingency reduction in Brazil, the payroll line was about flat versus last year. Most of the margin pressure in the quarter came from a number of factors within occupancy and other operating expenses. These increases were mostly related to delivery fees, utilities, and information technology. As Luis mentioned, delivery sales continued to exceed expectations as growth outpaced all other sales channels. As a result, fee payments to our delivery partners increased a percentage of revenue. Additionally, we have been investing in promotional activity that is successfully increasing the penetration of all delivery in the region. Over time, we will shift the strategy to better monetize this segment of the delivery business.

Speaker Change: Without the contingency reduction in Brazil, the payroll line was about flat versus last year.

Speaker Change: Most of the margin pressure in the quarter came from a number of factors within occupancy and other operating expenses.

Mariano: These increases were mostly related to delivery fees. Utilities and Information Technology. As Luis mentioned, delivery sales continue to exceed expectations as growth outpaced all other sales channels. Marcel Rezad Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, fee payments to our delivery partners increased as a percentage of revenue. Additionally, we have been investing in promotional activity that is successfully increasing the penetration of home delivery in the region. Over time, we will shift the strategy to better monetize this segment of the delivery business. In terms of utilities, we have seen unit cost increases that outpaced revenue growth in the quarter, in response. All markets are currently working to identify ways to reduce energy consumption in restaurants and offices.

Speaker Change: These increases were mostly related to delivery fees, utilities, and information technology.

Mariano Tannenbaum: These increases were mostly related to delivery fees, utilities and information technology. As Luis mentioned, delivery sales continued to exceed expectations as growth outpaced all other sales channels. As a result, fee payments to our delivery partners increased a percentage of revenue. Additionally, we have been investing in promotional activity that is successfully increasing the penetration of all delivery in the region. Over time, we will shift the strategy to better monetize this segment of the delivery business.

Speaker Change: As Luis mentioned, delivery sales continue to exceed expectations as growth outpaced all other sales channels.

Speaker Change: As a result, seat payments to our Delivering Partners increased a sub-percentage of

Speaker Change: Thank you.

Speaker Change: Additionally, we have been investing in promotional activity that is successfully increasing the penetration of home delivery in the region.

Speaker Change: Over time, we will shift the strategy to better monetize this segment of the delivery business.

Mariano Tannenbaum: In terms of utilities, we have seen unit cost increases that outpaced revenue growth in the quarter. In response, all markets are currently working to identify ways to reduce energy consumption in restaurants and offices. Finally, empty expenses are higher at the market level, largely because we are running far more systems and digital tools in restaurants than ever before. In order to help restaurant teams offer the best guest experience and run their businesses more efficiently, over the last few years, we have brought out everything from the set for the key of the NeoDF restaurants to employee scheduling and other restaurant level tools.

Speaker Change: In terms of utilities, we have seen unit cost increases that outpaced revenue growth in the quarter. In response, all markets are currently working to identify ways to reduce energy consumption in restaurants and offices.

Mariano: Finally, IT expenses are higher at the market level, largely because we're running far more systems and digital tools in restaurants than ever before. In order to help restaurant teams offer the best guest experience and run their businesses more efficiently, over the last few years we have brought out everything from the self-order kiosks in EOTF restaurants to employee scheduling and other restaurant-level tools. The operations team is working with each market to ensure these new tools are being leveraged in each and every restaurant to generate long-term efficiency.

Speaker Change: Finally, IT expenses are higher at the market level, largely because we are running far more systems and digital tools in restaurants than ever before.

Speaker Change: in order to help restaurant teams offer the best guest experience

Speaker Change: and run their businesses more efficiently, over the last few years we have brought out everything from the self-order kiosks in EOTF restaurants to employee scheduling and other restaurant-level tools.

Mariano Tannenbaum: The operations team is working with each market to ensure these new tools are being leveraged in each and every restaurant to generate long-term efficiencies. Food and paper was lower as a percentage of revenue in Brazil and relatively flat in both, low-level and flat. Payroll was better than last year in Brazil, even excluding the contingency reduction and flatish in flat, despite the challenging environment in Argentina. Pocopanci and other operating expenses were higher in each division for the reasons I already explained.

Speaker Change: The operations team is working with each market to ensure these new tools are being leveraged in each and every restaurant to generate long-term efficiencies.

Mariano: Food and paper was lower as a percentage of revenue in Brazil, and relatively flat in both lowland and flat, payroll was better than last year in Brazil, even excluding the contingency reduction, and sluttish in slat despite the challenging environment in Argentina. Nolan had slightly higher barrel expense, mainly due to unit cost increases in Mexico. Occupancy and other operating expenses were higher in each division for the reasons I already explained.

Speaker Change: Food and vapor was lower as a percentage of revenue in Brazil, and relatively flat in both lowland and flat.

Speaker Change: payroll was better than last year in Brazil even excluding the contingency reduction and sluttish in slat despite the challenging environment in Argentina

Speaker Change: NOLA had slightly higher payroll expenses, mainly due to unit cost increases in Mexico.

Speaker Change: Occupancy and other operating expenses were higher in each division for the reasons I already explained.

Mariano Tannenbaum: Our goal is to support long-term growth with sustainable cash generation, while managing through challenging macroeconomic conditions and consumption trends in the short term. As of the end of June 2024, trading 12 months US dollar in bidat was the highest ever, and we expect to generate the best full-year US dollar in bidat in Arcos Dorados history this year.

Luis: Our goal is to support long-term growth with sustainable cash regeneration while managing through challenging macroeconomic conditions and consumption trends in the short term. As of the end of June 2024, trading 12 months USD in VITA was the highest ever, and we expect to generate the best full-year U.S. dollar EBITDA in Arcos Dorado's history this year. Earlier, I told you about the continued digitalization of our governor. Now, let's take a closer look. Digital sales grew 24% in U.S. dollars versus a prior-year quarter, accounting for 57% of the system. With each new download and a growing number of active users, we are increasing identified cell penetration, which rose to 24% of cells in a period. Brazil is leading the digitalization of Arcos Dorados, with digital sales penetration rising to 67% in the quarter, including 28% identified sales.

Speaker Change: Our goal is to support long-term growth with sustainable cash generation, while managing through challenging macroeconomic conditions and consumption trends in the short term.

Speaker Change: As of the end of June 2024, trading 12-month U.S. dollar EBITDA was the highest ever.

Mariano Tannenbaum: As of the end of June 2024, trading 12 months US dollar in bidat was the highest ever, and we expect to generate the best full-year US dollar in bidat in Arcos Dorados history this year.

Speaker Change: And we expect to generate the best full-year U.S. dollar EBITDA in Arcos Dorado's history this year.

Mariano Tannenbaum: Earlier I told you about the continued digitalization of Arcos Dorados. Let's take a closer look. Digital sales grew 24% in US dollars versus the prior year quarter, accounting for 57% of system-wide sales. With each new download and a growing number of active users, we are increasing identified sales penetration, which rose to 24% of sales in the period. Brazil is leaving the digitalization of Arcos Dorados, with digital sales penetration rising to 67% in the quarter, including 28% identified sales. Sales in the off-premise channels of the delivery and right through grew and combined 11% in US dollars versus last year, and accounted for 45% of system-wide sales in the quarter.

Speaker Change: Earlier, I told you about the continued digitalization of our governance.

Luis Raganato: Earlier I told you about the continued digitalization of Arcos Dorados. Let's take a closer look. Digital sales grew 24% in US dollars versus the prior year quarter, accounting for 57% of system-wide sales. With each new download and a growing number of active users we are increasing identified sales penetration, which rose to 24% of sales in the period. Brazil is leaving the digitalization of Arcos Dorados with digital sales penetration rising to 67% in the quarter, including 28% identified sales.

Speaker Change: Let's take a closer look.

Speaker Change: Digital sales grew 24% in U.S. dollars versus the prior year quarter, accounting for 57% of system-wide sales.

Speaker Change: With each new download and a growing number of active users, we are increasing identified cells penetration, which rose to 24% of cells in a period.

Speaker Change: Brazil is leading the digitalization of Arcos Dorados with digital sales penetration rising to 67% in the quarter including 28% identified sales.

Luis: Sales in the off-premise channels of delivery and drive-thru grew a combined 11% in U.S. dollars versus last year and accounted for 45% of system-wide sales in the water. Delivery sales in particular were very strong in the quarter, growing in the high 20s to mid-40s in markets such as Brazil, Colombia, Costa Rica, Mexico, and Uruguay, in Brazil. Specifically, delivery sales were about 4.3 times compared with the nearest company.

Speaker Change: Sales in the off-premise channels of delivery and drive-thru grew a combined 11% in U.S. dollars versus last year, and accounted for 45% of system-wide sales in the quarter.

Luis Raganato: Sales in the off-premise channels of the delivery and right through grew and combined 11% in US dollars versus last year, and accounted for 45% of system-wide sales in the quarter. The delivery sales in particular were very strong in the quarter, growing in the high 20s to mid-40s in markets such as Brazil, Colombia, Costa Rica, Mexico, and Uruguay. In Brazil specifically the delivery sales were about 4.3 times compared with the nearest competitor.

Luis Raganato: The delivery sales in particular were very strong in the quarter, growing in the high 20s to mid-40s in markets such as Brazil, Colombia, Costa Rica, Mexico, and Uruguay. In Brazil, specifically, the delivery sales were about 4.3 times compared with the nearest competitor. We have deployed the loyalty program in Brazil, Costa Rica, and Uruguay, registering more than 11 million members as of July 31st, 2024. We remain on track to deploy loyalty in node markets by year end 2025. Over time, loyalty will evolve as we bring innovations and incentives to convert non-digital and digital customers alike to active loyalty members.

Speaker Change: Delivery sales in particular were very strong in the quarter, growing in the high 20s to mid 40s in markets such as Brazil, Colombia, Costa Rica, Mexico, and Uruguay.

Speaker Change: In Brazil specifically, delivery sales were about 4.3 times compared with the nearest competitor.

Mariano: We have deployed the loyalty program in Brazil, Costa Rica, and Uruguay, registering more than 11 million members as of July 31, 2024. We remain on track to deploy Loyalty in all markets by year-end 2025. Over time, Loyalty will evolve as we bring innovations and incentives to convert non-digital and digital customers alike to active Loyalty members, while we are still in the early days. 90 day active customer levels are very healthy and loyalty member visit frequency is 1.5 to 2 times that of non-loyalty.

Luis Raganato: We have deployed the loyalty program in Brazil, Costa Rica and Uruguay, registering more than 11 million members as of July 31st, 2024. We remain on track to deploy loyalty in node markets by year end 2025. Over time loyalty will evolve as we bring innovations and incentives to convert non-digital and digital customers alike to active loyalty members. While we are still in early days, 90-day active customer levels are very healthy, and loyalty member visit frequency is 1.5 to 2 times that of non-loyalties.

Speaker Change: We have deployed the loyalty program in Brazil, Costa Rica, and Uruguay, registering more than 11 million members as of July 31st, 2024.

Speaker Change: We remain on track to deploy loyalty in all markets by year-end 2025.

Speaker Change: Over time, loyalty will evolve as we bring innovations and incentives to convert non-digital and digital customers alike to active loyalty members.

Luis Raganato: While we are still in early days, 90-day active customer levels are very healthy, and loyalty member visit frequency is 1.5 to 2 times that of non-loyalties.

Speaker Change: While we are still in early days, 90-day active customer levels are very healthy, and loyalty member visit frequency is 1.5 to 2 times that of non-loyalty guests.

Mariano Tannenbaum: Let's take a look at our capital structure and investments in growth. Fraying 12 months is the highest it has ever been, and net depth is relatively stable, keeping net leverage at a very healthy 1.2 times at the end of the second quarter. Notably, Castro from Operations in the second quarter normalized compared with the first quarter of this year, and we expected to be relatively normal for the balance of the year. Typically, the second half of the year brings seasonally better Castro from operations with stronger EBDA and working capital generation. While this has been a more challenging year than we expected from a macroeconomic standpoint, we believe Castro conversion will remain close to historical level for the full year.

Mariano: Let's take a look at our capital structure and investment in growth. Training 12 months in Idda is the highest it has ever been, and NetDepth is relatively stable, keeping net leverage at a very healthy 1.2 times at the end of the second quarter. Notably, cash flow from operations in the second quarter normalized compared with the first quarter of this year and we expect it to be relatively normal for the balance of the year. Typically, the second half of the year brings seasonally better cash flow from operations with stronger EBITDA and working capital generation.

Speaker Change: Let's take a look at our capital structure and investments in growth.

Mariano Tannenbaum: Let's take a look at our capital structure and investments in growth. Fraying 12 months is the highest it has ever been and net depth is relatively stable, keeping net leverage at a very healthy 1.2 times at the end of the second quarter. Notably, Castro from Operations in the second quarter normalized compared with the first quarter of this year, and we expected to be relatively normal for the balance of the year. Typically, the second half of the year brings seasonally better Castro from Operations with stronger EBDA and working capital generation. While this has been a more challenging year than we expected from a macroeconomic standpoint, we believe Castro conversion will remain close to historical level for the full year.

Speaker Change: Trading 12 months EBITDA is the highest it has ever been and net debt is relatively stable, keeping net leverage at a very healthy 1.2 times at the end of the second quarter.

Speaker Change: Notably, cash flow from operations in the second quarter normalized compared with the first quarter of this year and we expect it to be relatively normal for the balance of the year.

Tannenbaum: Typically, the second half of the year brings seasonally better cash flow from operations, with stronger EBITDA and working capital generation.

Tannenbaum: While this has been a more challenging year than we expected from a macroeconomic standpoint, we believe cash flow conversion will remain close to historical level for the full year.

Mariano Tannenbaum: In the second quarter of 2024, we opened 15 restaurants. All openings were free standing units with 10 in Brazil. Capital expenditure in the quarter total $88 million, with investments in the restaurant portfolio and to support our digital and IT structures.

Mariano: While this has been a more challenging year than we expected from a macroeconomic standpoint, we believe cash flow conversion will remain close to historical level for the full year. In the second quarter of 2024, we opened 15 restaurants. All openings were freestanding units with 10 in Brazil, capital expenditures in the quarter total $88 million with investments in the restaurant portfolio and to support our digital and IT structure. Marcelo, back to you.

Mariano Tannenbaum: In the second quarter of 2024, we opened 15 restaurants. All openings were free standing units with 10 in Brazil. Capital expenditure in the quarter total $88 million with investments in the restaurant portfolio and to support our digital and IT structures.

Tannenbaum: In the second quarter of 2024, we opened 15 restaurants.

Tannenbaum: All openings were freestanding units with 10 in Brazil.

Tannenbaum: capital expenditures in the quarter total $88 million with investments in the restaurant portfolio and to support our digital and IT structures.

Marcelo Rabach: Marcelo, back to you. Okay, let's talk about the MFA renewal process. First, let me remind you of the terms of the current master franchise agreement with respect to the renewal.

Marcelo: OK, let's talk about the MFA renewal process. First, let me remind you of the terms of the current Master Franchise Agreement with respect to the renewal. McDonald's has until August the 3rd, 2024, to provide us with a renewal notice to extend the MFA for an additional 10 years, beginning on August the 3rd, 2027.

Marcelo: Marcelo, back to you.

Marcelo Rabach: Marcelo, back to you. Okay, let's talk about the MFA renewal process. First, let me remind you of the terms of the current master franchise agreement with respect to the renewal. McDonald's has until August the 3rd, 2024, to provide us with a renewal notice to extend the MFA for an additional 10 years beginning on August the 3rd, 2027. Over the last 17 years, Arcos Dorados has been a successful operator in Latin America and in the McDonald's system.

Marcelo: Okay, let's talk about the MFA renewal process.

Marcelo: First, let me remind you of the terms of the current Master Franchise Agreement with respect to the renewal.

Marcelo Rabach: McDonald's has until August 3rd, 2024, to provide us with a renewal notice to extend the MFA for an additional 10 years beginning on August 3rd, 2027. Over the last 17 years, Arcos Dorados has been a successful operator in Latin America and in the McDonald's system. A laser focus on leveraging structural competitive advantages through the disciplined execution of the 3D strategy generated and precedented brand strength and market share, as well as consistent growth in US dollar profitability. Given this track record of success, we received a renewal notice from McDonald's offering to replace the existing agreements with the new 20-year MFA beginning January 1st, 2025.

Marcelo: McDonald's has until August 3, 2024, to provide us with a renewal notice to extend the MFA for an additional 10 years, beginning on August 3, 2027.

Marcelo: Over the last 17 years, Arcos Dorados has been a successful operator in Latin America and in the McDonald's city. A laser focus on leveraging structural competitive advantages through the disciplined execution of the 3D strategy generated unprecedented brand strength and market share, as well as consistent growth in U.S. dollar profitability, given this track record of success, we received a renewal notice from McDonald's offering to replace the existing agreement with the new 20-year MFA beginning January 1st, 2025, growth potential for the McDonald's brand in Latin America and the Caribbean.

Speaker Change: Over the last 17 years, Arcos Dorados has been a successful operator in Latin America and in the McDonald's system.

Speaker Change: A laser focus on leveraging structural competitive advantages through the disciplined execution of the 3D strategy generated unprecedented brand strength and market share.

Marcelo Rabach: A laser focus on leveraging structural competitive advantages through the discipline execution of the 3D strategy, generated and precedented brand strength and market share, as well as consistent growth in US dollar profitability. Given this track record of success, we received a renewal notice from McDonald's offering to replace the existing agreements with the new 20-year MFA beginning January 1st, 2025. And growth potential for the McDonald's brand in Latin America and the Caribbean. And we are optimistic that we will reach an agreement to continue generating value for Arcos Dorados and all its shareholders. We expect to keep the market informed of developments in this process as appropriate and in accordance with the requirements of the SDC.

Speaker Change: as well as consistent growth in U.S. dollar profitability.

Speaker Change: Given this track record of success, we received a renewal notice from McDonald's offering to replace the existing agreement with a new 20-year MFA beginning January 1st, 2025.

Marcelo Rabach: And growth potential for the McDonald's brand in Latin America and the Caribbean. And we are optimistic that we will reach an agreement to continue generating value for Arcos Dorados and all its shareholders.

Speaker Change: growth potential for the McDonald's brand in Latin America and the Caribbean.

Marcelo: We are optimistic that we will reach an agreement to continue generating value for Arcos Dorados and all its shareholders. We expect to keep the market informed of developments in this process as appropriate and in accordance with the requirements of the FDC. Before we open the call for Q&A, I would like to leave you with some final thoughts. The 3D strategy has delivered consistent, resilient, sustainable, and long-term results.

Speaker Change: We are optimistic that we will reach an agreement to continue generating value for Arcos Dora Hldgos and know its shareholders.

Marcelo Rabach: We expect to keep the market informed of developments in this process as appropriate and in accordance with the requirements of the SDC.

Speaker Change: We expect to keep the market informed of developments in this process, as appropriate, and in accordance with the requirements of the FEC.

Marcelo Rabach: Before we open the call for Q&A, I would like to leave you with some final thoughts. The 3D strategy has delivered consistent, resilient, sustainable, and long-term results. We have consistent in delivering the best guest experience in the industry by focusing on execution and leveraging the convenience of our free standing restaurant portfolio and digital platforms. Our consistent value proposition has been run trust with our guests who know what to expect in terms of price, quality, service, and cleanliness from their experience. Arcos Dora Hldg's business model has evolved over the years to a point where we delivered the second best EBITDA in U.S.

Speaker Change: Before we open the call for Q&A, I would like to leave you with some final thoughts.

Marcelo Rabach: Before we open the call for Q&A, I would like to leave you with some final thoughts. The 3D strategy has delivered consistent, resilient, sustainable and long-term results. We have consistent in delivering the best guest experience in the industry by focusing on execution and leveraging the convenience of our free standing restaurant portfolio and digital platforms. Our consistent value proposition has been run trust with our guests who know what to expect in terms of price, quality, service, and cleanliness from their experience.

Speaker Change: The 3D strategy has delivered consistent, resilient, sustainable, and long-term results.

Marcelo: We have consistently delivered the best guest experience, in the industry by focusing on execution and leveraging the convenience of our freestanding restaurant portfolio and digital platform. Our consistent value proposition has built ground trust with our guests, who know what to expect in terms of price, quality, service, and cleanliness from their experience. Our Colorado business models have evolved over the years, to a point where we delivered the second best EBITDA in U.S. dollars for the second quarter despite macroeconomic and currency headwinds in some of our most important markets.

Speaker Change: We have consistently delivered the best guest experiences.

Speaker Change: [inaudible]

Speaker Change: in the industry by focusing on execution and leveraging the convenience of our freestanding restaurant portfolio and digital platform.

Speaker Change: Our consistent value proposition has been brand trust with our guests.

Speaker Change: who know what to expect in terms of price, quality, service, and cleanliness from their experience.

Speaker Change: Our Colorado business model has evolved over the years to a point where we deliver the second-best EBITDA in U.S. dollars for the second quarter, despite macroeconomic and currency headwinds in some of our most important markets.

Marcelo Rabach: Arcos Dora Hldg's business model has evolved over the years to a point where we delivered the second best EBITDA in U.S, dollars for the second quarter, despite macroeconomic and currency headwinds in some of our most important markets. We believe we are positioned to generate sustainable U.S, dollar cultural growth by leveraging our structural competitive advantages. And sustainability is about more than just financial results. It is about making a positive impact on the communities we serve through our recipe for the future ESC platform.

Marcelo Rabach: dollars for the second quarter, despite macroeconomic and currency headwinds in some of our most important markets. We believe we are positioned to generate sustainable U.S. dollar cultural growth by leveraging our structural competitive advantages.

Marcelo: We believe we are positioned to generate sustainable U.S. dollar cash flow growth by leveraging our structural competitive advantage, and sustainability is about more than just financial results. It is about making a positive impact on the communities we serve through our recipe for the future, ESG Plus, because it is the right thing to do and it is good for business. Finally, it is worth reminding you that we operate in a highly under-penetrated region for both the U.S. industry as well as for the McDonald's brand.

Speaker Change: We believe we are positioned to generate sustainable U.S. dollar cash flow growth by leveraging our structural competitive advantages.

Marcelo Rabach: And sustainability is about more than just financial results. It is about making a positive impact on the communities we serve through our recipe for the future ESC platform. Because it is the right thing to do, and it is good for business.

Speaker Change: and sustainability is about more than just financial results.

Speaker Change: It is about making a positive impact on the communities we serve through our Recipe for the Future ESG platform.

Marcelo Rabach: Finally, it is worth reminding you that we operate in a highly under-penetrated vision for both, degrees of industry as well as for the McDonald's brand. We see tremendous growth potential ahead, and we work to capture this potential as strategically and profitably as possible.

Speaker Change: because it is the right thing to do and it is good for business.

Marcelo Rabach: Because it is the right thing to do, and it is good for business. Finally, it is worth reminding you that we operate in a highly under-penetrated vision for both, degrees of industry as well as for the McDonald's brand. We see tremendous growth potential ahead, and we work to capture this potential as strategically and profitably as possible.

Speaker Change: Finally, it is worth reminding you that we operate in a highly under-penetrated region for both the US industry as well as for the McDonald's brand.

Operator: Then, over to you to start the Q&A session.

Operator: We see tremendous growth potential ahead, and we work to capture this potential as strategically and profitably as possible. Now, I turn over to you to start the Q&A session. Thanks, Marcelo. 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.

Speaker Change: We see tremendous growth potential ahead, and we work to capture this potential as strategically and profitably as possible.

Operator: Then, over to you to start the Q&A session. Thanks, Marcelo.

Operator: 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 several questions here from the analyst community and a few overlaps as well. So what I'm going to try to do is, consolidate the topics. And the first topic that came up from Alejandro Fuchs from Itaú, Thiago Bortolucci from Goldman Sachs. Eric Hwang from Santander and Bob Ford from Bank of America relate to the Master Franchise Agreement. Alejandro, hello Marcelo, Mariano, Luis, thank you for the space for questions and congratulations on the results. He asks on the MFA, can we have somewhat more color on timing?

Speaker Change: Dan, over to you to start the Q&A session.

Operator: In order to get started, please minimize the presentation slide 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 follow briefly to compile your questions. Okay, we have several questions here from the analyst community, and a few overlaps as well. So, what I am going to try to do is consolidate the topics.

Dan: Thanks, Marcelo. 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.

Operator: Thanks, Marcelo.

Operator: In order to get started, please minimize the presentation slide 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 follow briefly to compile your questions. Okay, we have several questions here from the analyst community, and a few overlaps as well. So, what I am going to try to do is consolidate the topics.

Operator: When do you expect to release the new terms? Javu asks, what do we have so far with respect to the MFA? Has it been renewed or not?

Dan: Please limit yourself to one or two questions so that I can read, understand, and convey them to our speakers.

Speaker Change: We will now pause briefly to compile your questions.

Marcelo: And is there a date for us to know more details of things like royalties and growth commitment? Eric asks regarding MFA, is there an expected timeline in terms of the announcement? And Bob asks, how should we think about the significance of outstanding issues in your MFA renewal and the time to resolve those? And so putting all those together, and one just came in from Credit Corp asking for more details about the MFA, and we'll start with that one with you, Marcelo.

Speaker Change: Okay, we have several questions here from the analyst community and a few overlaps as well. So, what I'm going to try to do is...

Speaker Change: consolidate the topics and the first topic that came up from Alejandro Fuchs from Itaú, Thiago Bertolucci from Goldman Sachs, Eddie Hwang from Santander and Bob Ford from Bank of America relate to the Master Franchise Agreement.

Operator: And the first topic that came up from other hunger foods from each double-boughts of luchi from Goldman Sachs. Eddie Kwan from South London, and Bob Ford from Bank of America relate to the master franchise agreement. I think I'm going to go, hello Marcelo, my general Luis, thank you for the space for questions and congratulations on the results. He asks on the MFA, can we have somewhat more color on timing when you expect to release the new terms.

Operator: I think I'm going to go, hello Marcelo, my general Luis, thank you for the space for questions, and congratulations on the results. He asks on the MFA, can we have somewhat more color on timing when you expect to release the new terms? Jago asks, what do we have so far with respect to the MFA? Has it been renewed or not, and is there a date for us to know more details of things like royalties and growth commitment? Eric asks regarding the MFA, is there expected timeline in terms of the announcement, and Bob asks, how should we think about the significance about standing issues in your MFA renewal and the time to resolve those?

Speaker Change: Alejandro, hello Marcelo, Mariano, Luis, thank you for the space for questions and congratulations on the results.

Speaker Change: Yes, on the MFA, can we have somewhat more color on timing? When do you expect to release the new terms?

Operator: Jago asks, what do we have so far with respect to the MFA? Has it been renewed or not and is there a date for us to know more details of things like royalties and growth commitment? Eric asks regarding the MFA, is there expected timeline in terms of the announcement, and Bob asks, how should we think about the significance about standing issues in your MFA renewal and the time to resolve those? And so, putting all those together, and one just came in also from credit court asking about more details of the MFA, and we'll start with that one with you Marcelo.

Speaker Change: Xabu asks, what do we have so far with respect to the MFA? Has it been renewed or not? And is there a date for us to know more details of things like royalties and growth commitment?

Speaker Change: Eric asks, regarding MFA, is there an expected timeline in terms of the announcement? And Bob asks, how should we think about the significance of outstanding issues in your MFA renewal and the time to resolve those?

Marcelo Rabach: And so, putting all those together, and one just came in also from credit court asking about more details of the MFA, and we'll start with that one with you, Marcelo.

Speaker Change: and so putting all those together and one just came in also from Credit Corp asking about more details of the MFA.

Marcelo: Okay, thank you, and thanks all for the questions and for joining us today. We have disclosed that the renewal notice provided by McDonald's to Arcos Dorados, which was received on August the 1st, 2024, provides for a 20-year term for a new MFA, commencing on January 1st, 2025, under 13 terms and conditions. The renewal notice itself is a confidential document provided by McDonald's to Arcos Dora Hldg as part of the renewal procedures laid out in the current master franchise agreement between the parties.

Marcelo Rabach: Okay, thank you, and thanks for the questions and for joining us today. We have disclosed that the renewal notice provided by McDonald's to our Colorados, which was received on August 1, 2024, provides for a 20-year term for a new MFA, commencing on January 1, 2025, under certain terms and conditions. The renewal notice itself is a confidential document provided by McDonald's to Arcos Dora Hldg as part of the renewal procedures laid out in the current master franchise agreement between the parties. As you know, the MFA is a complex document that includes a specific timeline for renewal.

Speaker Change: and we'll start with that one with you, Marcelo. Okay, thank you. And thanks, Ori, for...

Operator: Okay, thank you and thanks for the questions and for joining us today. We have disclosed that the renewal notice provided by McDonald's to our colorados, which was received on August 1, 2024, provides for a 20-year term for a new MFA, commencing on January 1, 2025 under certain terms and conditions. The renewal notice itself is a confidential document provided by McDonald's to Arcos Dora Hldg as part of the renewal procedures laid out in the current master franchise agreement between the parties. As you know, the MFA is a complex document that includes a specific timeline for renewal. And the process is being conducted within the limits of that timeline.

Marcelo: the questions and for joining us today. We have disclosed that the renewal notice provided by McDonald's to Arco Dorados

Marcelo: which was received on August the 1st, 2024, provides for a 20-year term for a new MFA, commencing on January the 1st, 2025 under certain terms and conditions.

Marcelo: The renewal notice itself is a confidential document provided by McDonald's to Arcos Dorados.

Marcelo: as part of the renewal procedures laid out in the current master-franchise agreement between the parties. As you know, the MFA...

Marcelo: As you know, the MFA is a complex document that includes a specific timeline for renewal and the process is being conducted within the limits of that timeline. We will communicate additional information in accordance with the applicable legal and regulatory requirements as appropriate. Great. Thank you, Marcelo. Alejandro's other question relates to margins. So, excluding the positive one-off in Brazil, we saw EBITDA margin contraction year-over-year despite solid top-line and gross margin dynamics. Can you help join the call, Alejandro, for the specific question?

Speaker Change: It's a complex document that includes a specific timeline for renewal, and the process is being conducted within the limits of that timeline.

Marcelo Rabach: And the process is being conducted within the limits of that timeline. We will communicate additional information in accordance with the applicable legal and regulatory requirements, as appropriate.

Speaker Change: We will communicate additional information in accordance with the applicable legal and regulatory requirements as appropriate.

Marcelo Rabach: We will communicate additional information in accordance with the applicable legal and regulatory requirements as appropriate. Great. Thank you, Marcelo.

Operator: Great. Thank you, Marcelo.

Mariano Tannenbaum: I found it was other question relates to margins. So, excluding the positive one-off in Brazil, we saw EBITDA margin contraction year over year, despite solid top line and gross margin dynamics.

Marcelo: Great. Thank you, Marcelo.

Marcelo: Alejandro's other question relates to Martin.

Mariano Tannenbaum: I found it was other question relates to margins. So excluding the positive one-off in Brazil, we saw EBITDA margin contraction year over year, despite solid top line and gross margin dynamics. Can you help join the call? And I defend it for this specific question. The main pressure we are seeing in our margins is coming from the line of occupancy, another operating expenses, where we see a decrease of 100 Dips. That's mainly that as we mentioned is growing more than other channels.

Speaker Change: Excluding the positive one-off in Brazil, we saw EBITDA margin contraction year-over-year despite solid top-line and gross margin dynamics. Can you help join the call and Alejandro for the specific question?

Mariano Tannenbaum: Can you help join the call? And I defend it for this specific question. The main pressure we are seeing in our margins is coming from the line of occupancy, another operating expenses, where we see a decrease of 100 dips. That's mainly that, as we mentioned, is growing more than other channels. That means that delivery, which is a segment with lower margin profitability than the rest of the segment, but highly accretive to the business in terms of your dollars. So when delivery grows faster than the other segment delivery platform, that will bring benefits in the future.

Marcelo: The main pressure we are seeing in our margins.., is coming from the line of occupancy and other operating expenses, where we see a decrease of 100 dips. That's me, that, as we mentioned, is growing more than other channels. That means that the livery, which is a segment with lower margin profitability than the rest of the segment, but highly accretive to the business, business in terms of U.S. dollars.

Marcelo Alejandro: The main pressure we are seeing in our margins...

Speaker Change: is coming from the line of occupancy and other operating expenses where we see a decrease of 100 EPS.

Alejandro: That's me.

Alejandro: [inaudible]

Speaker Change: that, as we mentioned, is growing more than other channels. That means that delivery, which is a segment with lower margin profitability than the rest of the segments, but highly accretive to the business.

Mariano Tannenbaum: That means that delivery, which is a segment with lower margin profitability than the rest of the segment, but highly accretive to the business in terms of your dollars. So when delivery grows faster than the other segment delivery platform, that will bring benefits in the future. And we are confident that this pressure that we are seeing now will be overturned in the coming quarters. Then in the same line, we are seeing some pressures in utilities, in each market for efficiencies to offset these increases in costs.

Mariano: So, when delivery grows faster than the other side of the delivery platform, that will bring benefits in the future, and we are confident that this pressure that we are seeing now will be overturned in the coming quarters. Then, in the same line, we are seeing some pressures in utilities and each market for efficiencies to offset these increases in cost.

Speaker Change: business in terms of US dollars

Speaker Change: so when delivery grows faster than the other side delivery platform that we bring benefits in the future and we are confident that

Mariano Tannenbaum: And we are confident that this pressure that we are seeing now will be overturned in the coming quarters. Then, in the same line, we are seeing some pressures in utilities, in each market for efficiencies to offset these increases in costs. And lastly, we are seeing in the same line and increasing the IT expenses, but these investments looking forward, we are seeing that will allow and will bring productivity gains as they will help us to drive more digital saves and also to be more productive at the restaurant level. For example, with new scheduling systems for payroll that we are implementing in many markets.

Speaker Change: This pressure that we are seeing now will be overturned in the coming quarters.

Speaker Change: Then, in the same line, we are seeing some pressures in utilities,

Speaker Change: Mariano Tannenbaum, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg

Speaker Change: [inaudible]

Speaker Change: Each market for efficiencies to offset these increases in costs.

Speaker Change: And lastly, we are seeing in the same line an increase in the IT expenses, but these investments, looking forward, we are seeing that will allow and will bring productivity gains as the

Mariano Tannenbaum: And lastly, we are seeing in the same line and increasing the IT expenses, but these investments looking forward, we are seeing that will allow and will bring productivity gains as they will help us to drive more digital saves and also to be more productive at the restaurant level. For example, with new scheduling systems for payroll that we are implementing in many markets.

Mariano: But these investments, looking forward, we are seeing that will allow and will bring productivity gains as they were. It will help us to drive more digital sales and also to be more productive at the restaurant level, for example, with new scheduling systems for payroll that we are implementing in many markets. Great, thanks Mariano. We have another, now we're going to move over to travel worker Lucia from Goldman Sachs who in addition to the MFA question had a few other questions.

Speaker Change: will help us to drive more digital sales and also to be more productive at the restaurant level, for example with new scheduling systems for payroll that we are implementing in many markets.

Operator: Great. Thanks, Mariano.

Luis Raganato: We have another. Now we are going to move over to travel what the Lucie from Goldman Sachs, who in addition to the MFA question, had a few other questions. One on demand around the world, we are seeing a challenging moment of per QSR operators with companies focusing and increasing more on their value platforms. Where does Latin America stand in terms of demand elasticity? And is it different from the rest of the world and why?

Speaker Change: Great, thanks Mariano. We have another, we're going to move over to Chava Huerta Lucia from Goldman Sachs who in addition to the MFA question had a few other questions.

Luis Raganato: Great. Thanks, Mariano. We have another, now we are going to move over to travel what the Lucie from Goldman Sachs, who in addition to the MFA question had a few other questions. One on demand around the world, we are seeing a challenging moment of per QSR operators with companies focusing and increasing more on their value platforms. Where does Latin America stand in terms of demand elasticity? And is it different from the rest of the world and why?

Marcelo: One on demand around the world we're seeing a challenging momentum for QSR operators with companies focusing increasingly more on their value platforms. Where does Latin America stand in terms of demand elasticity and is it different from the rest of the world and why? And also, if we can give a bit more color on Brazil in terms of traffic, ticket, and gross margin. So we'll start with those two, with Marcelo and maybe Mariano. Marcelo, you want to first focus on the QSR, and then we can talk about resistance. Yeah, perfect.

Speaker Change: One on demand around the world we're seeing a challenging momentum for QSR operators with companies focusing increasingly more on their value platforms. Where does Latin America stand in terms of demand elasticity and is it different from the rest of the world and why?

Marcelo Rabach: And also, if we can give a bit more color for on Brazil in terms of traffic, ticket, and gross margin. So, we'll start with those two with Marcelo and maybe Mariano Marcel. You want to first focus on the QSR, and then we can talk about resistance. Yeah, perfect. Yeah, I think that we are facing a more concerning consumer in the region, like it is the case in most of the other markets around the world. But that implies, obviously, that all the industry, and we are the leaders of the first one, first one to do. We are focusing offering great value all across our, our menu board.

Speaker Change: And also, if we can give a bit more color.

Luis Raganato: And also, if we can give a bit more color for on Brazil in terms of traffic, ticket and gross margin. So, we'll start with those two with Marcelo and maybe Mariano Marcel. You want to first focus on the QSR and then we can talk about resistance. Yeah, perfect. Yeah, I think that we are facing a more concerning consumer in the region, like it is the case in most of the other markets around the world.

Speaker Change: for on Brazil in terms of traffic, ticket and gross margin. So we'll start with those two.

Speaker Change: with Marcelo, and maybe Mariano, Marcelo, you want to first focus on the...

Marcelo: Yeah, I think that we are facing a more discerning consumer in the region, like it is the case in most of the other markets around the world. But that implies, obviously, that all the industry, and we as the leaders, are the first one to do. We are focusing, offering great value all across our menu board. In our case, we have very strong value platforms and other promotional activity across the markets. We are focused on offering a great and a compelling value proposition through competitive pricing, at the same time offering an unmatched restaurant experience for our guests, and through those two main levers, drive volume growth, and leverage fixed costs.

Speaker Change: I think that we are facing a more discerning consumer in the region like it is the case

Speaker Change: in most of the other markets around the world.

Speaker Change: But

Luis Raganato: But that implies obviously that all the industry, and we are the leaders of the first one, first one to do. We are focusing offering great value all across our, our menu board. In our case, we have very strong value platforms and other promotional activity across the markets. We are focused on offering a great and a compelling value proposition through competitive pricing. At the same time, offering an unmatched restaurant experience for our guests.

Speaker Change: That implies, obviously, that all the industry, and we as the leaders, are the first ones to do. We are focusing, offering great value all across our many worlds.

Marcelo Rabach: In our case, we have very strong value platforms and other promotional activity across the markets. We are focused on offering a great and a compelling value proposition through competitive pricing. At the same time, offering an unmatched restaurant experience for our guests. And through those two main levers, drive volume growth and leverage fixed costs. And as we saw in the second quarter, which is not different than what we have been seeing in previous quarters, we were able, in this more challenging environment, to grow sales. We have more inflation in most of our markets. In this year in particular, we have a more favorable cost environment, and a great job done by our supply chain team is helping us to keep growth margins in a very healthy position and to offer a very, very good offers and very good pricing points to our customers all across the region.

Speaker Change: In our case, we have very strong value platforms and other promotional activity across.

Speaker Change: the markets.

Speaker Change: We are focused on offering a great and a compelling value proposition through competitive pricing, at the same time offering an unmatched restaurant experience for our guests.

Speaker Change: and through those two main levers.

Luis Raganato: And through those two main levers, drive volume growth and leverage fixed costs. And as we saw in the second quarter, which is not different than what we have been seeing in previous quarters, we were able in this more challenging environment to grow sales, we have a more inflation in most of our markets. In this year in particular, we have a more favorable cost environment and a great job done by our supply chain team is helping us to keep growth margins in a very healthy position and to offer a very, very good offers and very good pricing points to our customers all across the region.

Marcelo: And as we saw in the second quarter, which is not different than what we have been seeing in previous quarters, we were able, in this more challenging environment, to grow sales well above inflation in most of our markets. In this year in particular, we have a more favorable cost environment, and the great job done by our supply chain team is helping us to keep gross margins in a very healthy position, and to offer very good offers and very good pricing points to our customers all across the region.

Speaker Change: drive volume growth and leverage fixed costs and as we saw

Speaker Change: in the second quarter, which is not different.

Speaker Change: that we have been seeing in previous quarters.

Speaker Change: We were able in this...

Speaker Change: more challenging environment to

Speaker Change: growth sales, web-level inflation in most of our markets.

Speaker Change: In this year in particular, we have a more favorable cost environment and a great job done by our partners.

Speaker Change: Supply Chain Team

Speaker Change: is helping us to keep growth margins in a very healthy position.

Speaker Change: to offer very good offers and very good pricing points to our customers all across the region. So, doing all of this, we were able to gain significant market share and outpace most of our peers across the region.

Marcelo: So doing all of this, we were able to gain significant market share and outpace most of our peers across the region. In the second part, I'm talking specifically about Brazil, in the second quarter, results in terms of sales and volumes were great. And volumes contributed almost half. And the other half came from average check to the system of comparable sales of the second quarter, which were well above inflation.

Marcelo Rabach: So, doing all of these, we were able to gain significant market share and out base most of our leaders across the region. In the second part of talking specifically about Brazil, in the second quarter, results in terms of sales and volumes were great, and volumes contributed almost half, and the other half came from Abarachec to the system with comparable sales of the second quarter, which were well above inflation. Keep in mind that specifically talking about Abarachec, the improvement came not only from pricing, but on top of that came from a better mix and the number of items per order.

Luis Raganato: So, doing all of these, we were able to gain significant market share and out base most of our leaders across the region. In the second part of talking specifically about Brazil, in the second quarter results in terms of sales and volumes were great, and volumes contributed almost half, and the other half came from Abarachec to the system with comparable sales of the second quarter, which were well above inflation. Keep in mind that specifically talking about Abarachec, the improvement came not only from pricing, but on top of that came from a better mix and the number of items per order.

Speaker Change: In the second part, I'm talking specifically about Brazil.

Speaker Change: In the second quarter, results in terms of sales and volumes were great.

Speaker Change: and volumes contributed.

Speaker Change: almost half, and the other half came from Average Check to the system-wide comparable sales of the second quarter, which were well above inflation. Keep in mind that specifically talking about Average Check, the improvement came not only from pricing but on top of that

Marcelo: Keep in mind that specifically talking about average check, the improvement came not only from pricing, but on top of that, came from a better mix and the number of items per order. Importantly, according to Crest, in Brazil, we gained both visit or volume share and sales share over the trailing 12 months, with some of the smaller players in the industry losing share. If you take a look to the midterm, in the last two years, Brazil's second quarter comparable sales are up cumulatively, were accumulated by 21% when you compare second quarter 2024 with second quarter 2022, with nearly even contributions coming from volume and average check growth.

Speaker Change: came from a better mix and the number of items per order.

Luis Raganato: Importantly, according to press, in Brazil we gain both visit or volume share and sales share over the trade in 12 months, with some of the smaller players in the industry losing share. If you take a look to the midterm in the last two years, Brazil's second quarter comparable sales are up communitably or accumulated by 21% when you compare second quarter of 2024 with second quarter of 2022, with nearly even contributions coming from volume and Abarachec growth. So a very healthy way to grow the business and improve the results in Brazil and in the whole company.

Speaker Change: Importantly, according to Crest, in Brazil we gain both visits or volume share and sales share.

Speaker Change: [inaudible]

Speaker Change: Brazil's second-quarter comparable sales are up cumulatively, or accumulated, by 21%.

Speaker Change: when you compare second quarter 2024 with second quarter 2022 with nearly even contributions coming from volume and average check growth. So a very healthy way to grow the business and improve the results in Brazil and in the whole company.

Marcelo: So a very healthy way to grow the business and improve the results in Brazil and in the whole company. And I guess related to that is the gross market question also with Brazil, and we'll turn it over to you, Mariano. Perfect.

Mariano Tannenbaum: And I guess related to that is the gross market question also with Brazil, and we'll turn it over to you, Mariano. Perfect. Yes, in terms of food and paper, we are happy to observe a gain in the food and paper line in Brazil, a leverage of almost one percentage point that is coming mainly, as Mariano mentioned in his answer, from better negotiations with suppliers than by our supply chain team. And also by better mix and all the improvements we are doing in the respect, in respect of pricing and revenue management. So we are very pleased with the results we are seeing in the food and paper cost line in Brazil.

Speaker Change: And I guess related to that is the gross market question also with Brazil, and we'll turn it over to you, Mariano. Perfect. Yes, in terms of food and paper, we are happy to observe a gain in the food and paper line in Brazil, a leverage of almost one percentage point.

Mariano Tannenbaum: And I guess related to that is the gross market question also with Brazil and we'll turn it over to you, Mariano. Perfect. Yes, in terms of food and paper, we are happy to observe gain in the food and paper line in Brazil, a leverage of almost one percentage point that is coming mainly, as Mariano mentioned in his answer, from better negotiations with suppliers than by our supply chain team. And also by better mix and all the improvements we are doing in the respect, in respect of pricing and revenue management. So we are very pleased with the results we are seeing in the food and paper cost line in Brazil.

Mariano: Yes, in terms of food and paper, we are happy to observe a gain in the food and paper line in Brazil, a leverage of almost one percentage point that is coming mainly, as Marcelo mentioned in his answer, from better negotiations with suppliers done by our supply chain team, and also by BetterMix and all the improvements we are doing in respect of pricing and revenue management. So we are very pleased with the results we're seeing in the food and paper cost line in Brazil. Great. Thanks, Mariano. And the last two questions from Thiago, I think are gonna be for you, Luiz.

Mariano Tannenbaum: Great. Thanks, Mariano.

Speaker Change: that is coming mainly, as Marcelo mentioned in his answer.

Speaker Change: from

Mariano: better negotiations with suppliers than by our supply chain team.

Mariano: and also by BetterMix and all the improvements we are doing in respect of pricing and revenue management. So we are very pleased with the results we are seeing in the food and paper cost line in Brazil.

Mariano Tannenbaum: Great.

Operator: Thanks, Mariano.

Luis Raganato: And last two questions from Chavo. I think they're going to be for you, Luis. The first one, same-store sales, do you think it's possible to keep same-store sales growing at X times inflation over the next several years?

Mariano: Great. Thanks, Mariano. And the last two questions from Chavo I think are going to be for you, Luis.

Luis: The first one is same-store sales. Do you think it's possible to keep same-store sales growing at X times inflation over the next several years?

Luis Raganato: And last two questions from Chavo, I think they're going to be for you, Luis. The first one, same-store sales, do you think it's possible to keep same-store sales growing at X times inflation over the next several years? Number one, and then, Douglas, the question on Mexico, we know there was a negative counter effect at this quarter. Can you comment on how underlying demand is trending there?

Speaker Change: The first one, same-store sales. Do you think it's possible to keep same-store sales growing at X times inflation over the next several years? Number one. And then, Chagua asked a question on Mexico. We know there was negative calendar effect this quarter. Can you comment on how underlying demand is trending there?

Luis Raganato: Number one, and then, Douglas, the question on Mexico. We know there was a negative counter effect at this quarter. Can you comment on how underlying demand is trending there? All right. Thank you very much, Chavo. How are you for thinking for the question? Talking about the cons, if we can maintain the cons about blame the inflation, yes. We think that it's going to be possible; it's one of our main objectives or main goals. What we've seen, we have like many engines of sales growth. One of them is that we still have opportunities in the execution of the 3D strategy. I remind you that we are delivering drive-through and digital; we're going to be having a positive impact on our investments.

Luis: And then Thiago asked a question about Mexico. We know there was a negative calendar effect this quarter. Can you comment on how underlying demand is trending there? All right.

Luis: Thank you for the question. Talking about the comms, if we can maintain the comms above blended inflation, yes. We think that is going to be possible. It's one of our main objectives or main goals.

Speaker Change: All right, thank you very much, Joe. How are you? Thank you for the question. Talking about the cons, if we can maintain the cons about blended inflation, yes.

Luis Raganato: All right. Thank you very much, Chavo. How are you for thinking for the question? Talking about the cons, if we can maintain the cons about blame the inflation, yes. We think that it's going to be possible, it's one of our main objectives or main goals. What we've seen, we have like many engines of sales growth. One of them is that we still have opportunities in the execution of the 3D strategy, I remind you that we are delivering drive-through and digital, we're going to be having a positive impact on our investments.

Speaker Change: We think that HACC is going to be possible. It's one of our main objectives, our main goals.

Luis: What we're seeing, we have like many engines of sales growth. One of them is that we'll still have opportunities in the execution of the 3D strategy. I remind you that 3Ds are delivery, drive-through, and digital.

Speaker Change: We have like many engines of sales growth. One of them is that we are...

Speaker Change: still have opportunities in the execution of the 3D strategy.

Luis: We're going to be having a positive impact on our investments. When we talk about comparable sales, I'm talking about investments in technology. We have two important engines of growth that are going to be product categories like chicken and coffee. And even though we have the best scores in some indicators of operations across the region, we still have opportunities and we're going to be focusing in those operational improvements that we need to maintain those sales.

Speaker Change: I remind you that we use our delivery, drive-thru, and digital.

Luis Raganato: When we talk about comparable sales, I'm talking about investments in technology. We have two important engines of growth that are going to be product categories like chicken and coffee, and even though we have the best scores in some indicators of operations across the region, we still have opportunities, and we're going to be focusing in those operational improvements that we need to maintain those sales. and regarding the second question, the underlying demand in Mexico, first to give you a context, know that there is directly related to Mexico, that they have similar performances, know that increased 3.2 times the blended inflation for the division in the first quarter and 2.5 in this second quarter.

Speaker Change: We're going to be having a positive impact on our investments.

Speaker Change: when we talk about comparable sales. I'm talking about investments in technology. We have two important engines of growth that are going to be product categories like chicken and coffee.

Luis Raganato: When we talk about comparable sales, I'm talking about investments in technology. We have two important engines of growth that are going to be product categories like chicken and coffee, and even though we have the best scores in some indicators of operations across the region, we still have opportunities and we're going to be focusing in those operational improvements that we need to maintain those sales, and regarding the second question, the underlying demand in Mexico, first to give you a context, know that there is directly related to Mexico, that they have similar performances, know that increased 3.2 times the blended inflation for the division in the first quarter and 2.5 in this second quarter. So, as I said, Mexico is directly related to that. So, yes, within that the underlying demand is still and is going to be very strong in the near future. We do not expect any changes.

Speaker Change: and...

Speaker Change: Even though we have the best scores in some indicators of operations across the region, we still have opportunities and we're going to be focusing in those operational improvements that we need to maintain those sales.

Luis: And regarding the second question, the underlying demand in Mexico, first to give you a context, know that there is, directly related to Mexico, that they have similar performances, increased 3.2 times the blended inflation for the division in the first quarter and 2.5 in the second quarter. So, and as I said, Mexico is directly related to that. So, yes, we think that the underlying demand is still and is going to be very strong in the near future. We do not expect any changes.

Speaker Change: And regarding the second question, the underlying demand in Mexico, first, to give you a context, know that there is no demand.

Speaker Change: directly related to Mexico, that they have similar performances, know that

Speaker Change: increased 3.2 times the blended inflation for the for the division in the first quarter and 2.5 in the second quarter so and

Luis Raganato: So, as I said, Mexico is directly related to that. So, yes, within that the underlying demand is still and is going to be very strong in the near future. We do not expect any changes.

Speaker Change: As I said, Mexico is directly related to that. So yes, we think that the underlying demand is still, and is going to be, very strong in the near future. We do not expect any changes.

Operator: Again, thanks, Luis.

Luis: Thanks, Luis. And maybe a good segue to talking about top line in Mexico slash NOLAD are several questions that came related to Mexico and NOLAD margins. And these came from Julia Riso, from Morgan Stanley, Eric Huang from Santander and Bob Ford from Bank of America. Julia asks, and these, by the way, all will be for you, Mariano. Julia asks, margin pressure, especially in Mexico. Surprise.

Mariano Tannenbaum: And maybe a good segue to talking about top line in Mexico slash Nolad, are several questions that came related to Mexico and Nolad margins. And these came from Julio Riso from Morgan Stanley, Eric Wein from something that, and Bob Ford from Bank of America. Julio asks, and these, by the way, all will be for you, Mariano. Julio asks, margin pressure, especially in Mexico. Surprise. Can you comment on your expectations for the region? How do you intend to offset that? How long will it take? Can you comment on delivery channel growth on impact on margins? We'll come back to that one.

Speaker Change: Thank you.

Mariano Tannenbaum: Again, thanks, Luis. And maybe a good segue to talking about top line in Mexico slash Nolad, are several questions that came related to Mexico and Nolad margins. And these came from Julio Riso from Morgan Stanley, Eric Wein from something that, and Bob Ford from Bank of America. Julio asks, and these, by the way, all will be for you, Mariano. Julio asks, margin pressure, especially in Mexico. Surprise. Can you comment on your expectations for the region? How do you intend to offset that? How long will it take? Can you comment on delivery channel growth on impact on margins?

Speaker Change: Thanks Luis, and maybe a good segue to talking about top line in Mexico slash NOLAD are several questions that came

Speaker Change: related to Mexico and NOLAD margins and these came from Julia Riso, from Morgan Stanley , Eric Hwang, from

Speaker Change: Santander, and Bob Ford from Bank of America. Julia asks...

Mariano: Can you comment on your expectations for the region? How do you intend to offset that? How long will it take?

Speaker Change: and these by the way all will be for you Mariano.

Speaker Change: Julie asks, margin pressure, especially in Mexico, surprise. Can you comment on your expectations for the region? How do you intend to offset that? How long will it take? Can you comment on delivery channel growth on impact on margins? We'll come back to that one. And then Eric asks about...

Mariano: Can you comment on delivery channel growth on impact on margins? We'll come back to that one. And then Eric asks about.

Mariano Tannenbaum: And then Eric asks about, could you please explore the operating leverage opportunities among the different operating regions and comment about the increase in payroll expenses, especially in Nolad? And then he asks, the Bob Ford asks about the causes for the margin contraction in Mexico. Again, I think we're talking about Nolad and expectations for the balance needs.

Mariano: And... Could you please explore the operating leverage opportunities among the different operating regions and comment about the increase in payroll expenses, especially in NOLED? And then he asks, Bob Ford asks, about the causes for the margin contraction in Mexico. Again, I think we're talking about NOLED and expectations for the balance of the EU. So we'll start with that. Mariano, and then I'll come back with a couple more.

Mariano Tannenbaum: We'll come back to that one. And then Eric asks, about, could you please explore the operating leverage opportunities among the different operating regions and comment about the increase in payroll expenses, especially in Nolad? And then he asks, the Bob Ford asks about the causes for the margin contraction in Mexico. Again, I think we're talking about Nolad and expectations for the balance needs. So we'll start with that, Mariano. And then I'll come back with a little more.

Speaker Change: Could you please explore the operating leverage opportunities among the different operating regions and comment about the increase in payroll expenses, especially in NOLAD?

Speaker Change: and then he asks, Bob Ford asks about...

Mariano Tannenbaum: So we'll start with that, Mariano. And then I'll come back with a little more. Perfect. Well, thanks for those questions. And I will focus on the concern about Nolad and Mexico, specifically. As Luis explained for Nolad and specifically for Mexico, we need to analyze not that the quarter itself, but I think it's better to explain it through the first half of the year, due to the seasonality effect of the Eastern holiday that last year was in the second quarter and this year in the first one. So if we consider the whole, the first six months of the year, what we see is that Nolad's margin is down by 70 basis points, from which 50 basis points are coming from very, very Mexico.

Speaker Change: the causes for the margin of contraction in Mexico. Again, I think we're talking about no-letting expectations for the balance of these. So, we'll start with that by the end of the note. Come back with a full of more.

Mariano: Perfect. Well, thanks for those questions. And I will focus on the concern about NOLED and Mexico specifically. As Luis explained, for NOLED and specifically for Mexico, we need to analyze not the quarter itself, but I think it's better to explain it through the first half of the year due to the seasonality effect of the Eastern holiday that last year was in the second quarter and this year in the first one.

Speaker Change: Perfect. Well, thanks for those questions.

Mariano Tannenbaum: Perfect. Well, thanks for those questions. And I will focus on the concern about Nolad and Mexico, specifically. As Luis explained for Nolad and specifically for Mexico, we need to analyze not that the quarter itself, but I think it's better to explain it through the first half of the year, due to the seasonality effect of the eastern holiday that last year was in the second quarter and this year in the first one.

Speaker Change: and I will focus on the concern about Northern Mexico specifically.

Speaker Change: As Luis explained, for NOLAD and specifically for Mexico, we need to analyze not the quarter itself, but I think it's better to explain it

Speaker Change: through the first half of the year due to the seasonality effect of the Eastern holiday that last year was in the second quarter and this year in the first one.

Mariano: So if we consider the whole, the first six months of the year, what we see is that NOLED's margin is down by 70 basis points, from which 50 basis points are coming from payroll, payroll in Mexico. In Mexico, we have been observing wage increases, well, minimum wage increases, well above inflation for the past years. And that, of course, affecting the payroll line in particular. But what we see is that in the medium, or what we usually observe in our region, is that when we see those salary or minimum salary increases, is that in the medium term, we see a benefit because there's more disposable income and that increases consumption.

Speaker Change: So if we consider the whole, the first six months of the year, what we see is that NODAT's margin is down by 70 basis points.

Mariano Tannenbaum: So if we consider the whole, the first six months of the year, what we see is that Nolad's margin is down by 70 basis points from which 50 basis points are coming from very, very Mexico. In Mexico, we have been observing weight increases, well, minimum weight increase, well above inflation for the past years. And that, of course, affecting the payroll line in particular. But what we see is that in the medium, what we usually observe in our region is that when we see those salary or minimum salary increases, is that in the medium term, we see a benefit because there's more responsible income and that increases consumption.

Speaker Change: from which 50 basis points are coming from payroll.

Mariano Tannenbaum: In Mexico, we have been observing weight increases, well, minimum weight increase, well above inflation for the past years. And that, of course, affecting the payroll line in particular. But what we see is that in the medium, what we usually observe in our region is that when we see those salary or minimum salary increases, is that in the medium term, we see a benefit because there's more responsible income and that increases consumption. So that's part of the explanation of how well we are doing in Mexico in terms of EBDA. So analyzing the first semester, what we see is that even though margin was down by five percent in US dollars.

Speaker Change: They rode in Mexico.

Speaker Change: But what we see is that in the medium or what we usually observe in our region is that when we see those

Silas Caballero: and Silas Caballero.

Mariano: So that's part of the explanation of how well we are doing in Mexico in terms of EBITDA. So, analyzing the first semester, what we see is that even though margin was down by 5% in U.S. dollars.

Mariano Tannenbaum: So that's part of the explanation of how well we are doing in Mexico in terms of EBDA. So analyzing the first semester, what we see is that even though margin was down by five percent in US dollars. So we're pleased with the trend that we are seeing in Mexico in particular and in Nolad.

Silas Caballero: So, analyzing the first semester, what we see is that even though

Silas Caballero: Margin was down by...

Mariano: So, we are pleased with the trend that we are seeing in Mexico in particular and in NOLAD, and we don't have a special concern with this line going forward. Great. That's specifically about questions about Mexico and so on.

Mariano Tannenbaum: So we're pleased with the trend that we are seeing in Mexico in particular and in Nolad. And we don't have a special concern with this line going forward. Great.

Speaker Change: 5% in US dollars. So we're pleased with the trend that we are seeing in Mexico in particular and in NOLAD and we don't have a special concern with this line going forward.

Mariano Tannenbaum: And we don't have a special concern with this line going forward.

Mariano Tannenbaum: That's specifically about questions about Mexico and Florida. Okay. So Julia, another question has to do with delivery. Can you comment on the delivery channel growth and impacts on margin? How much of the? It's back in this regard.

Julia: Great, that's the specific idea about questions about Mexico and that I'm flying over, okay? So Julia Zeller question has to do with delivery, can you comment on the delivery channel growth and impact on margin, how much of the problem?

Mariano: Okay. So, Julia's other question has to do with delivery. Can you comment on the delivery channel growth and impacts on margin, how much of the.., be expected in this regard. Yes, as I explained in the first question that Alejandro made, the delivery over the other channels, so faster than the other channels, we will see pressure on percentage.., on the occupancy and other line, another expenses line. But the growing delivery, and that's, we analyzed that and we are very pleased with the results we are seeing in delivery.

Mariano Tannenbaum: Great. That's specifically about questions about Mexico and Florida.

Mariano Tannenbaum: Okay. So Julia, another question has to do with delivery. Can you comment on the delivery channel growth and impacts on margin? How much of the? It's back in this regard. Yes, as I explained in the first question that Alejandro made the delivery over the other channels or faster than the other channels. We will see a pressure on percentage terms on the occupancy, another line, another expensive line. But the grow in delivery and that's we analyze that and we are very pleased with the results we were seeing in delivery.

Mariano Tannenbaum: Yes, as I explained in the first question, that Alejandro made the delivery over the other channels or faster than the other channels. We will see a pressure on percentage terms on the occupancy, another line, another expensive line. But the grow in delivery, and that's we analyze that, and we are very pleased with the results we were seeing in delivery. First is highly upgraded to the business in US dollar terms. So a really important portion of the EBWA role that we are seeing. We have been seeing in the last years is coming from that segment. That's really important.

Speaker Change: ...expect in this regard.

Julia: [inaudible]

Speaker Change: on the occupancy and other line, another expenses line.

Speaker Change: But the growth in delivery, and we analyze that and we are very pleased with the results we are seeing in delivery. First, it's highly agreed to the business in U.S. dollar terms, so a relevant portion of the EBITDA growth that we are seeing, we have been seeing in the last years, is coming from that segment. That's really important.

Mariano: First, it's highly accretive to the business in U.S. dollar terms, so a relevant portion of the EBITDA growth that we are seeing, we have been seeing in the last years, is coming from that segment. That's really important.

Mariano Tannenbaum: First is highly upgraded to the business in US dollar terms. So a really important portion of the EBWA role that we are seeing. We have been seeing in the last years is coming from that segment. That's really important. And on on top of that, the grow in delivery is helping to the youth. Six cost at the restaurant level because of also the time of sex are stronger usually at lunchtime. So is helping the youth. Six costs at the restaurant level. So in terms of delivery, we are very pleased with the gains we are seeing market share and the benefits that delivery is bringing to our.

Mariano Tannenbaum: And on top of that, the grow in delivery is helping to the youth. Six cost at the restaurant level because of also the time of sex are stronger usually at lunchtime. So is helping the youth. Six costs at the restaurant level. So in terms of delivery, we are very pleased with the gains we are seeing, market share and the benefits that delivery is bringing to our. Evita. Great.

Mariano: On top of that, the growing delivery business is helping to dilute fixed costs at the restaurant level because the time of sales is stronger, usually at lunchtime, so it's helping dilute fixed costs at the restaurant level. So in terms of delivery, we are very pleased with the gains we are seeing in market share and the benefits that delivery is bringing to our EBITDA.

Julia: And on top of that, the growing delivery is helping to dilute...

Speaker Change: six costs at the restaurant level because of also the time of...

Speaker Change: Sales are stronger usually at lunchtime, so it's helping the youth fix costs at the restaurant level. So, in terms of delivery, we are very pleased.

Speaker Change: with the gains we are seeing in market share and the benefits that delivery is bringing to our EBITDA.

Mariano: So back to you. And this one came from Eric Wang from Santander. Additionally, in Brazil, how did payroll expenses evolve, excluding the positive impact from the labor contingency reduction?

Mariano Tannenbaum: Thanks, Mario. And a quick one also on margin.

Mariano Tannenbaum: Evita.

Mariano Tannenbaum: So back to you. And this one came from Eric, one from sometimes that additionally in Brazil, how the payroll expenses evolve, excluding the positive impact from the labor contingency reduction. Yes, excluding the effect that, of course, is almost highly entirely reflected on the payroll line. We are seeing gains in the payroll line in Brazil. So in that respect, as opposed as what we are seeing in knowledge. But we are seeing leverage in Brazil, even that states are increasing above inflation. And we are seeing leverage on the payroll line, even excluding the one of. Great.

Speaker Change: Great, thanks Mariano. And a quick one, also on margin, so back to you, and this one came from Eric Wang from Santander. Additionally, in Brazil, how did payroll expenses evolve, excluding the positive impact from the labor contingency reduction?

Mariano Tannenbaum: Great. Thanks, Mario. And a quick one also on margin.

Mariano Tannenbaum: So back to you. And this one came from Eric one from sometimes that additionally in Brazil, how the payroll expenses evolve, excluding the positive impact from the labor contingency reduction. Yes, excluding the effect that of course is almost highly entirely reflected on the payroll line. We are seeing gains in the payroll line in Brazil. So in that respect as opposed as what we are seeing in knowledge. But we are seeing leverage in Brazil, even that states are increasing above inflation. And we are seeing leverage on the payroll line, even excluding the one of.

Mariano: Yes, excluding the effect that, of course, is almost entirely reflected on the payroll line, we are seeing gains in the payroll line in Brazil. So, in that respect, as opposed as what we are seeing in NOLAD, we are seeing leverage in Brazil, given that sales are increasing above inflation and we are seeing leverage on the payroll line, even excluding the one-off. Great, thanks. And, Eric, another one that has to do with the digitalization opportunities and what benefits those might bring. So, I'll turn it over to you.

Speaker Change: Yes, excluding the effect that of course is...

Speaker Change: almost entirely reflected on the payroll line, we are seeing gains in the payroll line in Brazil. So in that respect, as opposed as what we are seeing in NOLAD, we are seeing leverage in Brazil, given that sales are increasing above inflation, and we are seeing leverage on the payroll line, even excluding the one-off.

Luis Raganato: Thanks. And Erica, another one that has to do with the digitalization opportunities. And what benefits does my brain solve alternative reviews?

Speaker Change: Great, thanks. And Eric had another one that has to do with the digitalization opportunities and what benefits those might bring, so I'll turn it over to you, Luis.

Luis Raganato: Great. Thanks. And Erica, another one that has to do with the digitalization opportunities. And what benefits does my brain solve alternative reviews? All right. Thank you, Eric. About the digital growth, we are very pleased with the with the results will keep support. And we are confident in our ability to maintain the growth trend. Even by three main factors, the implementation of new functionalities to our app, like mobile on delivery, all right.

Luis Raganato: All right. Thank you, Eric. About the digital growth, we are very pleased with the results. We will keep support. And we are confident in our ability to maintain the growth trend. Even by three main factors, the implementation of new functionalities to our app, like mobile on delivery, all right. They continue to increase in the number of downloads. It's a second factor. We have. Already achieved 130 million downloads. That's a record for us and a great friend in active users. We today have 21 million monthly active users, another record for us. And a booster of our digital sales in the near future.

Luis: All right, thank you, Eric. As for digital growth, we are very pleased with the results we have achieved so far. And we are confident in our ability to maintain the growth trend, driven by three main factors. The implementation of new functionalities to our app, like mobile or on delivery. The continuing increase in the number of downloads is a second factor. We have

Luis: All right. Thank you.

Luis: Thank you, Eric. About the digital growth, we are very pleased with the results we achieved so far, and we are confident in our ability to maintain the growth trend.

Luis: The implementation of new functionalities to our app, like mobile or on delivery. The continued increase in the number of downloads is a second factor.

Luis Raganato: They continue to increase in the number of downloads. It's a second factor. We have. Already achieved 130 million downloads. That's a record for us and a great friend in active users. We today have 21 million monthly active users, another record for us. And a booster of our digital sales in the near future. And we are already seeing the results is a log of the program that is also contributing to, for example, due to to have access to our customer data.

Speaker Change: Thank you very much for joining us today.

Luis: Already achieved 130 million downloads, that's a record for us, and a great trend in active users. We today have 21 million monthly active users, another record for us. And a booster of our digital sales in the near future, and we are already seeing the results, is the loyalty program. That is also contributing to, for example, to have access to our customer data and identify sales experience.

Luis: [inaudible]

Luis: already achieved a hundred and thirty million downloads

Speaker Change: that's a record for us and a great trend in active users.

Luis: we today have 21 million monthly active users, another record for us, and a booster of our digital sales in the near future, and we are already seeing the results, is the loyalty program that is also contributing to, for example, to have access to our customer data and identify sales experience, and we already have

Luis: And we already have, with results in three main performance indicators of the program, like number of members. We have reached more than 11 million registered members in three markets that we have the loyalty program, Brazil, Uruguay and Costa Rica. We are today, as we speak, piloting Puerto Rico and we have the objective to fully implement the program in all of our markets by the end of the year, performance is the number of members, the other one is average check. We have a higher average check in loyalty of the customers and the other one is frequency.

Luis Raganato: And we are already seeing the results is a log of the program that is also contributing to, for example, due to to have access to our customer data. And I think the same experience. And we already have. with results in three main performance indicators of the program, like number of members. We have reached more than 11 million registered members in three markets that we have the loyalty program.

Luis Raganato: And I think the same experience. And we already have, with results in three main performance indicators of the program, like number of members. We have reached more than 11 million registered members in three markets that we have the loyalty program. Brazil, Uruguay, Costa Rica, we are today as we speak pilot in Puerto Rico and we have projected to fully implement the program in all of our markets by the end. Performance is the number of members.

Luis: results in three main performance indicators of the program, like number of members.

Luis: We have reached more than 11 million registered members.

Luis Raganato: Brazil, Uruguay, Costa Rica; we are today, as we speak, pilot in Puerto Rico, and we have projected to fully implement the program in all of our markets by the end. Performance is the number of members. The other one is Agra Check. We have a higher Agra Check-in loyalty to customers and the other one is frequency. We know that 90-day active customers are very healthy, and we are seeing that the frequency is 1.5 to 2 times that of non-loyalty customers. We are going to keep on investing in the expansion of our digital platform because it has the value and convenience, while the drive's guest frequency and optimizes the customer lifetime value.

Luis: in three markets that we have the loyalty program, Brazil, Uruguay, and Costa Rica. We are today, as we speak, piloting Puerto Rico, and we have the objective to fully implement the program in all of our markets by the end.

Speaker Change: Mariano Tannenbaum, Daniel Schleiniger, Luis Raganato

Speaker Change: Performance is the number of members. The other one is average check. We have a higher average check in loyalty of the customers. And the other one is frequency. We know that 90-day active customers

Luis Raganato: The other one is Agra Check. We have a higher Agra Check in loyalty to customers and the other one is frequency. We know that 90-day active customers are very healthy and we are seeing that the frequency is 1.5 to 2 times that of non-loyalty customers. We are going to keep on investing in the expansion of our digital platform because it has the value and convenience while the drive's guest frequency and optimizes the customer lifetime value.

Luis: We know that 90 day active customers the levels of these 90-day active customers are very healthy and we're seeing that the visit frequency is 1.5 to 2 times that of non-loyalty customers. So we're going to keep on investing in the expansion of our digital platform because it enhances the value and convenience while drives guest frequency and optimizes the customer lifetime value. Dan?

Speaker Change: [inaudible]

Speaker Change: The labels of these 90 day active customers are very healthy and we're seeing that the digit frequency is 1.5 to 2 times that of non-loyalty customers. So we're going to keep on investing in the expansion of our digital platform because it enhances the value and convenience while drives guest frequency and optimizes the customer lifetime value.

Operator: Thanks, Luis.

Marcelo: He had a little follow-up within his original question on margins, and that had to do with recent operating trends in July and August. How are we doing, and what did we see so far in the third quarter in terms of sales? As I mentioned before, we are facing a disturbing consumer, but to remain focused on delivering great value to our guests, with different intensities, depending on... We have..., should remain at or above inflation for the full year 2024. It is very diversified.

Marcelo Rabach: I'm going to come back to Bob Ford. He had a little follow-up within his original question on margins, and that had to do with recent operating trends in July and August. I don't know if you want to give us one. Yeah, Bob, how are we doing and what we saw so far in the third quarter in terms of sales? As I mentioned before, we are facing a certain consumer, but through remaining focus on delivering great value to our guests with different intensity depending on the market. We have sales growth should remain at or above inflation for the year 2024.

Marcelo Rabach: Thanks, Luis. I'm going to come back to Bob Ford. He had a little follow-up within his original question on margins and that had to do with recent operating trends in July and August.

Luis: Thanks, Luis.

Speaker Change: I'm going to come back to Bob Ford. He had a little follow-up within his original question on margins, and that had to do with recent operating trends in July and August . And I don't know, Marcelo, if you want to give us a look.

Marcelo Rabach: I don't know if you want to give us one. Yeah, Bob, how are we doing and what we saw so far in the third quarter in terms of sales? As I mentioned before, we are facing a certain consumer but through remaining focus on delivering great value to our guests with different intensity depending on the market. We have sales growth should remain at or above inflation for the year 2024. In most of all, and the reality of the arc of the world is that it is very diversified.

Bob Ford: Yeah, yeah. Both.

Speaker Change: How are we doing and what we saw so far in the third quarter in terms of sales? As I mentioned before, we are facing a disturbing consumer.

Speaker Change: to remain in focus on delivering great value to our guests with different intensity depending on...

Speaker Change: says growth should remain at or above inflation for the full year 2024 in most of Australia and the beauty of the Arcos Dorados

Marcelo Rabach: In most of all, and the reality of the arc of the world is that it is very diversified. So this helped us to mitigate the pressures we are managing in the market, for example, Argentina. Consumption environment is more challenging, but we are more than offsetting those challenges with excellent results and excellent growth in markets like Mexico, for example, that was mentioned a couple of minutes ago. So good to the third quarter in terms of sales.

Marcelo: So this helps us to mitigate the pressures we are managing in markets, for example, Argentina, the consumption environment is more challenging, but we are more than offsetting those challenges. We have excellent results and excellent groups. Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, The outlook for the year continues to be that we will be able to grow our sales above inflation in most of our markets and on a consistent basis, talk a little bit more specifically on any market when we report Q3 results. Great. And thanks, Marcelo. And another one for you, actually.

Speaker Change: is that it is very diversified. So this helps us to mitigate the pressures we are managing in markets, for example, Argentina.

Marcelo Rabach: So this helped us to mitigate the pressures we are managing in the market, for example Argentina. Consumption environment is more challenging but we are more than offsetting those challenges with excellent results and excellent growth in markets like Mexico, for example, that was mentioned a couple of minutes ago. So good to the third quarter in terms of sales. The outlook for the year continues to be that we will be able to grow our sales above inflation in multiple markets and on a basis maybe a little bit more specifically on any market when we report Q3 results.

Speaker Change: The consumption environment is more challenging, but we are more than offsetting those challenges with excellent results and excellent growth.

Speaker Change: in markets like Mexico, for example, that was mentioned a couple of minutes ago. So, good luck to the third quarter in terms of sales.

Marcelo Rabach: The outlook for the year continues to be that we will be able to grow our sales above inflation in multiple markets and on a basis maybe a little bit more specifically on any market when we report Q3 results. Great, and thanks, Marcelo.

Speaker Change: The outlook for the year continues to be that we will be able to grow our sales above inflation in most of our markets and on a consistent basis.

Speaker Change: talk a little bit more specifically on any market when we report Q3 results.

Marcelo Rabach: Another one for you, actually, and this comes from Rodrigo as soon as they share over the company. What about the work that we're doing in remodeling in Mexico, and will this continue? Yes, thanks for the question. And yes, for sure. We are, I would say, in the early stages in terms of modernization of all restaurants in Mexico. At the end of June this year, we have about one-third of the restaurants converted to YODF in Mexico, so still a lot of job to do and a lot of results to get from those investments because we continue to see a significant sales lift in those restaurants that are transformed to YODF.

Marcelo: And this comes from Rodrigo, who I assume is a shareholder of the company. What about the work that we're doing in remodeling in Mexico? And will this continue?

Rodrigo Azuma: Great, and thanks Marcelo. Another one for you actually, and this comes from Rodrigo Azuma, a shareholder of the company. What about the work that we're doing in remodeling in Mexico and will this continue?

Marcelo Rabach: Great, and thanks Marcelo. Another one for you, actually, and this comes from Rodrigo as soon as they share over the company. What about the work that we're doing in remodeling in Mexico and will this continue? Yes, thanks for the question. And yes, for sure. We are, I would say, in the early stages in terms of modernization of all restaurants in Mexico at the end of June this year, we have about one-third of the restaurants converted to YODF in Mexico, so still a lot of job to do and a lot of results to get from those investments because we continue to see a significant sales lift in those restaurants that are transformed to YODF.

Marcelo: Yes, thanks for the question and yes, for sure. We are, I would say, in the early stages in terms of modernization of our restaurants in Mexico. At the end of June this year we had about one-third of the restaurants converted to UTF in Mexico, so still a lot of job to do and a lot of results to get from those investments because we continue to see a significant sales lift in those restaurants that are transformed to UTF and we firmly believe that digitalization of our operation in Mexico and in the company in general will be the next big step in our growth story.

Speaker Change: Yes, thanks for the question, and yes, for sure. We are, I would say, in the early stages in terms of...

Speaker Change: modernization of our restaurants in Mexico. At the end of June this year we had about one-third of the restaurants converted to UTF in Mexico so still

Speaker Change: a lot of job to do and a lot of results to get.

Speaker Change: from those investments because we continue to see...

Speaker Change: a significant sales lift in those restaurants that are transformed to EODF. And we firmly believe that digitalization of our operation in Mexico and in the company in general will be the next big step.

Marcelo Rabach: And we truly believe that digitalization of our operation in Mexico and in the company in general will be the next big step in our growth story. So, in fact, for example, in the case of Mexico in 2023, our mobile app, the McDonald's mobile app, in Mexico became the most popular in the market, and that's based on active users reported by third parties. So we think we are in the right track, in the right direction, and we still have a lot of work to do in Mexico, but we've excellent results so far.

Marcelo Rabach: And we truly believe that digitalization of our operation in Mexico and in the company in general will be the next big step in our growth story. So in fact, for example, in the case of Mexico in 2023, our mobile app, the McDonald's mobile app, in Mexico became the most popular in the market and that's based on active users reported by third parties. So we think we are in the right track, in the right direction and we still have a lot of work to do in Mexico, but we've excellence results so far.

Marcelo: So, in fact, for example, in the case of Mexico, in 2023 our mobile app, the McDonald's mobile app, in Mexico became the most popular in the market and that's based on active users reported by third parties.

Speaker Change: in our growth story. So in fact, for example, in the case of Mexico in 2023, our mobile app, the McDonald's mobile app in Mexico became the most popular in the market.

Marcelo: So, we think we are in the right track, in the right direction and we still have a lot of work to do in Mexico but with excellent results so far. Thanks, Marcelo. Now one for you, Mariano, from Fraulein Mendes at JPMorgan. Thanks for the question. He asked, will the lower labor contingency burden in Brazil imply higher margins for Brazil on a consistent basis moving forward? Okay, no, actually the lower-level contribution is no longer applicable, so future contributions will be made at the higher level, so we're not expecting any changes there.

Speaker Change: and that's based on active users reported by third parties. So we think we are in the right track, in the right direction and we still have a lot of work to do in Mexico but with excellent results so far.

Mariano Tannenbaum: Thanks, Marcelo.

Mariano Tannenbaum: Now one for you, Mariano from Portland, Mendez at JP Morgan. Thanks for the question. He asked, will the lower labor contingency burden in Brazil imply higher margins for Brazil on a consistent basis moving forward? Okay, no, actually the lower level contribution is no longer applicable, so future contributions will be made at the higher level, so we're not expecting any changes there.

Speaker Change: Thanks Marcelo. Now one for you Mariano from Fordland Mendez at JP Morgan. Thanks for the question. He asked, will the lower labor contingency burden in Brazil imply higher margins for Brazil on a consistent basis moving forward?

Mariano Tannenbaum: Thanks Marcelo. Now one for you, Mariano from Portland, Mendez at JP Morgan, thanks for the question. He asked, will the lower labor contingency burden in Brazil imply higher margins for Brazil on a consistent basis moving forward? Okay, no, actually the lower level contribution is no longer applicable, so future contributions will be made at the higher level, so we're not expecting any changes there.

Speaker Change: Okay, no, actually the lower level contribution is no longer applicable, so future contributions will be made at the higher level, so we're not expecting any changes there.

Marcelo: Okay. By the way, we've received a couple of follow-up questions on, you know, more details of the MFA, etc. I think Marcelo has... Bob Ford has sent a follow-up, how should we think about your own delivery solution? initial expense pressure, as well as the longer-term implications for lower costs and better service. All right, thank you, Bob. Hello, how are you?

Mariano Tannenbaum: Okay, by the way, we received a couple of follow-up questions on more details of the MFA, so I think Marcelo has said Bob Ford has sent a follow-up. How should we think about your own delivery solution in terms of its initial expense pressure, as well as the longer term implications for lower costs and better service? And I'll turn that over to Lee Vuele's. All right, thank you, Bob. Hello, how are you? I believe you; for us, it's strategic for those points. It has the lower cost, and it allows us to deliver a better service. To give you a little bit of context, we have the service in 1,500 restaurants in nine countries.

Speaker Change: Okay, by the way, we received a couple of follow-up questions on, you know, more details of the MFA etc. I think Marcelo is Bob Ford has sent a follow-up. How should we think about your own delivery solution?

Luis Raganato: Okay, by the way, we received a couple of follow-up questions on more details of the MFA, so I think Marcelo has said, Bob Ford has sent a follow-up, how should we think about your own delivery solution in terms of its initial expense pressure, as well as the longer term implications for lower costs and better service, and I'll turn that over to Lee Vuele's. All right, thank you, Bob. Hello, how are you?

Luis: Our delivery for us is strategic for those points. It has the lower cost and it allows us to deliver a better service. Just to give you a little bit of context, we have the service in 1,500 restaurants in nine countries. Steel is very small.

Speaker Change: Our delivery for us is strategic for those points. It has a lower cost and it allows us to deliver a better service. Just to give you a little bit of context, we have the service in 1,500 restaurants in nine countries.

Luis Raganato: I believe you, for us, it's strategic for those points. It has the lower cost and it allows us to deliver a better service. To give you a little bit of context, we have the service in 1500 restaurants in nine countries. Still is very small, 12% of our total delivery sales come from this channel is growing by quarter, but we are still working on finding a scalable logistical model that has to meet our guest expectations.

Luis Raganato: Still is very small; 12% of our total delivery sales come from this channel. It is growing by quarter, but we are still working on finding a scalable logistical model that has to meet our guest expectations. For sure, I'm going to see in that today. The solution is going to be different from market to market, and we expect to benefit from an increase in these sales over time. Like you said, it has slightly better economics, but the impact will be gradual, and it is still too early to want to find the potential gain.

Luis: Twelve percent of our total delivery sales come from this channel. It's growing quarter by quarter, but we are still working on finding a scalable logistical model that has to meet our guest expectations. For sure, and we're seeing that today, the solution is going to be different from market to market, and we expect to benefit from an increase in these sales over time. Like you said, it has slightly better economics, but the impact will be gradual, and it is still too early to quantify the potential gains.

Speaker Change: Arcos Dora Hld

Speaker Change: still is very small. 12% of our total delivery sales come from this channel. It's growing quarter by quarter, but we are still working on finding a scalable logistical model that has to meet our guest expectations. For sure, and we're seeing that today, the solution is going to be different from market.

Luis Raganato: For sure, I'm going to see in that today, the solution is going to be different from market to market, and we expect to benefit from an increase in these sales over time. Like you said, it has slightly better economics, but the impact will be gradual, and it is still too early to want to find the potential gain.

Speaker Change: to market, and we expect to benefit from an increase in these sales over time. Like you said, it has slightly better economics, but the impact will be gradual, and it is still too early to quantify the potential gains.

Luis Raganato: Thanks, Luis.

Luis: Also, a follow-up from Alejandro Fuchs at Ita, and he says, "Can I make a follow-up on Argentina?" How have you seen July in terms of volume?

Marcelo Rabach: Also a follow-up from 100 folks at Itaú, and he says, can I make a follow-up on Argentina? How have you seen July in terms of volume? And we've seen comments improving trends from other consumer companies with exposure to Argentina, and I'll hand that one to you, Marcelo. Okay, thank you, Alejandro. Yeah, yes, we saw an improvement in the trends of the business in Argentina. We continue to face a challenging consumption. If you take a look to the first half of the year, consumption in general in Argentina declined around 25%, and alcohol overall volumes, remaining resilient and declining just about half of that rate.

Speaker Change: Thanks, Luis. Also, a follow-up from 100 folks at Itaú.

Marcelo Rabach: Thanks, Luis. Also a follow-up from 100 folks at Itaú, and he says, can I make a follow-up on Argentina? How have you seen July in terms of volume? And we've seen comments improving trends from other consumer companies with exposure to Argentina, and I'll hand that one to you, Marcelo. Okay, thank you, Alejandro. Yeah, yes, we saw an improvement in the trends of the business in Argentina. We continue to face a challenging consumption.

Speaker Change: and he says, can I make a follow-up on Argentina?

Marcelo Alejandro: How have you seen July in terms of volume, and we've seen comments of improving trends from other consumer companies with exposure to Argentina. And I'll hand that one to you, Marcelo. Okay, thank you, Alejandro. Yes, yes, we saw...

Marcelo: And we've seen comments of improving trends from other consumer companies with exposure to Argentina. And I'll hand that one to you, Marcelo. Okay, thank you, Alejandro. Yes, yes, we saw an improvement in the trends of the business in Argentina. We continue to face a challenging consumption. If you take a look to the first half of the year...

Marcelo Alejandro: improvement in the trends of the business in Argentina. We continue to face a challenging consumption

Marcelo Alejandro: [inaudible]

Marcelo Alejandro: If you take a look to the first half of the year

Marcelo Rabach: If you take a look to the first half of the year, consumption in general in Argentina declined around 25% and alcohol over all volumes, remaining resilient and declining just about half of that rate. I think that our local team has been doing a very good job, remaining very close to the customers and offering the best body proposition in the QSR industry. This year, and further strengthen our brand attributes, which have been already very high in Argentina for many years.

Marcelo: Consumption in general in Argentina declined around 25% and Arcos Dora Hldg's volumes remain resilient and declining at just about half of that rate. I think that our local team has been doing a very good job, remaining very close to the customers and offering the best value proposition in the QSR industry in Argentina, this year, and further strengthen our brand attributes, which have been already very high in Argentina for many years. I think that this work that we are doing in Argentina should position us in a very strong position for when the Argentine economy begins its expected recovery.

Marcelo Alejandro: consumption in general in Argentina declined around 25% and

Speaker Change: Arcos Dora Hldg volumes remain resilient and declining at just about half of that rate. I think that our local team has been doing a very good job, remaining very close to the customers and offering the best value proposition in the QSR industry in Argentina.

Marcelo Rabach: I think that our local team has been doing a very good job, remaining very close to the customers and offering the best body proposition in the QSR industry. This year, and further strengthen our brand attributes, which have been already very high in Argentina for many years. I think that this work that we are doing in Argentina should position us in a very strong position for when the Argentina economy begins its expected recovery. Fortunately, inflation in the country has been declining since December 2023, but it is still too soon to know how was the macroeconomic factors with impact results for the year 2024. However, we are causally cautiously optimistic.

Speaker Change: this year, and further strengthen our brand attributes, which have been already...

Bury Hayner: very high in Argentina for many years.

Bury Hayner: I think that this work that we are doing in Argentina should position us in a very...

Marcelo Rabach: I think that this work that we are doing in Argentina should position us in a very strong position for when the Argentina economy begins its expected recovery. Fortunately, inflation in the country has been declining since December 2023, but it is still too soon to know how was the macroeconomic factors with impact results for the year 2024, but we are causally cautiously optimistic.

Bury Hayner: strong

Bury Hayner: position for when the Argentine economy begins its expected recovery. Fortunately, inflation in the country has been declining.

Marcelo: Fortunately, inflation in the country has been declining since its December 2023 peak, but it is still too soon to know how all the macroeconomic factors will impact results for the full year 2024, but we are cautiously optimistic, based on the trends we already saw in July and August.

Marcelo Rabach: Argentina based on the trends we already saw in July and August.

Bury Hayner: [inaudible]

Marcelo Rabach: Great, thanks Marcelo.

Marcelo: Great, thanks. Marcelo, we have a question from Jean-Vierre, from Credit Corp. He asked if we have any plans to refinance the international 2027 notes, and that was for you, by now. OK, thanks Jean-Pierre for the question. We are three years ahead of maturity, so we don't have any plans to announce yet. Great. And that actually was the last question that we received. One thing I wanted to mention.., issues perhaps for some of you. Apologize for that.

Speaker Change: based on the trends we already saw in July and August .

Marcelo Rabach: Argentina based on the trends we already saw in July and August.

Operator: We have a question from Jean-Vierre from Credit Corp. He asked if we have any plans to refinance the international 2027 notes, and that was for everybody else. Okay, thanks.

Marcelo Alejandro: Great, thanks. Marcelo, we have a question from Jean-Pierre Aguilar from Credit Corp. He asks if we have any plans to refinance the International 2027 notes. And that was for you, Mariano.

Operator: Great, thanks Marcelo. We have a question from Jean-Vierre from Credit Corp. He asked if we have any plans to refinance the international 2027 notes, and that was for everybody else. Okay, thanks. Jean-Vierre for the question. We are three years ahead of maturity, so we don't have any plans to announce yet.

Operator: Great. And that actually was the last question that we received.

Operator: Jean-Vierre for the question. We are three years ahead of maturity, so we don't have any plans to announce yet. Great.

Mariano Tannenbaum: Okay, thanks Jean-Pierre for the question. We are three years ahead of maturity, so we don't have any plans to announce yet.

Operator: And that actually was the last question that we received.

Operator: One thing I wanted to mention to issues perhaps for some of you. Apologize for that. The audio for this call will be available for replay. Also make the transcript available as soon as possible for any of you who might have missed part of the call. We wanted to thank you for all of your questions. We are interested in our course.

Speaker Change: Great, and that actually was the last question that we received. One thing I wanted to mention...

Operator: The audio for this call will be available for replay. Also make the transcript available as soon as possible for any of you who might have missed part of the call. We wanted to thank you for all of your.., and for joining today's webcast. Look forward to speaking to you again in the middle of November on our third quarter earnings call. And until then, please stay safe and have a great day.

Speaker Change: issues perhaps for some of you. Apologize for that. The audio for this call will be available for replay. Also make the transcript available as soon as possible for any of you who might have missed part of the call. We wanted to thank you for all of your...

Operator: And for joining today's webcast, look forward to speaking to you again in the middle of November on our third quarter earnings call. And until then, please stay safe and have a great day. .

Speaker Change: and many more. Thank you. Thank you.

Speaker Change: for interest in ARCOS and for joining today's webcast. I look forward to speaking you again in the middle of November on our third quarter earnings call and until then please stay safe and have a great day.

Operator: And for joining today's webcast, look forward to speaking to you again in the middle of November on our third quarter earnings call.

Operator: And until then, please stay safe and have a great day.

Speaker Change: [inaudible]

Operator: [inaudible] Giorno precisi Please like, comment and subscribe Mariano Tannenbaum, Daniel Schleiniger, © transcript Emily Beynon [inaudible] Mariano Rabach, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Direction Music Sound Music Music Music Music Music Music Sponsored By, Read the full film description below On screen titles, www.aarcn.de Mariano Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Thank you for watching! Mariano Tannenbaum, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Raganato, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleinger, Arcos Dora Hldg, Thanks for watching!

Speaker Change: Mariano Tannenbaum, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg

Speaker Change #100: MyV really aestens

Operator: Mariano Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, and Daniel Schleiniger. Mariano Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Thanks for watching! Mariano Tannenbaum, Daniel Schleiniger, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg © transcript Emily Beynon, Arcos Dora Hldg Raganato, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, www.marcoparet.com, now the world's leading authority in non-verbal hypnosis Daniel Schleiniger, Arcos Dora Hldg, Visit our website at hobbyjapan.com Stay safe!

Operator: Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger[inaudible] Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg

Operator: [inaudible] Mars, Pluto, Apollo, Jupiter, Neptune, Dragon, Wyeth, Uranus, Saturn Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Mariano Raganato, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Select USAID is a joint venture withAUDIOADVICE.gov of AUDIOADVICE.GOV, [inaudible] Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Dora Hldg, Arcos Dora Hldg, Arcos Dora Hldg, Arcos Dora Hldg, Arcos 2 5 6 6 2 1 0 0 0 0 0 0 0 0 f f f f f f f f f f f f f f f, [inaudible] © Transcription bympadc Sanget device, and Daniel Schleiniger.

Speaker Change #100: [inaudible]

Operator: Dedicated to Mario Tannenbaum, Mariano Tannenbaum, Daniel Schleiniger, and many more. Thank you for watching. I hope you enjoyed this video. If you did, please leave a like and subscribe. I'll see you in the next video.

Operator: Thank you for watching! Raganato, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Mariano Tannenbaum, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, on Facebook! Raganato, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg, Donate at Voice of America [inaudible] and Daniel Schleiniger, https://www.youtube.com.ac, Thank you very much. Charles Raganato, Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg

Operator: Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg Marcelo Rabach, Mariano Tannenbaum, Daniel Schleiniger, Arcos Dora Hldg

Speaker Change #101: the by ok on

Speaker Change #101: [inaudible]

Speaker Change #101: Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger [inaudible]

Speaker Change #102: Daniel Schleiniger, Mariano Tannenbaum, Daniel Schleiniger [inaudible]

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