Arcos Dorados Holdings Inc. (NYSE:ARCO) Q4 2022 Earnings Call Transcript

Dan Schleiniger: Great. Thanks, Marcelo. And the second part on Melissa’s question has to do with our loyalty program. This was for Luis. Are there any initial indications or learnings from the MyMcDonald’s Rewards pilot that we can share and what the timeline for the broader rollout of the program? Thank you.

Marcelo Rabach: Right. Hello, Melissa. Thanks for the question. Yeah. We are running today the pilot in Ribeirão Prêto in Brazil. The objective is to validate our assumptions and to get feedback from customers and operations. And what I can share is that, even without a massive media launch customers are joining the program that is surpassing our expectations. And we are increasing our identified sales. And as we introduce those new customers to the program we see an increase in visit frequency because they are exposed to now new functionalities. And as we said in the investor update, once we learn from this experience, we’re going to be able to start up that. Dan?

Dan Schleiniger: Thanks, Melissa. Actually, I think that was the only question we received so far. Another one is coming in now. And please remember that you can submit your questions. You can submit your questions via the chat function on the webcast. Okay. It looks like we’re not getting any additional questions here in the — the chat function. It’s a busy day in the markets, obviously. I just jump on in . We mentioned food and paper costs in the second half of 2022. How are we seeing these pressures going into 2023? And considering this and the benefit we mentioned from operational leverage, what’s our expectation for margin expansion or contraction in 2023? That one is for you Mariano?

Mariano Tannenbaum: Thank you, Dan, and thank you, Gerono , for the question. For the start of 2023, we are seeing a better input cost environment, and we believe we can capture other efficiencies as well in the business to maintain healthy margins and the idea and our plan in this respect is very clear. We remain focused on driving top line with sustainable volume growth. That’s what we have done in 2022 and the plan to continue in 2023. We already started with a very healthy sales trend, as we mentioned in the first two months in all channels. And we are committed to deliver U.S. dollar absolute EBITDA growth as we have done in 2022 as well with a healthy margin profile and, of course, maintaining a disciplined cost and expense control.

Dan Schleiniger: Great. Thanks Mariano. The next question is actually asked some of the questions, do you have any forecast for margins in 2023, and I think we just answered that. And we have a question from Martin Capital, asked how does growth look for 2023? And is the main driver store openings? And I think that’s back to you, Marcelo.

Marcelo Rabach: Okay. Yes, as it was the case in 2022, our plan is to continue building revenue through volume growth in the existing restaurant base surpassing with our systemwide comparable sales, not only inflation, but our competitors in the different markets, and that has been the case in 2022. And that’s the base and the focus of our plan for this year of 2023 based on the first couple of months of the year, we are doing well against that plan. And on top of that, we accelerated our peso investments, both in terms of expansion. Last year, we opened 66 new restaurants, 90% of them first-time units for this year 2023, we are planning to open 75 to 80 new restaurants. So, we are accelerating our peso of growth. And on top of that, we are accelerating our modernization program, converting approximately 250 restaurants to the experience of the future format.

So, we are gaining traction, both from the existing restaurant base. And on top of that, with the new restaurant openings that we accelerated last year, and the same will be case for this year.