Arcos Dorados Holdings, Inc. Class A Aktie

Good morning, and thank you for joining Arcos Dorados' First Quarter 2026 Earnings Webcast. With us today are Luis Raganato, Chief Executive Officer; and Mariano Tannenbaum, our Chief Financial Officer. Today's webcast, which is being recorded, will consist of prepared remarks from our leadership team, which will be accompanied by a slide presentation that is also available on the Investors section of our website, ir.arcosdorados.com. To better follow the presentation, please note that you can set your view to full screen on the webcast platform. Additionally, you can submit your questions at any time during the presentation using the Q&A function on the bottom of the street. After we conclude our opening remarks, we will answer your questions.

Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to [indiscernible] new or changed events or circumstances. In addition to reporting financial results in accordance with generally accepted accounting principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial results as compared with GAAP results, which can be found in today's earnings press release and conference call presentation as well the unaudited financial statements filed today with the SEC on Form 6-K. I will now turn the call over to Luis.

Thank you, Dan, and good morning, everyone. Over the last several years, we consistently added to our dominant market share position and elevated brand attributes to historical highs across Arocoperado's operating foot. As a result, for the 6 years ended in 2025, total revenue grew almost 60% EBITDA nearly doubled and net income was up more than 2.5x in U.S. dollars. Moving forward, our objective is to build on this incredible foundation and capitalize on the significant competitive advantages we built over the period.

[indiscernible] 2026 is off to a good start. First quarter 2026 highlights included some important milestones within the context of a challenging consumer environment. Total revenue grew about 13% and surpassed $1.2 billion for the first time in the first quarter, overcoming relatively soft consumption in certain markets. This included 16% growth in systemwide comparable sales, which was driven mainly by average check, but we also saw improvements in guest traffic in several markets. Similar to total revenue, we generated the highest adjusted EBITDA for the first quarter in U.S. dollars. The $119 million result was driven mainly by strong top line growth combined with very solid margin expansion, especially in Brazil and SLAD.

We have pursued strategies that capitalize on the brand to monetize the significant market share advantage we hold in the region. These, together with very strong EBITDA growth is adding to cash flow performance as well. along these lines. In a few minutes, Marina will take you through how we measure adjusted free cash flow to drive shareholder value. Marketing campaigns focused on offering value platforms that appeal to lower income consumers and core menu items that drive brand love as well as licenses [indiscernible] that keep McDonald's culturally relevant.

The brand experience continue to expand beyond our restaurants, bolstered by the region's most comprehensive digital platform and loyalty program. As much as digitalization has and will change the business, 55% of sales continue to be generated inside our restaurants. During the quarter, we added 19 new restaurants to the footprint, including 13 freestanding units with a more efficient capital deployment.

[indiscernible] markets are in the same phase of the economic cycle. So our local teams have deployed specific strategies to adapt to their specific operating environment. In Brazil, marketing campaigns during the quarter spanned Carmen, affordability and partnerships. For example, the introduction of Westberg, leveraging limited time offers through economic the first promotions associated with the FIFA World Cup and a strong presence at [indiscernible] Brazil.

In NOLAD, marketing initiatives drove sales performance across the division. Mexico, Panama and Costa Rica continue to leverage affordability platforms and localized offerings. Across markets, family-focused initiatives seasonal venue and license activations such as [indiscernible] menu complemented core and value execution, reinforcing brand affinity and residence. [indiscernible], menu innovation was a key growth driver. For example, in the beef category, we introduced the tasty fit quarto in Chile and Uruguay blending the popular [ [indiscernible] with a core favorite Quarter Pounder with cheese to the live guests. In Argentina, we leveraged the successful premium sandwich platform by introducing a limited time-only grand fee clock house featuring Franco Cola Pinto the well-known Formula 1 driver and local hero. Within the chicken platform, Colombia introduced [indiscernible] and the [indiscernible] option with an encouraging guest response. Finally, we reinforced the brand's culture relevance in Argentina, Chile and Colombia to music a key consumer passion point at Lollapalooza and [indiscernible].

Digital channels, including mobile app delivery and third quarter kiosks grew 21% versus the prior year and contributed about 64% of system-wide sales. Sales growth in delivery remained strong. boosted by promotional activity by new 3PL partners in Brazil. Of course, with an increasingly modernized restaurant base, sell for ac sales also grew an accelerated rate. The loyalty program top 30 million registered members at the end of the quarter, and we expect the program to grow quickly with more active members to visit us more often now that the rollout phase is nearly complete. U.S. dollar revenue performance was strong in all 3 divisions. Brazil delivered the highest growth, thanks mainly to contributions from new restaurants, a higher area check and the appreciation of the Brazilian real.

The first 6 weeks of 2026 were ahead of expectations, but we experienced an important slowdown in restaurant volume in the weeks following [indiscernible] our team in Brazil responded with initiatives designed to recapture volume without sacrificing profitability. By the end of the first quarter, we saw a promising reversal in gas volume trends, while also delivering better margins versus the prior year period. In other words, we took a balanced approach to monetize our significant market share advantage in Brazil. The second quarter is off to a very strong start with positive gas traffic and solid average growth in April and the first half of May. Note comparable sales rose due to higher gas traffic in a couple of key markets. The result was supported by disciplined pricing, targeted mix optimization and continued momentum in Mexico.

Panama, Costa Rica also achieved early progress towards rebalancing traffic and average check. The appreciation of the Mexican peso and Costa Rican [indiscernible] helped contribute to revenue growth in the period as well. [ SLAD sustained ] strong momentum with internal research pointing to either maintained or expanded visit and value share in each slab market within the respective QSR industries. This performance underscores our ability to consistently gain market share. The currency environment in slide was mixed. Most local currencies appreciated versus the prior year, with the exceptions of Argentina and Venezuela. Elevated inflation in these 2 countries probably offset the currency devaluations and helped to generate U.S. dollar revenue growth in the quarter. Over to you, Mariano.

Thanks, Luis, and good morning, everyone. As you just heard, we were aiming to monetize brand and market share advantages in several key markets during the first quarter of 2026. Adjusted EBITDA totaled $118 million at almost 30% in U.S. dollars year-over-year. The consolidated margin expanded by 120 basis points with a very encouraging 60 basis point contribution from food and paper and 60 basis points from G&A as well. modest pressure in payroll and occupancy and other operating expenses was fully offset by income from certain franchisee restaurant transactions in NOLAD and SLAD. Even without these transactions consolidated EBITDA margin expanded by 70 basis points versus the first quarter of 2025.

Going back to food and paper, both Brazil and SLAD we're able to generate margin improvements versus last year when NOLAD was stable as a percentage of revenue despite accumulated food inflation globally. Payroll expenses were up as a percentage of revenue in Brazil and NOLAD mainly due to higher hourly crew wages. This was partly offset by payroll expense leverage in slab. Occupancy and other operating expenses included modest pressure in each division, whereas G&A was lower, partly reflecting the benefits of last year's restructuring process.

First quarter adjusted EBITDA included $5.8 million from some franchise restaurant transactions in SLAD and NOLAD which added $2.7 million and $3.1 million, respectively. In Brazil, adjusted EBITDA was up more than 20% in U.S. dollars improved food and paper was the main driver of the quarter's 30 basis point margin expansion. NOLAD has had a more challenging time generating margin improvement in recent quarters. Excluding the income from the restaurant transaction, EBITDA margin was down about 40 basis points in the quarter. We are working with the leaders in each market to implement strategies that better balance guest volume and profitability. Slab continued generating strong U.S. dollar growth and margin expansion in the first quarter, even without the income from the restaurant transaction with the local franchisee. SLAD EBITDA margin rose by about 120 basis points in the period.

Moving ahead, we remain optimistic that Saris on track to deliver another positive performance this year. navigating the short term while building on the successes of 2025. Starting with today's earnings release, we will be publishing our adjusted free cash flow for the last 12 months. We believe this calculation over a full business cycle provides a clear picture of our ability to service our debt and fund our CapEx plans.

Additionally, this is in line with the 3 pillars of focus that Luis introduced last year, targeting greater operational efficiency and cash flow generation to create long-term shareholder value. For the 12 months ended March 31, adjusted free cash flow generation reached almost $110 million versus a negative $3 million in the previous period. As a reminder, during the first quarter, we also completed the liability management transaction we described on our last call. As of the end of the first quarter, net debt to adjusted EBITDA was unchanged compared with year-end 2025. We continue to have a healthy cash balance and are combining improved profitability and cash flow generation with other initiatives to strengthen our balance sheet and support future growth and modernization.

With that in mind, during the first quarter, we invested $36.8 million, including $16.7 million for new restaurants. Growth continues to be a priority for capital allocation as long as the returns on investment are strong. With all the uncertainty currently influencing local economies and consumer behavior, we continue to focus on the factors we control to drive profitable sales growth and generate value through the investments we make inside and outside our restaurants.

I am encouraged by the progress achieved during the first quarter and our objective remains to deliver improved underlying margin performance throughout the year. Back to you, Luis.

Thanks, Mariano. I have just a few more things to mention before we open up for Q&A. Arco Dorados is in a unique position in the Latin American consumer space. We operate in a segment of the economy that will never disappear as we meet a basic need for guests. Within that segment, we developed significant competitive advantages. Spanning the emotional connection we have with consumers, the multiple channels we use to generate sales, the business foundation built on operational efficiency and the prudent management of the company's capital structure. We also partnered with the communities we serve to support economic development and new former job opportunities for young people.

In fact, over the last several months, we have been recognized by Great Place to Work among large companies as the #1 great place to work in both Argentina and Uruguay and the number four great Place to Work in Brazil, the highest ever ranking in that country's history. In Mexico, the prestigious expansion Media Group publishes an annual super Empresas ranking, which evaluates organizational culture among the country's largest companies. The ranking is based on factors including leadership, professional growth, company policies and social responsibility among others. We were honored to have been ranked #1 in the 2026 ranking. The recognition we received in each of these markets is a reflection of a company-wide commitment to running restaurants while also generating new formal job opportunities that have a positive impact on the community's reserve.

[indiscernible] Arcos Dorados 2025 social impact and sustainable development report. In addition to the impacting ongoing work on youth opportunity and the other pillars of the recipe for the future, you will find the details of how we met the targets of the sustainability-linked bond we issued back in 2022. Check back on the website respite future. come in the next few weeks to download the report. Also, please mark your calendars for Arcos Dorados next Investor Day. We are working on an agenda for the morning of October 1 in New York with the participation of several members of the company's executive leadership who will provide an update on how we are addressing the businesses, 3 pillars of focus, today, growth and tomorrow.

In the coming weeks, we will provide more details on how you can participate in the event. We hope you will join us. Finally, let me reinforce a couple of key messages from today's presentation. The plan for 2026 was developed to optimize sales growth drivers over the course of the year and capture efficiencies to drive improved profitability. This should help us generate positive adjusted free cash flow to create additional shareholder value. The team is focused and the second quarter is off to a good start. Thank you for joining today's call. Dan, back to you.

[Operator Instructions] We're going to try to go systematically through these. We're going to start with a question related to our beef costs, which we have from both Bob Ford, Bank of America who says, how should we think about beef costs and pricing for the balance of the year across markets. And also for [indiscernible] from JPMorgan, can you provide more detail on the evolution of beef prices in Brazil during the first quarter and quantify how much of the margin improvement was attributed to this tailwind? And also, how do you expect beef prices to trend for the remainder of the year and what implications could this have to your margin performance in full year '26 in Brazil. So with all of that, I'll turn it over to you, Mariano.

Regarding food and paper, I will start with Brazil, food and paper and beef, in particular, was the main driver of margin improvement in Brazil during this quarter. As we already -- or I mentioned during the previous call that this is the second quarter where we are seeing big cost reduction in Brazil. So we are very pleased with that. Compared to last year, there's a clear moderation on price increases, and that's, of course, helping our margin performance at the restaurant level. Looking ahead, we expect costs, especially beef to remain dynamic, global demand, as you know, is still shaping domestic prices. Brazil is still with beef costs lower than in many places in the world. We are working on that. For the outlook, we are cautiously optimistic about the evolution of food and paper costs in Brazil. Besides beef, we are seeing the rest of the main categories pretty stable. And going out from Brazil, we haven't seen the same pressure that we have seen last year in beef costs in Brazil, in the rest of the countries where we operate, and we are not seeing further pressures during this year. So in summary, we are very pleased with the performance in the last 2 quarters. We have seen big cost reductions and we are cautiously optimistic for the outlook for the remaining of 2026.

The next question, we're going to stay with Bob Ford from Bank of America. Can you talk about loyalty penetration rates in your bigger markets? And what that's doing to frequency and average ticket? And where are you rolling out loyalty or have yet to lap in terms of the markets, what's already been rolled out. And that one is for you, Luis.

All right. Thank you very much, Bob, for the question. First, to start, loyalty boost the power of the app because it brings busy frequency, while increasing the percentage of identified sales. The program continued to grow this first quarter, reaching more than 30 million resistant members. -- and this is an increase of 62% versus the end of last year, representing 25% of total sales. In the first quarter, we launched 1 additional market, both Panama. So our loyalty program is available in 10 countries now that account for 94% of our stores. Regarding the analyzing the transactions of the program, we calculated a 20% to 25% increase in this frequency and the performance of 90-day active users. Frequency and retention rates is above the average of the market. And regarding margins, we're seeing a positive impact since we didn't products have on average, a higher margin. We are seeing a minimal impact on average check, and this is compensated greatly by the increase in frequency. And another advantage is that it helps us to analyze the customers' behavior to better manage the customer lifetime value that has reached record high figures. So that's the answer there.

Thanks, Luis. And I actually have a couple more from Bob, both of them will be for you, Mariano, one at a time here. First is what's behind your sub-franchisee acquisitions and sales in NOLAD and Argentina were flat? And how do you think about the optimal balance of corporate versus subfranchise locations these days?

Perfect. Basically, this is business as usual for us. We currently have more than 2,500 restaurants in the region, and it's normal for us to acquire some restaurants from franchisees and to sell some restaurants operated by us to some franchisees, and that happens on a regular basis. So this quarter, we acquired some restaurants in Mexico and we sold a restaurant in SLAD. So this is normal for us. You are going to see these type of transactions as you have seen them in the past, and you will see them in the future regarding the mix between Arcos operating restaurants and some franchises. We are not expecting any big changes on the percentage. You recall, more or less, we operate 70% of total restaurants and the sub franchisees operate around 30%, and we are planning to maintain that percentage quite stable throughout this year and next year.

Great. And then final one from Bob Ford, Bank of America. How should we think about the cuts to the central administrative structure net of the severance and opportunities for further improvement due to AI or other efficiencies that's back to you, Mariano.

Perfect. Well, as maintaining a strong discipline over the G&A expenses, it's a core priority for Arcos as we continue to focus on efficiency and operating leverage while supporting the needs of the business. Following this G&A restructuring that started in November last year until January this year, we entered -- we can say that we entered 2026 with a leaner and more agile cost structure. -- it's better aligned with our strategic priorities and growth agenda. So at a consolidated level, G&A over revenues is down 60 bps versus the prior year, and that's supported, of course, by sales growth. and the reductions that we -- that I just mentioned. The only thing is, of course, the increase in the U.S. dollar that is helping our -- sorry, the real appreciation of the local currencies in the last months is helping our results and our EBITDA, but at the same time, is making our G&A in dollars a bit higher. But throughout the year, we expect to maintain the leverage that we obtained during this first quarter, and we are very pleased with these results. In terms of AI. We are beginning this journey with, of course, training on our staff, adoption of AI tools, and we are convinced that we have the scale to generate value through AI and agents. And we will talk about this with much more detail during our Investor Day in September.

The next question is going to be a combination of 3 questions for Luis. And I'll start with Eric Wong from Santander. Three questions from his side. Comp sales in Brazil remained quite pressured, but we saw a sequential improvement in your main competitors indicator in the quarter. Could you walk us through the competitive environment and current expectations towards a rebound in comp sales in Brazil. I'll combine that with one from [indiscernible] from Goldman Sachs, who asked us, could you comment on how traffic has sequentially evolved since mid-last year and how it is into the second quarter. And I'll add to that, Julia Russo from Morgan Stanley, who says she would like to hear management's expectations on the pace of sales recovery in Brazil. And then she has the second part about margins and result come back to you on that one. But the first piece that has to do with Brazilian sales and competitive environment. Over to you Luis first.

All right. Thank you, Dan. SP999 Thank you, [indiscernible] for the questions. Bear with me, I will try to cover everything. First, although I can speak to a specific competitors' performance. I can tell you that -- we believe that we are managing top line growth in a way that is sustainable over time. It is important to understand that the Brazilian QSR industry is undergoing a correction in gas volume. And since this is an industry-wide reality, we have focused our efforts on monetizing the significant market share advantage we do have. So while we are doing that while also improving profitability margins. That is what we did during the first quarter when we delivered EBITDA margin expansion while also increasing the brand's visit share versus the prior year quarter. And by, as I mentioned in the first payment, the second quarter is off to a very good start. And this was thanks to the proactive step that the team -- the resilient team took to reverse gas volume trends with maintaining healthy margins. And for the rest of the question, I will start with 2025 and a little bit of context. We did have a challenging and volume trends remained under pressure during the first quarter of this year, which was the main reason for the quarter's comp sales result. The industry experienced experienced volumes down mid- to high single digits. And this was especially evident in the post-Carnival season. This happened in the first half of March and we experienced an important decline in these volumes in that period. What we're seeing is that cost of income among consumers continues to be limited, which is why it was important for us to maintain our focus on offering a compelling value proposition with competitive pricing that fares were economic in the value -- national value platform starts to play. And we try to do this without pricing margins and delivering a great experience through all the channels. The focus of the operational team is to have the right profile, the right quantity the right level of strength of training to deliver the best accuracy and speed through all the channels. And having said that, what we saw is that when the industry continue to focus on promotional activities driven by pricing and transactional very transactional, we focused on a more comprehensive plan. That complements actions targeted to increase traffic and shield market share with actions that aim to build the love for the brand. As a result of the mix of these initiatives, gas volume trends in the second half of March improved significantly. The contribution to sales came more in the first quarter from average check and channel shifts down volume, but we generated important improvements in margins. And in this context, it's worth mentioning that even we had flattish comparable sales. We achieved our highest visit share label since 2022, and this is according to Crest. We've managed to maintain a multiple of more than 2x the guest traffic of the nearest competitor. And we also saw some of the brand equity scores we track like value, quality, top of mind brand preference that are at or near their auto highs, which not only supports current sales performance but also we believe that puts us in a position of strength for when market conditions improve moving forward. And the last piece of the answer would be with what we're seeing in the second quarter. We have continued supporting gas volume and sales growth. And again, by making the brand both more affordable and more aspirational and so we have initiatives, including doubling down on economic, the national value platform. You know that today, the attractive price that we have is [indiscernible] for less than $4 you can make your own combo, your own menu. We have 4 items to -- that our guest can choose. And we introduced the World Cup sandwiches [indiscernible] is a lineup of sandwiches inspired by different countries participating in the FIFA World Cup. This has happened for the last 20 years. Of course, the story is the [indiscernible] and the results so far have been promising. April tips, case volume and comparable sales reached the best growth levels out of the last 20 months. And so for the month of May is following a similar trend. So with that, we are convinced that we're in a position of strength to face the current or any situation that could arise. And just to highlight that our 2026 plan was designed to optimize sales growth drivers and to improve profitability. We want to generate to shareholder shareholder value. .

And I think you just answered another question that came in. I'll mention it very quickly, but I think you just answered it, which is from a -- what do you think is driving the traffic pick up in second quarter in Brazil and considering the pickup in inflation in the period I think you just addressed that. So right I'm going to shift back to the second part of Julia's question from Morgan Stanley that I mentioned, which was the sustainability of first quarter 26 margin tailwinds through the year. And I think she's talking specifically about Brazil [indiscernible]

Are you already talked about food and paper dynamics in Brazil. But in general, your question is more general about margins in Brazil, update and outlook. So this quarter, we saw an EBITDA margin expansion of 30 bps, reaching 12.7% EBITDA margin in the division. This increase -- as I already mentioned, was mainly driven by the reduction of food and paper costs with less pressure from beef prices and very good results from all our revenue management strategies. In addition, I would mention that leverage of G&A as the same case as in the consolidated level, we saw an average of G&A over revenues after the restructuring process that I already mentioned and we are seeing positive results on that. On the other hand, we experienced small deleverage in payroll and occupancy and an operating expenses. But we expect to reverse that with increasing in sales in the coming months. Of course, the appreciation of the currency of the Brazilian real as many other key currencies where we operate, such as the Colombian peso, the Chilean peso, the Colombian [indiscernible] Costa Rica, the Mexican peso or the Argentine peso, but the appreciation of the Brazilian real, in particular, also was a relevant factor for EBITDA growth. So looking ahead to 2026, after a tough 2025 in Brazil in terms of margin because of big cost increases, we're cautiously optimistic in relation to the food and paper expenses. And of course, we expect to continue increasing sales that will allow us to generate additional level leverage on fixed cost plans.

We're going to stay with you for a couple of more questions from Eric Wong at Santander. His second question, the tax rate in the quarter showed significant improvement on a quarter-over-quarter basis. What can we think about in terms of the effective tax rate going forward.

Yes. We always say and in this case, even if it plays in our favor that we need to look at the ETR on an annual basis. And in this respect, we expect the ETR to be in line with the ETR we saw last year. Of course, we're always looking at different projects and different ways as the one that we mentioned in the last call about Brazil to improve our ETR. We are working on several projects. But for now, I would say that we expect an ETR in line with what we had during 2025.

Great. And then the final one from Eric, also for you, [indiscernible], this is back to a divisional margin question. NOLAD margins were somehow pressured year-over-year. What are the main drivers for the pressure in the quarter. and what could be expected going forward.

Yes. Well, thanks for the question. Margins in NOLAD, all in all, we're 50 bps above prior year, but of course, the main explanation here is the game that we recorded from the restaurant transaction that happened in Mexico. The other good news in terms of margin in NOLAD is also leveraged in the G&A line. In terms of food and paper, it remained flat. We saw increases or improvements in lab and in Brazil, in NOLAD, we saw a flattish foot of paper that -- but having said that, we see a sequential improvement compared to both the previous quarter and the 2025 run rate. Then in terms of payroll and occupancy and other expenses, those 2 lines remain under some pressure. We have seen minimum wage increases in many of not country and sales growth at 1.6% comparable sales has been running below the labor and other cost inflation and that resulted in temporary deleverage in NOLAD. That said, the underlying performance of the business remains solid Mexico, our largest market in the division continues to perform very well with positive traffic, robust comparable sales growth and food and paper costs in Mexico below prior year. So that's supporting the overall profitability profile of the division. So we are confident that this all the initiatives that we are implementing and the expectation of recovery on sales would support the path to higher profitability in the coming quarters. That's what we're looking for. That's our expectation, and we need to work hard to improve and we acknowledge that to improve margins in the division.

We're going to move now to [indiscernible] from Goldman Sachs. So I had a couple of more questions. The first 1 for you, Luis, is the gap between total sales, same-store sales and unit growth suggest there's a better productivity and all that. Can you give us a little more color there?

And the answer is yes. We are having a better productivity in the division. We have a very solid expansion plan, and we are very pleased in particular in Mexico with the organic and inorganic evolution of the business. And as you know, we are focused on improving the return on investments to increase our cash flow generation, not only in order but in the country -- in the company as a whole.

And then the final one from [indiscernible] is related to capital allocation, you're splitting your store growth into a broader ownership and format mix, and that has materially reduced your average cost per store, per store opening. How should we think about this composition going forward? And how should it move the ROIC curve versus previous cohorts? Back to you, Mariano.

Actually, how we are seeing this is -- we're not planning to change the ownership, as I mentioned before, we are pleased with the split between restaurants operated by us, by ACOs and restaurants operated by subfranchisees. We are also -- we are still opening the majority of stores as freestanding units. We are convinced that this model is where we should focus the majority of our store openings. Having said that, of course, if there are opportunities in other store formats, and we see -- we are seeing good returns. We are going for them. So if I would say the main source of efficiency is not about format and not about ownership, it's more about the overall approach of maximizing the returns on capital, looking at better execution, supplier localization, more efficient construction by maintaining the high standards of each restaurant that we open. We are having a very tough discipline in our investment approach. What we have done is we have been searching for highest returns on new store openings and moving investments from countries where we or markets where we were seeing lower returns to markets where we were seeing higher returns. And that, I think, that overall strategy is what is giving us currently the efficiencies that we are seeing in the CapEx. That's also -- you can see that in the new adjusted free cash flow chart that we are including starting this quarter. Capital expenditure in this first quarter totaled $36.8 million, down from $48.8 million in the prior year period. This period we are opening or we opened 19. And in the previous year, we opened 10 restaurants. So having opened 9 more restaurants, the investment is much lower, and that's all about discipline, focus and a more disciplined approach to investment.

The next question is from [indiscernible] at JPMorgan. This will be for you Luis. With digital sales reaching very high penetration, how do we think about the impact of total CapEx and CapEx mix in terms of store openings and format mix over the next few years? Also, how could this be managed under the restrictions and/or commitments of the MFA.

And this answer is going to be related with the one that Mariano just gave -- just a reminder that our growth plan is aligned with our long-term vision. This vision is to unlock McDonald's full potential in the region. It already incorporates market opportunities and funding strategies to support the expansion. We keep the same focus on modernization and digitalization the same focus that we've had in the last couple of years. We are currently at 75% of Experience of the Future restaurants. The objective is to achieve 90% in the next couple of years. And of course, if conditions change, we are flexible in adjusting the pace and focus of investments, as you know that and Mariano just talked about that in the way that we are already doing and we have done in the past, we are prioritizing and we will prioritize the most profitable markets and restaurant formats. As you know, the relationship with the McDonald's Corporation team is stronger than ever. So we do have space to adjust anything we think we need. And as you know, we are, in fact, in the process of revisiting every element of our development process to ensure that every dollar invested brings the best possible return. Dan?

We'll stick with you, Luis, also similar or on the topic of digital sales [indiscernible] from BTG. On digital sales penetration, Luis stressed that 55% of sales remained in store, and this quarter saw a more normalized growth of digital sales. So how should we think about digital sales penetration and a weaker purchasing power environment.

All right, [indiscernible], thank you for the question. The 55% of on-premise that we talked about, that they refer to the opportunity that we have still in the sales delivered by our full brand experience. That is great news because it shows us it's a testament of our aspirational the experience inside our restaurants in the region is they do not get in comfort with digital sales. that in fact are built largely by our self-order kiosks that are inside our restaurants. So we expect to keep on growing digital sales and on-premise sales despite any market situation.

Moving now to a couple of questions from [indiscernible] from [indiscernible]. The first [indiscernible] are going to be for you by the end of but I'll start with the first one. In the company's annual report is the CapEx for new restaurants, a blended figure that includes both company-operated and franchise restaurants -- and what do you expect the opening cost for new restaurant to be going forward, will it be more through owned properties or leased properties.

Perfect. Yes, the CapEx is all the CapEx that the company does. Remember that in the case of new restaurants, Arcos makes the investment in the building. And then Arcos also makes the investment in the inside of the store in case is an Arcos operated restaurant and the sub-franchisee makes the investment inside the store in case this is a enfranchise restaurant. But always, Arcos has an investment there as the developmental licensee as we are. In this case, what do you expect the opening cost per new restaurant to be going forward? Well, as I already mentioned in the previous question related to this topic, we are working very hard, and we have been so far, I think, successful in reducing the average cost per restaurant open, and we will continue to look for opportunities to to reduce these costs. This has been a priority for lease since he started as CEO last year, and the whole team, [indiscernible] in finance and the development team are working very hard to find efficiencies and to reduce the investment, but it's important to note, always maintaining the high quality of the rest and standards of the restaurants opened. And we are very pleased that we are seeing higher returns by lower investments, but keeping sales in and margins in the new restaurants. In terms of if we are going to open more owned properties or leased, the majority of the stores, we opened the vast majority of the stores we opened are on leased properties and nonowned properties. That doesn't mean that we don't buy any land. But the majority of the cases is in on leased land.

The second question from Land is after reaching a 90% EOTF mix by the end of 2027 or so, how many restaurants do you expect to be reimaged or upgraded to EOTF each year thereafter.

Well, in the industry, the standard -- in the QSR industry, the standard is to modernize or remodel approximately 10% of the restaurant base each year. So that means every 10 years, a restaurant more or less than years is due to modernization or redevelopment. And we are expecting to do that. Probably it could be ODS, it could be something new. We are working with McDonald's in order to develop the new restaurant that will come. But we are still planning to keep modernizing our stores that is a key component for being modern being attractive for our customers and to continue increasing same-store sales in our restaurants.

We have another question from [indiscernible] from [indiscernible] Analytics Wondering. Wondering why you no longer compare system-wide comparable sales with blended inflation and also if you can comment on the expected impact from the World Cup and guest traffic and sales in Q2 and Q3. And that question is for you, Luis.

I think I already covered the part of the World Cup actions. We've seen and we are pleased with the performance of that campaign in the first weeks. And regarding the question about the initiation under normal circumstances inflation or inflation is a good measure stick for comparable sales but it is not a load. For example, in Brazil, I already said this, that the QSR industry is undergoing a correction in guest traffic and when that occurs, it is important to maintain as much traffic as possible, which we believe we have done and the evidence is that we have a strong base share performance. We believe it is also a time to monetize the significant market share advantage we built in the market to try to help offset the cost increases that are also impacting the interest rate. That way, we build top line in a sustainable way without buying traffic while also maintaining healthy margins. So at this moment, you can apply this concept to a couple of other markets as well in the region. Long term, we expect to maintain an optimized combination of sales growth drivers based on market conditions and the factors that we can control.

And we have one more question from [indiscernible] from [indiscernible] he's an individual investor. And he's asking the food and paper cost as a percentage of revenue decrease is part of -- is it a part of an average price increase? Or is it a cost efficiency initiative? And the case of a cost efficiency initiative, could you elaborate on those initiatives? So I'll pass that one to you, Mariano.

Okay. I'll try to be fast, so we can end at time. Pricing strategy, it's very important, remains disciplined and closely aligned with inflation. We continue to avoid aggressive pricing actions to protect long-term brand health. So we're not increasing prices above inflation and our affordability platform as the one that Luis mentioned in Brazil, the economic is performing very well, reinforcing value and traffic. At the consolidated level, the food and paper improved 60 basis points versus prior year, but that's more a mix between input cost trends very disciplined revenue management where we can -- we are looking for opportunities in pricing, but being disciplined as I mentioned before, currency appreciation of imported items, as already I mentioned about real depreciation of main currencies. So I would say there's a mix reduction in costs initiatives from our supply chain team, revenue management. So with that mix, but always keeping in mind that we are monitoring prices to be in line or below inflation. That's how we obtain this 60 bps improvement versus prior year. And that's why we remain cautiously optimistic for the rest of. With that, Dan, back to you.

Thanks, Mariano. And before we wrap up the Q&A session, I think, Luis, you had a couple of things that you wanted to mention.

Yes. Thank you. Dan, we have quick a couple of thoughts, even though we continue to see a challenging environment in some markets with pressure on consumer confidence and private consumption we remain very confident because we're in a position of strength and have exciting marketing plans that will help us face any situation and let me mention again that we are targeting sustainable top line growth and improved operational efficiency to drive profitability, generate free cash flow and create shareholder mining.

So that does bring us to the end of the Q&A session. Thanks again for your interest in Arcos Dorados for joining today's webcast. Look forward to speaking with you again in the middle of August on our second quarter 2026 earnings webcast. Have a nice rest of your day.

Good morning, and thank you for joining Arcos Dorados Fourth Quarter and Full Year 2025 Earnings Webcast. With us today are Luis Raganato, our Chief Executive Officer; and Mariano Tannenbaum, our Chief Financial Officer. Today's webcast, which is being recorded, will consist of prepared remarks from our leadership team which will be accompanied by a slide presentation that is also available in the Investors section of our website, ir.arcosdorados.com.

To better follow the presentation, please note that you can set your view to full screen on the webcast platform. Additionally, you can submit your questions at any time during the presentation using the Q&A function on the bottom of the screen. After we conclude our opening remarks, we will answer your questions.

Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. In addition to reporting financial results in accordance with generally accepted accounting principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial results as compared with GAAP results, which can be found in today's earnings press release and conference call presentation. as well as the audited financial statements filed today with the SEC on Form 6-K.

I will now turn the call over to Luis.

Thank you, Dan, and good morning, everyone. The fourth quarter of 2025 marked a solid finish to the year with double-digit revenue growth, expanded margins and strong adjusted EBITDA growth despite ongoing cost and consumer pressures in certain markets. Importantly, we exited the year with improving trends, particularly in Brazil as well as continued momentum in Mexico and SLAD.

Mariano and I will take you through the highlights of the financial results for the fourth quarter and full year 2025 as well as how we see 2026 developing. As I've mentioned in prior calls, our focus remains centered on 3 priorities: optimizing the performance of today's business, maximizing returns on capital investments, especially those related to growth and preparing the company for tomorrow's business trends. The fourth quarter demonstrated progress across all 3 areas. Our teams executed with discipline on pricing, cost control and marketing relevance while continuing to invest in high-return restaurant development and digital capabilities.

Total revenue reached $1.3 billion, representing 10.7% growth. Revenue growth was supported by 16% higher system-wide comparable sales in line with the blended inflation of the 21 markets in the Arcos Dorados footprint. Comparable sales growth was primarily driven by average [ Czech ], reflecting disciplined pricing effective promotional execution and the continued strength of our digital and loyalty platforms. [indiscernible] traffic trends were generally stable compared with the third quarter.

Adjusted EBITDA totaled $172.7 million, up 17.2% year-over-year representing an 80 basis point expansion of the adjusted EBITDA margin. This included a net tax benefit in Brazil that Mariano will explain in more detail. For the full year, system-wide comparable sales growth was in line with the company's blended inflation rate with particularly strong performance in Mexico, Argentina and several other SLAD markets. Brazil and a couple of NOLAD markets faced a challenging consumption environment last year, but we began to see some improving trends towards the end of the year. Total revenue in 2025 grew by almost 5% in U.S. dollars.

Full year adjusted EBITDA was the highest in the company's history. Boosted by the net tax benefits we recognized. Together with strong U.S. dollar growth in both SLAD and NOLAD, this tax benefit more than offset the impact of higher food and paper costs and lower consumption in the Brazilian market. The strength of our marketing, digital and loyalty platforms have helped differentiate us from the competition by enhancing the brand experience across all channels. We also expanded the branch presence in 2025 by opening 102 restaurants and bringing the modernized percentage of the portfolio up to 73% at year-end.

Let's take a look at a few of the initiatives we used to generate sales growth in the quarter. Marketing activities strengthened consumer connections with the brand through a series of campaigns and initiatives. The highlight for most markets was a fully integrated many strategy, leveraging the cultural relevance of the Stranger Things with Netflix Series, which posted sales drove high levels of engagement and meaningful brand conversations among consumers. Several markets also offered compelling value platforms, including economic in Brazil, and [ MacPormenos ] in Chile, both of which performed well with price-sensitive consumers. Menu innovation in the quarter included a new chicken sandwich in Colombia, and limited-time flavors within the dessert category, such as [ mochi ] in Brazil.

Finally, Happy Meal sales were a bright spot for several markets. During the quarter, we run engaging campaigns for the latest beyond around popular licenses such as France, Zootopia 2 and [indiscernible]. Digital penetration reached its highest level with 62% of total sales coming from digital channels, mobile app delivery and sulfur kiosks. Digital channel sales grew 18.7% versus the prior year quarter, with sulfur kiosks, delivery and loyalty showing particularly strong performance. Sales growth in delivery has been strong for several years, which is why the strong performance in [indiscernible] is so important. It demonstrates the continued relevance of the on-premise restaurant experience in the Latin American QSR industry.

The loyalty program had 27.2 million registered members at year-end and is now available in all main markets. Completing the planned 2025 rollout and covering more than 90% of all restaurants in the Arcos Dorados footprint.

At the divisional level in the fourth quarter, we saw continued strength in SLAD with sequential improvements in both Brazil and NOLAD, contributing to consolidated top line growth. In Brazil, where restaurant industry traffic was down all year, we saw modest sequential improvement in comparable sales growth. We'll also maintain a significant market share advantage versus all competitors by leveraging the strength of the digital platform and popularity of a loyalty program. Almost 3 out of every 4 transactions were generated through digital channels and about 30% of total sales came through the loyalty platform. These results were supported strongly by the annual [ Mike Friday ] campaign that capitalizes on the popularity of the Black Friday shopping day to drive mobile app downloads and digital engagement. It is worth noting that the relative strength of the Brazilian real versus the prior year quarter also contributed to U.S. dollar revenue growth in the period.

In NOLAD comparable sales grew 1.7% versus the prior year quarter, with strong guest traffic growth in several markets. As was the case in the first 9 months of the year, Mexico was the main contributor in the fourth quarter with comp sales growth of 5.6% or 1.5x the country's inflation. Importantly, we began seeing improved trends in several other NOLAD markets and also benefited from the stronger Mexican peso and Costa Rica and Colombia versus the prior year quarter. SLAD's comparable sales increased by 49.5% versus the prior year quarter or 1.2x blended inflation, driven by strong execution in Argentina. We also saw continued momentum in other markets such as Colombia and the [ Dutch ] was in this. Digital tenant penetration reached a new high, and market share gains were particularly strong in Argentina and Chile, where guests responded well to the quarter's marketing campaigns.

Over to you, Mariano.

Thanks, Luis, and good morning, everyone. Consolidated adjusted EBITDA in the fourth quarter grew by more than 17% versus the prior year quarter as reported, while both periods benefited from tax-related items even excluding these items, adjusted EBITDA grew by almost 14% in U.S. dollars year-over-year with a 30 basis point margin expansion.

For the first time in 2025, the fourth quarter included lower food and paper costs as a percentage of revenue in Brazil. This is a sign that our marketing strategies and supplier negotiations are working as they were designed. The main impact on consolidated food and paper costs in the quarter related to some mixed shifts in NOLAD and higher beef costs in Argentina. Payroll expenses were up as a percentage of revenue due to the comparison with last year's quarterly result which included a tax benefit in Brazil. Excluding this benefit, payroll expenses improved by about 60 basis points as a percentage of revenue.

It is worth noting that over the last few years, certain markets have experienced elevated labor costs, but we have been implementing initiatives and technologies that have successfully offset these pressures. Currently, payroll expenses are among the lowest in our history as a percentage of sales. As you have heard on recent calls, we are very focused on capturing efficiencies at every level of the business, not just in the restaurants. With that, we made the difficult decision to reduce our G&A expenses through a reduction in headcount. This process, which was completed during the first quarter of 2026, was decided to focus resources on the projects and investments we believe will generate the most shareholder value.

Our adjusted EBITDA definition excludes reorganization and optimization charges so you will see an $8.7 million add-back associated with these initiatives in the EBITDA reconciliation. Finally, the fourth quarter included a net tax benefit in Brazil arising largely from the same items we recognized during the third quarter. We recorded a benefit of $20.5 million, mainly as other operating income and below the line, we recorded $13.3 million of interest income. With that, the full P&L impact of this net tax benefit was recognized in 2025.

As a reminder, full year adjusted EBITDA includes $106.1 million and interest income includes $52.9 million from this benefit for a total impact of $159 million in 2025. Importantly, we have already begun to apply the credit to tax liabilities in 2026. We expect to utilize the tax credit over the course of the next 5 years with an annual cash benefit of around $30 million.

In terms of full year 2025 results, we are encouraged that even though food and paper costs rose due mainly to significantly higher beef costs in Brazil, we were able to fully compensate the impact on restaurant margins, by capturing efficiencies in payroll and occupancy and other operating expenses. In Brazil, excluding the tax impact from both the 4 quarters of 2024 and 2025, adjusted EBITDA grew 3% in U.S. dollars with margin compression of about 160 basis points. The margin decline was primarily related to the higher royalty rate in Brazil in 2025. Remember that royalties were equalized starting in 2025 with a higher royalty rate in Brazil more than offset by a lower royalty rate in NOLAD and SLAD.

The other restaurant level cost and expense line items in Brazil improved versus the prior year. NOLAD generated solid U.S. dollar EBITDA growth in the quarter despite some margin pressure in food and paper costs as well as G&A. Meanwhile, Slab delivered another strong quarter to close out a very good year, which included 26.1% U.S. dollar EBITDA growth and almost 2 percentage points of margin expansion. In addition to operating efficiencies, we are implementing certain projects to improve the efficiency of our capital structure and capital allocation decisions, including the recent liability management transaction completed during the first quarter of 2026.

Let me take you through it. In December of last year, our Brazilian subsidiary secured $150 million in new bank debt that matures in 2029. This is why you see the higher total financial debt as well as cash and cash equivalents at the end of 2025, but a stable leverage ratio versus year-end 2024. We entered into certain derivative instruments to hedge the interest rate and maintain the foreign currency exposure of our long-term debt. As a result of these transactions, with the new bank debt has an estimated U.S. dollar cost of 2.53%. The proceeds of the new debt were used to fund a tender offer for about $135 million of our 2029 sustainability-linked bond which has a [ 6 and 1/8% ] interest rate. Th tender was completed earlier this month among the benefits of the transaction are a reduction of the average U.S. dollar cost of our long-term debt and the more efficient capital structure, both at the consolidated level and in Brazil. Additionally, moving forward, this new local debt increases the deductibility of our interest expenses.

In terms of capital allocation, last year, we exceeded openings guidance by adding 102 restaurants to our footprint while deploying less total capital expenditures versus the prior year. Importantly, about half the total CapEx in 2025 was used to fund restaurant openings. For 2026, openings guidance is for 105 to 115 restaurant openings and total capital expenditures between $275 million and $325 million with a goal of improving returns on investments through better cash margins and lower per unit of opening CapEx.

Also for 2026, the Board of Directors has declared a cash dividend of $0.28 per share, up from $0.24 last year, payable in equal installments on a quarterly basis this year. Although it is early, we began the year with good momentum by focusing on factors we control. We expect the underlying profitability trends of the fourth quarter to continue. Importantly, we are seeing the potential for a higher gross margin this quarter and throughout 2026. When sales growth normalizes, we believe this focus on cost and expense discipline will generate incremental margin improvement opportunities in other lines of the P&L as well.

Back to you, Luis.

Thanks, Mariano. Let me wrap up with a few final thoughts. We are encouraged by business momentum entering 2026 and confident we are positioned to deliver sustainable growth, expand profitability and create long-term shareholder value. Our priorities remain unchanged, disciplined execution, improved returns on invested capital and continued strengthening of the McDonald's brand into the future.

As Mariano mentioned, early results in 2026 have been relatively strong. Although current events have introduced some uncertainty, we believe in the resilience of the Arcos Dorados business model. We see a more normalized consumer environment as the year progresses, and we have a strong marketing plan to strengthen the bond with consumers across income levels.

In the short term, we are monetizing the significant market share advantage we built over the last several years. There is no other QSR operator in Latin America and the Caribbean capable of delivering the omnichannel experience guests preferred in an increasingly digitalized world. And we believe longer-term sales trends will recover and we will have even more opportunities to generate value.

Thank you for joining today's call. Dan, back to you.

Thanks, Luis. We will now begin the Q&A session. [Operator Instructions] Great. Okay. We have several questions already in the queue. We'll try to get to all of them as we can.

Good morning again, everyone. We have a question from Froylan Mendez from JPMorgan, and Froy asks us about taxes and Eric from Santander has a similar question. So I'll read both questions and then I'll pass it over to you, Mariano.

Froy asked, can you please explain the higher taxes paid during the quarter and if we should expect this higher level going forward? And Eric from Santander says, good morning all, thanks for taking our question. This quarter, income tax was quite elevated. Could you help us understand the moving parts behind such levels? And how should we think about this line in 2026, especially following the capital structure optimization?

Over to you, Mariano.

Thank you, Dan. Good morning, everybody, and thanks Froylan and Eric, for the question. Regarding the ETR, remember that we analyzed the effective tax rate on a full year basis not on a quarter-by-quarter. For the full year 2025, it's important to note that the ETR of Arcos Dorados was 37.7%, an improvement of almost 5 percentage points versus 2024 and reasonably close to the regional statutory rates. This reflects the mix of earnings across countries and some discrete impacts, particularly in Brazil.

Going to the fourth quarter, the [indiscernible] was high compared to the fourth quarter of 2024, but this was in line with our projections. The quarter includes some one-off adjustments in this case in Chile and Colombia and higher tax charges in Argentina related to FX and inflation. But it's important to note that there are no structural changes behind that number. So again, accrual to the full year, 37.7%, 5 percentage points better than in 2024.

Looking ahead, 2026, we expect a full year ETR in line with what we had for the full year in 2025. Of course, again, there may be quarterly variability, particularly early in the year, but the annual profile remains stable, and we are not seeing any structural changes on our ETR. Of course, during the year, we will continue to look for efficiencies and to look into ways to reduce that number.

Thanks, Mariano. And we'll stay with you before I send a couple of other questions that I think will be yours as well. We'll start with can you give more color on the drivers of margin expansion in Brazil and SLAD?

Perfect. First of all, we're very pleased with margins in Brazil, specifically in -- with the gross margin. As we have been mentioning during 2025 in the previous calls, the impact of the increase in beef in Brazil was very high and impacted us, particularly in the first half of the year. Now in the fourth quarter of 2025, for the first time in the year, we are seeing an improvement, small of 10 bps, but we are seeing an improvement that going forward, and we are still in -- we have not finished the first quarter of 2026 but we are expecting that this improvement will continue.

During the first quarter of 2026 in Brazil and in the other 2 divisions, and we have a favorable outlook for the rest of the year. But it doesn't end here the margin expansion or the improvements we have seen in Brazil during the quarter, excluding the one-off related to payroll in 2024, we have seen an improvement in payroll of 90 bps, mainly due to productivity and headcount. And also an improvement in occupancy and other operating expenses, mostly driven in this case by improving delivery margins. So we are very pleased when you exclude the one-offs, related to [ peril ] in 2024, and you exclude the impact of the growth support of royalties also in 2024. The expansion in Brazil, we are very pleased with that.

Regarding SLAD that you also asked about Froylan, payroll expenses, royalties and occupancy and other expenses, we saw leverage in all of those lines having a better other operating income as well and a flattish G&A in the division but SLAD have seen an improvement of 180 bps regarding same quarter of 2024 from 10.8 '24 to 12.6 in '26 -- in '25, sorry.

Okay. Great, Mariano. And one more from Froy before we move on. And this one is also given the recent depreciation of LATAM currencies, does this change your outlook for top line and margins versus the time you shared guidance?

Well, if we look at the average for the 2 main currencies, let's go to the Brazilian real and the Mexican peso, in the first quarter of '26 so far, and we are almost approaching the end of the quarter. The Brazilian real had an average of 5.2 versus [ 5.86 ] for the same period of last year and the Mexican peso an average of 17.4 compared with an average of 20.4 in the first Q last year. So we are seeing an appreciation of the currency, but adding the inflation rate, the real appreciation is even higher. We're not seeing that depreciation of the currencies.

Of course, in January, at some point, the real was a bit more appreciated than what it is now, which, of course, given the worldwide events that we are experiencing, we are seeing an increase in volatility, but the FX are performing much better than everybody expected at the end of last year and even at the beginning of this year. And you know that when LATAM currencies are appreciated and on top of that, with modest level of inflation. We are seeing real appreciation of the currencies that at the end, had a positive impact in our results.

Great. Thanks, Mariano. We're going to go now to Eric Huang of Santander again, who had asked previously about the same income tax question. And Eric had a second question, this one for you, Luis.

Secondly, how should we think about Brazil's comp sales throughout 2026, bearing in mind all of the initiatives undertaken by the company and the additional resources from the increase in income tax rate exemption level in Brazil?

Okay. Thank you very much, Eric, for the question. And to answer that, I have to go a few steps into 2025 where the market had a very challenging year with industry volumes down mid to high single digits versus 2024, and this happened since the first quarter of the year with the additional pressure of the increase in beef costs that somehow made us make an adjustment in our strategy. And the pressure to consumption game, especially or was related to specialty factors related to disposable income. And however, given this context throughout the fourth quarter and full year, we managed to deliver positive comp sales and better margins.

So about the consumption, we believe that consumers, particularly lower income consumers are being more rational with their spending power. And even though this -- there isn't a lot of room for higher pricing, we are working through a combination of pricing and mix to increase average check trying to offset those volume declines, protecting our margins. So what happened in the fourth quarter was that the contribution to sales came more from average check internal shift, time volume because, as I said, we're trying to strike a balance between sales growth and profitability. And what we are seeing today first months of the year is that we're seeing similar consumption trends. And our performance in the first quarter is about in line with our expectations. And what we expect from the second quarter and on, is that the consumption levels are going to normalize. Still, our focus during this quarter and the rest of the year is going to be to build to build healthy comparable sales.

Dan, back to you.

Thanks, Luis. The next question we have is from [ Jonathan Schwark ] of the [ Ion ] Group. This one will be back to you, Mariano. In addition to a lower rate and no longer needing to hedge part of the U.S. dollar-denominated debt into Brazilian reais, are there any other monetary benefits of raising debt in Brazil or in BRL i.e., lowering pretax accounting results that lowers taxes, avoidance of taxes for taking money outside the country, et cetera. That's a question from Jonathan.

Perfectas. Johnny, how are you thanks for the question. I walk you through the transaction, and I'll try to answer your several questions here. In this case, this liability management exercise, we identified an opportunity -- market opportunity to lower the cost of our debt. You will start seeing that, of course, during the full year 2206. We structured in this case, 3 bilateral loans with 3 different banks and couple them with derivatives to synthetically sorry, maintain our debt in U.S. dollars. Avoid, of course, by paying the cost of carry in Brazil was key for these transactions. And we ultimately repaid our 2020 [ non-U.S ]. dollar denominated debt.

In this case, the resulting cost of these transactions and [indiscernible] estimated pretax cost of 2.53 in an annual basis. That's the interest rate which compares in this case with [ 6 1/8 ] coupon of the senior notes '29. And on top of that, in January, we launched the tender offer and successfully repaid 135 of these notes. In this transaction, going to your second part of your question, enable us to capture an even larger tax shield, therefore, having advantages from a tax perspective as well. So I hope that with this flow your questions are answered.

Thanks, Mariano. I'm going to move on now to Álvaro García from BTG Pactual. And Álvaro ask a couple of questions, the first one for you, Luis. On Brazil sales [indiscernible], are you seeing any interesting behavior from cohorts buying [indiscernible], i.e. adding other items to their order or increased traffic?

Thank you, Alvaro, for the question. As I said, the situation in Brazil regarding volumes are directly related with the slowdown whether we see in the consumption. So this value platform, the [ economic ] value platform that is a national value platform is giving us the chance to somehow shield or to protect our market share for those who do not know about this, it offers a very attractive price point, and it gives the opportunity to our guests to build their own menu and it has very good margins. So so far, the platform has very good results. And yes, we do have some add-ons the value platform is still going on during the first quarter.

And most importantly, what did is that, we were able with that kind of actions, even though the sector is down we were able to maintain our market share, leading our nearest competitor by a factor of 2. We were able to maintain that gap, this is going to position us very well when the operating environment improves and we expect that to be around -- now the second quarter and on into 2026.

Great. Thanks, Luis. Álvaro has a follow-up question, and I have similar questions from Froy of JPMorgan and Melissa at BofA. So I'll read the 3 and then I'll bring it over to you, Mariano, I think this one is for you.

So Álvaro says, headcount reduction. Can you give more color on the headcount reduction, both financial impact and strategically why it makes sense for the organization? Froy at JPMorgan ask, can you quantify the impact of the headcount reduction going forward in terms of SG&A reduction as a percent of sales or any other metric that we can use to understand the impact? And Melissa from Bank of America asks, can you provide some additional information on the restructuring charge, including drivers of the decision, areas impacted and anticipated savings.

So all those, I think of the same question over to you, Mariano.

Thank you, and thanks, everybody, for the question. In this case, maintaining strong discipline over G&A expenses continues to be one of Arcos Dorados top priorities and is aligned with Luis message when he assumed at his position.

We consistently pursue initiatives in improving efficiency and optimizing our G&A structure always supporting the needs of the business. In full year 2025, G&A as a percentage of revenues remained flat, excluding one-off items that affected 2024. Notably, and this is relevant during the fourth quarter of 2025, we delivered a 50 basis point improvement in G&A over revenues, also excluding those one-offs. But in line with our commitment to long-term shareholder value creation and enhanced cash generation and supported by efficiency gains from technology investment, we implemented a G&A restructuring over the last few months that is already completed. The objective in this case was we serve operational excellence while better aligning resources with activities that are more critical to sustaining growth and strengthening our platform for the future.

In terms of numbers, sorry, our ongoing cost base has been reduced by more than $10 million on an annualized basis and in this case, positioning us to generate operating leverage in 2026. Of course, then there are other moving parts that affect the G&A, as you all know, like FX movements, like share price movements. But in this case, the -- our cost base case is $10 million less in the [indiscernible]. And this restructure has been made in the 3 divisions and at the corporate level.

Okay. Great. Thanks Mariano, I'll move on to Melissa's next question which is related to CapEx. And we have a similar question from an investor Max Joseph. So I'll read first Melissa and then Max, and I'll turn it over to you. Why was CapEx for 2025 below initial guidance? Despite a higher number of openings, is this FX related? And how does investment per unit and ROI for recent openings compared with previous vintages? Max also asked about 2025 CapEx, can you provide more detail on '25 CapEx outside of new restaurant openings and how much was allocated to restaurant modernizations, technology initiatives, maintenance and other categories.

So I'll stop there and then they both also asked about CapEx moving forward. But let's talk about '25 first. Over to you Mariano.

Thanks, Melissa, and Max, for the question. In 2025, we remain focused on optimizing capital spending while fully executing our plant openings and [indiscernible] program. It's important to note that we did not obtain the savings by switching to cheaper restaurant formats. We maintain even we exceeded the guidance and we maintained the number of freestanding openings that we planned at the beginning of the year.

In the second half of the year, we accelerated initiatives to be more efficient. We localize suppliers. We did rightsizing of the restaurants. So a lot of focus on the construction phase, coupled with FX movements that had some benefits on imported elements that go inside the restaurant, specifically at the kitchen level, but all those allowed to reduce the per unit cost without, as I mentioned before, compromising quality or scope. This area is important to note, has been a main focus for the entire finance and development teams during 2025 and the objective was to maximize return on investments but maintaining the quality of our restaurant openings.

So as a result of all this, we were able to surpass the plan opening 102 restaurants instead of the -- or on top of the guidance that was 90 to 100, but with lower capital intensity, and we are very pleased with the results we obtained that contributed to increase and improve the free cash flow of the company.

Dan you were going to ask about 2026.

Yes. So Melissa from Bank of America, what is the allocation of your 2026 CapEx budget across restaurant openings, reimagings technology in other areas? And Max asked a similar question, separately, are you planning to increase modernization rate to hit your year-end goal of experience to the future of 90-plus percent?

Perfect. Just as a reference, 2025, approximately 80% of the total CapEx was allocated to development CapEx, 20% to nondevelopment CapEx that includes mainly technology. For 2026, given that we increased a bit the guidance of openings our expectation is and also because we are going to finalize and modernize more restaurants we are expecting that from the total guidance we gave you in January, approximately 85% will be allocated to development and 15% will be allocated to technology and other type of investments.

Great. Thanks, Mariano. I'm going to move now to Julia -- from Julia Rizzo from Morgan Stanley. She has a couple of questions. I'm going to start with one for Luis. Are there already signs of same-store sales recovery in the first quarter, '26 in Brazil and NOLAD? And when do you expect same-store sales to reach inflation levels according to the company's algorithms?

Thank you, Julia, for the question. And I mean, our plan is designed to deliver comparable sales growth about in line with inflation level as the year progresses. And we do have a strategic marketing plan that is fairly robust not only in Brazil and NOLAD, but in SLAD, also. You saw that in the fourth quarter, for example, we have in Brazil, actions like I was telling just a little -- a few minutes ago about [ economic ] that drives volume. But we also had the Stranger Things action that brings the love for the brand. So we think that the situation in Brazil is going to last for a while. We are prepared for that.

And as I said, we -- our challenge is to build a healthy comp sales. And in the case of NOLAD we had a slightly different case because even though we did have a challenging and highly competitive environment across most markets, comparable sales grew 1.7% with positive volume. This was supported by a slight shift in product mix and competitive pricing strategies. Overall, sales growth was driven more by volume than by average check. And the highlight of the fourth quarter was Mexico and Puerto Rico. And looking ahead, we remain confident because Mexico is going to sustain the trend, and we believe that Panama and Costa Rica are taking the right actions to rebalance average check and guest traffic trends. So we expect to see that reaching that inflation were about in line inflation for the second question. Dan?

Thanks, Luis. Okay. So I'm going to go now to Julia's second question, and this one will be for you, Mariano. Can we explain NOLAD margin -- NOLAD's margin fall despite the royalty rate being 100 basis points better? And what should we expect for NOLAD margins in 2026?

Perfect. Thanks, Julia, for the question. Well, margins in NOLAD during the last quarter of last year were challenged due to sales growing below blended inflation. And as we always mentioned, when we have sales growing below inflation, then you start having deleverage in several fixed cost lines.

On top of that, we have seen some food and paper cost pressures during the last quarter. Remember that during the full year 2025 NOLAD did not experience food and paper pressures in the first half of the year, but starting having some pressures on the second half of the year. The good news here is that we saw improvements in occupancy and other operating expenses, and we managed to keep payroll almost in line with prior year. If you're recalling 2024, payroll line was under pressure in NOLAD due to increases in minimum wages in several markets such as Puerto Rico, Panama, Costa Rica and Mexico.

So we are pleased to see that in 2025 through productivity gains we saw leverage in this line. We are also very pleased with Mexico's results that is the division's largest market, where comp sales grew well above inflation, and we expect to generate leverage during 2026. Going back to the food and paper line, and as I mentioned when I was asked about Brazil. In the case of NOLAD and let me add in the case of SLAD as well, we have seen very good signs during the first quarter of the year that, of course, is still ongoing, but early results are showing an improvement in food and paper costs in the 3 divisions and in the case of NOLAD, in particularly in NOLAD.

So the fourth quarter was not great. We agree, but we are seeing some good news starting 2026, and we are very pleased how we have managed the payroll line, remember that between payroll and food and paper are the 2 most important cost lines in our income in our P&L.

Great. Thanks, Mariano. I'm going to move over to Thiago Bortoluci from Goldman Sachs. Thiago ask the question related to same-store sales in Brazil. At 2% same-store sales growth, I assume traffic in Brazil is at least mid-single-digit negative. How has it evolved sequentially versus the third quarter and to which factors would you attribute this evolution? And what are the drivers for an eventual inflection in 2026? I think Luis addressed this earlier, Thiago, I think you said this while he was answering a similar question.

Sorry, we'll try not to be repetitive. And then Thiago was other question, which is a 2-parter. I think the first part will be for you, Mariano, probably hooks on what you just mentioned around food and paper costs. And then the second part will be for you, Luis. The first part is what is your base case for beef prices in Brazil in 2026?

Okay. Thanks, Thiago. In Brazil, the main pressure, I will try not to be that repetitive, but the main pressure on food and paper last year came from beef and flesh, which was up about 30% over the last 12 months. The good news is that we have seen 2 consecutive quarters of sequential improvement and that the trend has continued into early 2026. So we feel confident in our ability to continue recovering gross margin in this respect and the recent appreciation of the real also helps especially for our imported items. It's important to mention that our pricing strategy remains disciplined and aligned with inflation, with CPI. So we are avoiding aggressive actions that compromise long-term health of the business. And as Luis mentioned, our new affordability platform is performing very well so far.

Thanks Mariano, and then the second part, which is sort of a continuation of Thiago's question and this will go for you, Luis. How have you prepared your menu board for the next 12 months in the context of the costs?

All right. Thank you, Thiago for the question. The good news about our menu board is that we're under one brand, we have all the categories. We do have beef, and we have our core items of our sandwiches. We have our value platform, and we do have our premium sandwiches. So indeed, we are really well covered. Then we have the chicken category that with the launch of the McCrispy Chicken has reinforced and is now an engine of growth. And then we have desserts. We are focused on trying to recoup the levels pre pandemic that we had pre-pandemic. And then we have beverages, for example, in coffee, that many of our main competitors around the region to not have a chance to talk about all the categories. So our menu board is very healthy. We have an opportunity not only to increase our top line, but to improve our margins, trying to pushing these other categories.

So I would say that, Thiago, it's important to say that in the region, 2025 was challenging. And one of the great outputs of 2025 is for example, we managed to shield our market share around the region we gained 1 percentage point versus 2024, and we maintain the gap versus our main competitors 2x more. So I already talked about Brazil that had last year, but we have the case of Colombia, Mexico, Costa Rica and Panama, taking in consideration of our internal research. We have more than 2x in those countries in comparable footprints and more than 3x in markets like Argentina, Uruguay or Chile in comparable footprints also. So going back to the question that you have, just to give you a little bit more color, we've seen seeing sequential improvement that is reflected in our market share in comparable sales and of course, in margins.

And as we have mentioned in other calls, our target is to bring sustainable top line growth and to improve operational efficiency. Our focus is in every line of our P&L. This should drive profitability. This should generate free cash flow. And of course, create shareholder value.

Great. Thanks, Luis. And we actually have no more questions in the queue. So we've reached the end of the Q&A session. Thank you once again for your interest in Arcos and for joining today's webcast. We look forward to speaking with you again in the middle of May on our first quarter 2026 earnings webcast. And until that, stay safe and have a nice rest of your day.

Thank you, Dan. Good morning, everyone, and thank you for joining us. Today, we will take you through Arcos Dorados' third quarter 2025 results, which included balanced U.S. dollar revenue growth with solid profitability. We successfully navigated challenging consumer dynamics in a couple of our largest markets as well as persistent input cost pressure, especially in Brazil. As I mentioned in August, we are focused on exceeding guest expectations in today's business while modernizing and improving our growth processes to support higher returns on investment and to ensure Arcos Dorados maintains its leadership position well into the future. In the near-term, operating conditions remain challenging, but we believe we are well positioned to resume more normalized top line and EBITDA growth across the business when the consumer and macroeconomic environments improve.

Let's move now to the key highlights of consolidated results for the third quarter. Total revenue reached $1.2 billion, a new high for a single quarter with balanced U.S. dollar growth across the three divisions. System-wide comparable sales rose 12.7%, in line with blended inflation for the period. Comp sales growth was particularly strong in SLAD, specifically Argentina and selected Northern markets such as Mexico and the French West Indies. Average check growth drove the result, more than offsetting a low single-digit decline in guest traffic versus the prior year.

Marketing and digital have been an important differentiator for the McDonald's brand throughout the Arcos Dorados footprint. This has allowed us to protect or expand market share almost without exception in the markets where we operate, which should help us sustain strong performance over the long run. We generated more than $200 million in adjusted EBITDA in the third quarter. This result included the net impact of a federal tax credit in Brazil. Excluding this impact on the quarter's results and the recovery of social contributions from the prior year period, U.S. dollar adjusted EBITDA declined by about 3%, mainly due to continued food and paper cost pressure. We opened 22 restaurants with more than half of the quarter's capital expenditures invested in new restaurant growth. With all remaining restaurants under construction, we are on track to deliver this year's 90 to 100 openings guidance.

Let's take a look at a few of the initiatives we used to generate sales growth in the quarter. Digital channel sales rose more than 11% versus the prior year and generated 61% of system-wide sales in the quarter with continued strength in delivery and self-order kiosks. We are encouraged by the positive impact of the self-order kiosk since it demonstrates the relevance of the on-premise restaurant experience and the value guests see in our omnichannel offerings, convenient restaurant locations and industry-leading service, the only we can offer. Digital sales growth was strongest in Brazil and SLAD, where Argentina capitalized on a modernized restaurant base and a tech-savvy consumer to drive growth.

The loyalty program is now available in seven countries, and we expect it to be offered in about 90% of all restaurants by the end of 2025. The program had 23.6 million members at the end of the third quarter, growing by nearly 50% versus the end of 2024. As the program grows in membership and active users, we expect it to help support more sustainable top line growth in the long-term.

Marketing in the quarter focused on brand strength across all platforms. We deepened the emotional connection with the brand and created memorable experiences for families with the Hello Kitty and Tiny Tan licenses. Value platform offered good value for money to guests and remains a strategic priority given the operating environment. Several markets leveraged the McCrispy Chicken platform to introduce new sandwiches and bundles in this key growth category. The dessert category also supported guest traffic with locally relevant McFlurry flavors and the popular Hello Kitty license.

Finally, we leveraged the exclusive regional sponsorship agreement with Formula 1 to drive sales and strengthen brand love in several markets.

Over to you, Mariano.

p id="418686546" name="Mariano Tannenbaum" type="E" />

Thanks, Luis, and good morning, everyone. Brazil's total revenue grew 4.9% in the third quarter, including a sequential improvement in comp sales performance. We believe this is an early indication that the worst is over in Brazil in terms of sales growth, especially since guest volumes were down slightly less than during the second quarter. Importantly, according to third-party measurements, we maintained significant market share leadership in Brazil through the first nine months of 2025 despite a challenging environment for the entire restaurant industry. This is a testament to the dynamic approach we have taken in Brazil with competitive pricing designed to balance sales growth and profitability.

Digital channels in Brazil accounted for almost 72% of system-wide sales with notable strength in delivery and self-order kiosks. Additionally, 30% of Brazil's system-wide sales involved Meu Méqui loyalty program members. NOLAD's total revenue rose 6.1% in U.S. dollars with strength in Mexico, Costa Rica and the French West Indies. In fact, Mexico's comp sales rose 6.3% or 1.8x the country's inflation rate and 2x to 4x higher than the main competitors' brands.

In NOLAD, Costa Rica and Puerto Rico are seeing excellent guest engagement with the loyalty program, which is also being piloted in Mexico.

We expect the program to help drive higher digital sales penetration and guest frequency in 2026. SLAD's U.S. dollar revenue rose 4.9%, supported by comparable sales up 1.3x the division's blended inflation in the period. Argentina's sales growth remained strong in the quarter, and the division's sales also benefited from good performance in markets like Colombia and Uruguay. 

Digital sales penetration in SLAD was 61.5% during the third quarter, supported by a strong performance from the loyalty program, which was available in Argentina, Colombia, Ecuador, and Uruguay. Third quarter profitability remained solid despite below inflation comparable sales growth in Brazil and NOLAD. And as Luis mentioned, the quarter's result included the net impact of a federal tax credit in Brazil. Let me take you through the details. We generated more than $200 million in adjusted EBITDA, which included the net benefit of $85.6 million related to a federal tax credit in Brazil.  The credit, which also includes $39.6 million in interest, arose from the treatment of certain government-related tax incentive for the period 2016 to 2023. We expect the $125.2 million net credit to have a positive cash impact since we plan to use it to offset federal tax obligations beginning in 2026. We expect to recover the taxes over the next 5 years. As a reminder, last year's result included a $5.6 million recovery related to social security contributions in Brazil. 

Excluding these impacts from both periods results, adjusted EBITDA declined by about 3% in U.S. dollars due to modest margin pressure. The main margin headwind in the third quarter was elevated food and paper costs. The domestic price of beef in Brazil rose significantly at the end of 2024, but we were able to leverage our supplier relationship and significant purchase volume to delay the impact of the price increase until the first quarter of this year.  By generating operational efficiencies during the third quarter, we were able to partially offset the food and paper cost pressures with greater labor productivity as well as leverage in occupancy and other operating expenses. This translated into stable margin performance sequentially in the third quarter, and we expect to capture additional efficiencies moving forward. 

NOLAD's margin included improved payroll and lower royalties, more than offset by margin pressure from food and paper, occupancy and other operating expenses, and G&A. SLAD has been the bright spot all year, generating strong quarterly adjusted EBITDA growth in U.S. dollars and margin expansion in each of the first 3 quarters of 2025.  Adjusted EBITDA grew more than 30% versus the prior year, supported by a 2.2 percentage point margin expansion. Increased payroll productivity, leverage in occupancy and other operating expenses, and the lower royalty rate more than offset food and paper cost pressure. 

Our balance sheet is strong. And as I mentioned, in the coming years, our cash flows are expected to benefit from the gradual utilization of the federal tax credit in Brazil. At the end of the third quarter, the net debt to adjusted EBITDA ratio was a comfortable 1.2x. We believe this, together with the extra flexibility provided by the new syndicated revolving credit facility, gives us plenty of room to support our medium-term growth plans.  Through the first 3 quarters of 2025, we opened 54 restaurants, including 34 in Brazil, with more than half the period's CapEx invested in openings. By the end of the year, there should be more than 2,500 restaurants in the Arcos Dorados footprint. We are revising every element of our development processes with a focus on identifying and implementing initiatives designed to improve operational efficiency and generate more consistent returns on investment from each of these assets. Performance has been strong this year in Argentina and Mexico, SLAD and NOLAD's largest markets, and we believe this is sustainable going into next year. 

As Luis mentioned, we believe we are well-positioned to return to healthier sales growth in Brazil moving forward. With our 3 largest markets aligned, operational profitability and cash flow generation should also improve. We know this is the best way to create shareholder value, and we have the entire team working toward that goal. Back to you, Luis.

Thanks, Mariano. Let me wrap up with a few final thoughts. As you have heard before, one of the pillars of the Recipe for the Future platform is youth opportunity. Part of providing first-time formal job opportunities to young people is making sure they have a positive experience in that first job. This is why it is so satisfying to be recognized by Great Place to Work as one of the top employers or to see Arcos Dorado's corporate reputation continue to climb the rankings in several of the markets where we operate. 

All 6 pillars of the Recipe for the Future platform are good for business and good for the social, environmental, and economic impacts we make throughout Latin America and the Caribbean. Since beginning my tenure as CEO 4.5 months ago, I have worked to refocus the team and the company on 3 big priorities: optimizing the performance of today's business, maximizing the return on investment from capital expenditures, and ensuring the company is preparing itself for the long term. With that mindset, we're pushing to have a solid finish to the year while positioning ourselves for a stronger performance next year. 

We are excited about our marketing plans for the remaining 7 weeks of 2025, and we believe next year's plan is among the strongest ever. One spoiler I can give you is that next year's marketing calendar includes McDonald's sponsorship of the FIFA World Cup, which is the most popular and impacted sporting event in all the markets where we operate.  Notably, next year's World Cup will include Arcos Dorado's 3 largest markets: Argentina, the defending champion; Brazil, the winningest team in the [indiscernible] history; and Mexico, one of the 3 host nations. 

Last week, we reviewed the plans for 2026 with the team, and each of the country-level managing directors, divisional presidents, and corporate leaders is targeting sustainable top-line growth and improved operational efficiency to drive profitability, generate free cash flow, and create shareholder value. Thank you for attending today's call. Dan, back to you.

Thanks, Luis. We will now begin the Q&A session. [Operator Instructions]. We have a few questions to get through here in the queue already. We'll start with Alessandro Ciarnelli from Sal Muoio. He says, just a question on the tax benefit and EBITDA. If I adjust out the tax credit from EBITDA, then it was down year-over-year. Was that related to food and paper costs? And could you give some color on that? I'll start with you, Mariano, on that one.

Okay. Thank you. Good morning, everyone, and thanks, Alessandro, for your question. You're right. Basically, if we remove the one-off, we can see that we have margin contraction mainly related to food and paper and mainly related to the increase in beef costs in Brazil of 35% over the year and in a much lesser extent in increases in NOLAD. There is also some G&A increase, mainly related to timing and appreciation of the Argentine peso and the Brazilian real. These forces were partially offset by a very relevant increase or better payroll of 60 bps year-on-year. We can see this increase in payroll -- or this better payroll mainly in the 3 divisions in Brazil, in NOLAD and SLAD. We're very, very pleased with those efficiencies. Also, there are gains in occupancy and other operating expenses of 20 bps and royalties on 10 bps approximately.

Great. Thank you. We now have 3 questions from Eric Huang from Santander. I'll give this next one to you, Luis. And Eric asks, in Brazil, how has the company's market share evolved in the previous quarter? And how has competition been moving given it's a still challenging macro backdrop in the country? He further goes on to ask, does management foresee potential additional initiatives to boost revenues? Or is the balance between market share protection and/or gain versus profitability protection at comfortable levels? Again, over to you, Luis.

p id="263403931" name="Luis Raganato" type="E" />

All right. Thank you, Eric, for the question. Good morning, everyone. First, let me give you a little bit of context. Traffic in Brazil remained, and remains, challenging, especially due to factors related to disposable income. Consumer confidence is still down and out-of-home consumption is negatively impacted. We believe in general consumers, particularly lower income consumers, are being more rational with their spending power [indiscernible]. We've seen an impact in reduced guest traffic in the sector in general. For this reason, it was very important to remain focused on offering a compelling value proposition with competitive pricing and try to deliver a great experience through all the channels our customers today are omnichannel, so we have to deliver the good -- excellent operation in all of them.

And what we have seen regarding our competitors is that the industry in general continue to focus on promotional activities. They have been more transactional, trying to just drive traffic on a more comprehensive plan that complements actions targeted to increase traffic and shield our market share with those actions that aim to build the love for the brand. For example, we have just launched by the end of the third quarter, the beginning of this fourth quarter, Economequi in Brazil. It is a national value platform where customers can get a 4 item menu for BRL 22.9 or about $4.2. We also have actions like Formula 1. Today, we have implemented a co-branded with Red Bull, for example, that makes the brand more aspirational, and those are the actions that aim to keep on improving our revenue in a more healthy way. According to CREST, regarding the part of the question that was asking about our market share, our visit share remains strong, near record highs and maintaining a positive gap versus our other main competitors. We are comfortable with that position. The main goal in Brazil is to recoup margins. So our main focus is going to be on that. And we think that we are in a position of strength to capture the rebound of the economy when it starts to come back.

The second question from Eric that we'll take here is, given the potential for dividend taxation in Brazil starting in 2026, does the company see any potential impacts on its operations when it comes to the repatriation of results from the Brazilian entity to the parent company or the holding company. I'll give that one over to you, Mariano.

Perfect. Thanks, Eric, for the question. First of all, this taxation has not been approved yet. But we can mention that we deal with similar rules all over the countries we operate. We have a very efficient cash management structure. On top of that, we have very relevant expansion plan in Brazil. But if the law is approved, we will comment on that later.

Great. Thanks, Mariano. Now I'm actually going to take Eric's third question and combine it with a question that we received from Froylan Mendez of JPMorgan. First from Eric, entering 2026, if the softness in consumer conditions in both Brazil and to some extent Mexico, persists, how does management think about expansion? Would it be an opportunity to perhaps scale down openings and accelerate the renovations, especially in Mexico, for example? So on some [level], that's associated with what's going into 2026. One question is on the side of renovations. Froy asked a similar question with a different punchline. Also, what are your initial thoughts on pricing versus affordability in '26? Are you considering a strategy to gain market share in '25? Will you be able to recover pricing in '26? Maybe what we should do is focus on what we're seeing for '26, and then we can talk about the expansion side after that. Over to you, Luis.

Okay. As I mentioned, my focus or our focus for the pricing in 2026 is that we're going to remain close to our customers, having a compelling value proposition, trying to shield our market share. We're going to be laser-focused trying to capture any opportunity that we have to improve our margins. The objective for next year is to expand the EBITDA margin versus this year. And regarding the growth plan, right? Yes, let me first tell you that our growth plan is aligned with our long-term vision that is to unlock McDonald's full potential in the region. It already incorporates market opportunities and funding strategies to support this expansion. But let me tell you that we're going to be flexible. If conditions change, we are going to be flexible to adjust the pace and the focus of investments, not just in Brazil and Mexico, in the whole region, as we have done in the past. We're going to prioritize the most profitable markets and restaurant formats. In fact, as I said in our call in August, we're in the process of revisiting every element of our development process because we are convinced that in order to increase our cash flow generation and create more value for our shareholders, we need to ensure that every dollar invested brings the best possible return, and we're going to -- regarding the nondevelopment investments, we're going to accelerate or defer as needed to preserve cash.

As you know, the guidance for 2026 are going to be given in the first quarter of next year as we have done historically. I think I covered the 2 points.

Yes, Thanks, Luis. Next question for you, Mariano, staying with Froylan Mendez from JPMorgan. Should we expect lower input cost pressure in Brazil already in the fourth quarter given the recent beef trends?

Perfect. Thank you, Froylan, for the question. Let me elaborate a bit on the gross margin of the paper costs in Brazil that were mainly impacted by beef inflation, which remains the primary pressure point. In the last 12 months, they have increased more than 35%, as I already mentioned. However, we believe that the second quarter was the lowest point of the year, and we're confident that we will continue to recover gross margin going forward. In addition, let me point out that the current appreciation of the Brazilian real is also positive for our imported products, so we also can see an improvement related to the appreciation of the currency.

And of course, all the tools that we actively use in order to mitigate impacts like the ones we saw in beef through pricing, mix, supplier negotiations, our scale, operational efficiencies and so forth. On top of that, what we can say is that overall and the early -- very early numbers that we are seeing for the last quarter, we are seeing some signs of improvement in beef costs in Q4. And for sure, we are not expecting additional pressures as we have seen in the last 12 months.

Thanks, Mariano. Now we have a few questions from Alvaro Garcia from BTG Pactual. I will start with a bigger picture question he has on Brazil. He says you're clearly not losing market share. So I wanted to get your take on consumer weakness. What are your thoughts on the impact of sports betting or GLP-1 drugs might be having on your sales? And I'll give that one to you, Luis.

Okay. Yes. As I said, we are seeing an impact in the consumption. And as I said, it's related to disposable income and mainly in lower income consumers. The [indiscernible] for sure, are having a big impact in the purchasing power of -- in general but mainly in lower income socioeconomic levels. And the GLP-1 today regarding that, we're not seeing yet an impact in consumption due to this kind of treatment in the region. And we really do not believe that it will have a material impact in the future.

Okay. Thanks, Luis. The next question from Alvaro, and this will be for you, Mariano. Double checking on the $125 million tax credit in Brazil, can you share how those savings might be phased over the next 5 years? And is $125 million the fair number of gross savings to use going forward on federal tax benefits in Brazil?

Perfect. Thanks, Alvaro. Yes, $125 million is the fair number. And the credit will be gradually compensated with federal taxes over the next 5 years. We are currently building our compensation strategy, of course, in full compliance with the law. But we can assume it will be evenly distributed in the next 5 years.

Great. Thanks, Mariano. And Alvaro has another question, and this one, I'll give it to you, Luis. A bigger picture question on chicken. Can you please provide an update or view -- updated view on how you see your mix shifting towards chicken in a heavy beef-loving markets like Brazil and Argentina?

Yes. Thank you, Alvaro, for the question. As you know, under the umbrella of the McDonald's brand, we have different categories like beverages, like desserts and chicken that are today and are going to be very important, after the -- for us, an inflection point for the category was the launch of the McCrispy chicken platform that has sandwiches that are excellent regarding quality that were greatly accepted by our customers and that are gaining share quarter after quarter.

The growth will be and it's being gradual, but it will be consistent. We're giving -- but it's going to be relevant for us in the near future. We do have room for innovations. For example, we have [indiscernible] windows that we bring innovation with, for example, spicy chicken, that is a flavor that is very well accepted in the region, or for example, in this quarter in Brazil, we launched the Chicken Bacon Ranch, and that is going to be important for us, not only in the top line as you're seeing and saying in the question is going to be important for us in the bottom line.

Important to say that we still have a huge opportunity to keep on growing with a category like McNuggets that is an asset for us that within the chicken category is strength for our business. So for sure, this is going to be a strategic pillar in the coming years.

Okay Luis, I'm sorry to do this, but we actually have 3 more questions I'm going to give you, and it's going to be a combination of questions.

First, from Thiago Bortoluci of Goldman Sachs. Thiago asks, could you please expand on your same-store sales foot traffic performance in Brazil, Mexico and Argentina and Brazil, how did traffic share evolve? Aligned with that, we have from Alejandro Fuchs at Itaú. First question is for Luis. Same-store sales in Brazil. Could you provide some thoughts on the competitive environment today? And how have other markets in NOLA performed, especially against Mexico? So I think it's another same-store sales question related to that. And Jeronimo de Guzman from INCA Investments asks if we can comment on recent sales trends. Are you seeing a recovery so far in the fourth quarter? So maybe a little bit of the third quarter performance in terms of same-store sales with the 3 biggest markets and then a little bit of recent trends as well.

Perfect Dan. Bear with me. I'm going to start with Brazil because I already said a few things. As you -- even though we did see a challenging situation in the market because we know for a fact that the QSR market is down in visits, we managed to deliver positive comp sales. And even though there isn't a lot of room for higher pricing, we're working through a combination of pricing and mix to increase average check because we need to offset that volume decline that is related to the market, and we need to offset the pressure that we have in margins.

So the contribution to sales in the market came more from average check than volume. We are seeing that, that is improving in the beginning regarding traffic in the beginning of this quarter. And we are doing that because we're trying to reach a balance between sales growth and profitability. And to give you a little bit more color about what is happening in the different channels, the strongest channel was delivery in Brazil that kept on growing in sales, supported by positive guest traffic, from [indiscernible] remained roughly flat for us is very good because it is proof of how aspirational our brand and the on-premise experience continues to be important. And very relevant too, the dessert [indiscernible] channel are recovering as a result of better operational execution, right pricing and relevant innovation. For example, we have Hello Kitty under the Hello Kitty platform and licensing the Happy Meal. We did have some innovation with [indiscernible] and McFlurry. So in this channel, we still have room to grow and improve and the goal is to achieve pre-pandemic volumes. So regarding the [indiscernible] and Mexico, as I said, in Brazil, we think that we are in a position of strength and ready to capture any rebound in the economic activity. Regarding Mexico -- Mexico, the economy remains under pressure with high uncertainty levels, and this is driven by external and internal factors. Talking about external factors, we have the potential tariff policies that could be implemented or internally, there have been some conversations about proposed reforms. If any of this happens, we don't see that it's going to materially impact our business. But despite the uncertainty that I was talking about, the food service sector shows resilience. And from our business perspective, we were able to deliver 6.3% growth in comparable sales. This was driven by growth in guest traffic that we know that outperformed this sector.

Regarding the channels, the research centers were the main growth engine. All the other channels had a solid performance that is very good for us. And what is happening in Mexico and the improvement in performance that we're having is that besides the launches and the innovations, we are adding an operations improvement that has been going on for the last years. And everything has been working on under the umbrella of a brand campaign that is called Mexico Me encanta. All this is bringing a very strong improvement in brand attributes and market share gains. According to internal research, we know that the market share gap versus our main competitor is almost 3x more in comparable footprint, and we are consolidating our leadership position in the industry.

And now I will go to Argentina. Argentina was the main driver of the division results, the SLAD division results. The context remained during the third quarter challenging due to the macroeconomic instability. This instability had a negative impact on the levels of uncertainty and it had a negative impact on private consumption. What was notable in the quarter is that despite the ongoing [devaluation] that we had during the quarter, inflation remained stable at almost 2% per month. And this indicates that we do have limited pass-through to consumer prices. But despite of this, the good news is that our business remains solid and continue to show strong performance.

The local team has done a terrific job. They were able to capitalize on last year's investments to try to maintain themselves close to their customers. The market share gained, we were able to maintain the market share this year, but the market share that we gained last year also helped us drive strong results. We were able to maintain the gap of more than 3x the market share of our main competitor. And in Argentina, even though the market will remain disciplined on pricing, they will also be focused on capturing every opportunity to improve margins. And I think part of the question then was about the trends in this quarter, right?

Yes. And actually, I'll add one more because Thiago's second question is associated with that as well. So what are your general expectations for the fourth quarter performance in Brazil? And what gives you confidence what are your expectations for fourth quarter? And what gives you confidence in sequentially better trends? So...

All right. First, we're going to be finishing this year even though we've had a challenging macroeconomic and social situation across the region in a position of strength, shielding and protecting our leadership position with excellent brand scores. And as you know, going into this fourth quarter, historically, the second half of the fourth quarter is the strongest part of the year. We are excited about the marketing plans that we have for the remaining weeks. We think that these actions will help us push for a solid end of the year. The whole team is working on that, specifically in Brazil, sales performance stabilized between the second and the third quarter, and we believe we can improve on those results in the fourth quarter.

In NOLAD, NOLAD continues to see a challenging environment. We were seeing this in several markets like, for example, in Panama, Panama faced a challenging comparison this year with strong sales growth during the first half of the year. What made more challenging was the social unrest in the country. We see that the situation is normalizing. But so far, we have not seen the rebound we expected for the QSR industry. Similar situation in Costa Rica that has also been dealing with a weaker consumer environment and reduced industry volumes. And what we see in NOLAD is that Mexico has been very resilient. It's going to have a good end of the year, and we believe we're taking the right steps in the rest of the markets to resume more normalized growth. And regarding SLAD, SLAD's results have been strong all year, and we believe it will end the year with another strong quarter. And I think with that, Dan, I covered everything.

I think you did ... As I said, it's a long set of questions here, maybe you want a glass of water, but there's one more for you before we shift back to Mariano. And this one is also from Thiago from Goldman Sachs, where he asks, how has McDonald's value gap evolved versus food away from home and versus other burger QSRs in Brazil? Where is it today? And where do you want it to be? And Jeronimo de Guzman from INCA Investments asked a similar question, how much pricing have you taken in Brazil as a result of input cost pressures? What's been the impact on traffic? And how are you thinking about pricing going forward to protect margins versus traffic? Again, I think this is the pricing question between the 2 of them.

Okay. So I already talked about the main objective that we have in Brazil. Again, we're going to try to be close to our customers. We already launched a national, very convenient value platform called Economequi. In that context, we're going to shield our market share, but we aim to improve our margins. So in this context, we increased prices above inflation this year. We did it with the goal to mitigate the margin pressure that we had in Brazil. And having said that, we maintain promotions and affordable prices to try to remain affordable according to internal research in the brand attribute value for money, we have reached a record high this year.

And so far, we were able to maintain our market share, as I said, to maintain the gap versus our main competitor. And again, we believe that we are in a position of strength and ready to capture the rebound of the economy.

Great. Thanks, Luis. Back to you, Mariano. A question from Alejandro Fuchs at Itaú. Now with more cash flow generation expected and the flexibility of the new MFA in terms of CapEx, how do you feel about the possibility of buybacks as a priority for capital allocation?

Okay. Thank you, Alejandro. Well, in 2025, our Board declared already a $0.24 per share dividend, which was declared on March this year. And we have been paying dividends in the last few years. But having said that, the Board of Directors will always consider options such as buybacks based on what they believe is best for the company and its shareholders, considering our capital allocation priorities, available cash, of course, and expected cash generation. So this is on the table. And the Board will decide if this is the right path to go, given that we will have more cash generation for sure next year.

Great. Thanks, Mariano. Actually, I had another question from  Jeronimo de Guzman from INCA, which I think Luis has already answered. Just regarding [indiscernible] can you comment on what's helping maintain strong comp sales in Mexico? On the flip side, what's driving lower sales trends in the other markets?  I think Luis has already covered that. So I'm going to move now to [Bob Ford], who has sent us 4 questions. And back to you, Mariano. Bob's first question. Can you explain the source of the tax credit in Brazil and the rate at which you expect to monetize it over the next 5 years?

Okay. Thank you very much for the question. Well, we cannot go into all the specifics, but the case is based on the treatment of [indiscernible] subsidies within the federal tax calculations. And as I already mentioned, in terms of monetizing it over the next 5 years, we don't know yet for sure, but our best estimate is that this credit will be evenly monetized in the next 5 years. That's the best we can -- our best estimation right now.

Great. Thanks, Mariano. The next one is a 2-parter, the first part will be for Luis, and then I'm going to come back to you, Mariano, on this one. Can you provide an update on your promotional strategy in Mexico, Luis, and then sources of margin pressure in NOLAD, given Mexico's strength, that I'll move over to you, Mariano.

All right. Thank you, Bob. As I said, in general, but specifically in Mexico, we're going to be prudent about pricing. We want to be close to our customers, but take care of margins. So in Mexico, we have like 3 engines of traffic growth. The first one is desserts that we're taking care of with the right pricing and with the right operational execution. Then having innovations like, for example, Hello Kitty or the Grimace Shake, that -- I don't know if you know that, but it's a very historic and very famous McDonald's character. That launch surpassed our expectations in the market. So desserts is one of those engines.  Then we do have the value platform. The value platform is divided into 2. We have one that begins pricing at MXN 99 and another one that is called [indiscernible]. That is being very effective and with good margins. And we're trying to take care of the promotional activities because at some point, we needed to be more prudent, taking into consideration margins. 

And then another engine of traffic are the Happy Meal licenses. Like I said, August  Hello Kitty was very important, and Tiny Tan in September. Those 2 months were the strongest for Mexico in the quarter. With that, Mariano, I pass it to you so you can talk about margins.

Perfect.  And the question is the sources of margin pressure in NOLAD. They were mainly in food and paper costs. So even though Mexico is growing well above inflation, in terms of food and paper, we have seen some pressures during this third quarter. And that also applies to other NOLAD markets. And also, there was a timing effect on G&A that we expect to normalize in the coming quarters.

Great. Actually, sticking with you, Mariano, and your last third question is what is your outlook for key input costs in Brazil and other markets? And where do you see additional operating efficiencies? I think you've covered the input cost [piece] in Brazil. Maybe you want to touch a little bit on other markets and then talk about where we see some additional efficiencies.

Perfect. Yes. Well, I already mentioned, as you said, what's going on in Brazil. In other markets, what we are seeing is that we are very pleased with the efficiencies that we are observing in payroll in the 3 divisions, 60 bps. If you recall, last year, we saw important minimum salary increases in many of our markets, such as Panama, Puerto Rico, Costa Rica, Mexico, and some of SLAD countries. and payroll was a source of pressure during 2024.

What we are seeing in 2025 is that with the implementation of the scheduling system and the efficiencies that we implemented, we have seen a recovery and even a much better payroll than what we had last year. So we are very pleased with those results. Then, in occupancy and others, we have been seeing some improvements there, even though sales during this quarter in NOLAD and Brazil were growing below inflation. We have seen improvements in this line, related also to better deals negotiated with 3POs. So we are making deliveries also more efficiently. So we are seeing as sources of operational gains, the payroll line and the other [indiscernible] occupancy line as well. 

And as I mentioned in a previous question, not from you, but from, I think, Jeronimo, what we are seeing in the fourth quarter is that the pressures that we have seen in gross margin, are mainly -- they are much less now than what we have seen in the last 12 months. So with a better outlook in gross margin, I think we will be able to leverage the gains, and margins will improve as long as sales continue to improve, as Luis also mentioned.

Great. Thanks, Mariano. Final question from [Bob Ford] is, how do you expect the World Cup to impact traffic? And are there global McDonald's marketing campaigns and/or regional efforts that you can comment on? And I'll give that one to you, Luis.

All right. Thank you, Bob. What you can expect is a positive impact from the FIFA World Cup event. It's very popular and very important for the whole region from Mexico to Argentina, Brazil, and other geographies. So what you can expect is a positive impact in brand -- attributes like favorite brand and brand awareness, and you can expect a positive impact on traffic. 

What happened and what is different today is that, comparing with the World Cup in 2022 is that, today, the delivery channel is a strength for us. So during the games, we're going to be able to be at home with our customers when they will be enjoying the games. And we're going to have, for sure, marketing campaigns throughout the whole period and more that, for sure, we're going to surprise you with, all right? That's all that I can tell you. But yes, the impact is going to be positive.

Great. Thanks, Luis. And I think we have time for one more. This one is from [ Yuron from Obam ]. And he asks, at what point do you believe operating leverage after a long stretch of very strong top line will convincingly lead to a higher level of margins, especially taking into account further improvements in the digitalization and other efforts. And maybe you both want to take this, but I'll start with you, Mariano.

Perfect. Thanks, [indiscernible]. Well, our strategy has been to grow sales at or above inflation, and we have done this consistently, although in some quarters, like the third quarter of this year has been tough in Brazil and in NOLAD, given external factors as economic conditions and consumer situation, we think that by doing that, we will be able to leverage on all the operational efficiencies that we have been working on. 

As for example, I just mentioned payroll and other occupancy expenses. So as we are seeing, for example, pressures in gross margin, we have been working a lot in the company in every single cost line to bring efficiencies to the business. We are doing that. And I think for 2026, we are pretty comfortable that this strategy will yield, at the end of the day, better margins, better cash flow, focusing also on efficiencies in our investments. The company will have an improved free cash flow. And with that, we will be able to return to shareholders and invest in the business for all the opportunities that we have.

Yes. And Mariano, if you let me add, when we talk about the digitalization, and that is part of your question. And we're talking about not only customer-facing, but also back office. We have just implemented, and we finished the implementation by the end of last year, a new scheduling system in the whole company that is bringing already efficiencies, and you can see that in our payroll line, that is helping us to mitigate, for example, the cost pressure that we have in food and paper.

And just to finish this part of the question and the Q&As, I want to just make sure that you understand that our focus, my focus, the team's focus is to try to deliver sustainable top-line growth and improved operational efficiency, to your point, because the main focus for the whole team is to drive profitability. We're working on the returns on investments, working in every line of the P&L, because the main goal is to generate free cash flow to create shareholder value. So with that, Dan, I pass to you.

Thanks, Luis. And that actually was the last question that we have here in the queue. So that brings us to the end of the Q&A session. Thank you once again for your interest in Arcos and for joining today's webcast. We look forward to speaking with you again in the middle of March on our fourth quarter 2025 earnings webcast. Until then, stay safe, and have a great holiday season, everyone.

Hello, and thank you for joining Arcos Dorados Second Quarter 2025 Earnings Webcast. With us today are Luis Raganato, our Chief Executive Officer; and Mariano Tannenbaum, our Chief Financial Officer. Today's webcast, which is being recorded, will consist of prepared remarks from our leadership team, which will be accompanied by a slide presentation, also available in the Investors section of our website, ir.arcosdorados.com.

To better follow the presentation, please note that you can set your view to full screen on the webcast platform. Additionally you can submit your questions at any time during the presentation using the Q&A function on the bottom of the screen. After we conclude our opening remarks, we will answer your questions.

Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

In addition to reporting financial results in accordance with generally accepted accounting principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial results as compared with GAAP results, which can be found in today's earnings press release and conference call presentation as well as the unaudited financial statements filed today with the SEC on Form 6-K.

With that, I'll now turn the call over to our CEO, Luis Raganato.

Thank you, Dan. Good morning, everyone, and thank you for joining us. Before getting into the quarter's results, let me take a moment to thank our Executive Chairman, Woods Staton, and the entire Board of Directors for their confidence in appointing me CEO of Arcos Dorados. I am honored to continue the work of my predecessors, each of whom took the company to new operational and customer experience heights by working collaboratively with all stakeholders of the Arcos Dorados and McDonald's Systems.

I would also like to congratulate all members of the team who are taking on new roles as part of this management change. We always said that Arcos Dorados has a deep bench of talented executives. This includes Carlos Gonzalez, who is taking on the role of Chief Operating Officer, bringing very significant management experience and a demonstrated ability to bridge cultural and generational gaps to drive strong performance. I look forward to working with him and the entire team to exceed our against expectations and generate value for all stakeholders.

Moving now to the key highlights of the quarter. We generated solid results in very dynamic macroeconomic and operating environments. Total revenue reached $1.1 billion. Constant currency revenue remained solid, built on 12.1% higher system-wide comparable sales, which was above blended inflation for the period. Comp sales growth was particularly strong in NOLAD and SLAD, growing well above blended inflation in each division. The same calendar effect that impacted NOLAD's results in the first quarter helped boost the division's results in the second quarter.

Marketing and digital initiatives focused on value and brand strength across sales channels and product categories. Additionally, the loyalty program continued to drive an increasing percentage of sales by bringing members back to our restaurants more often. These efforts helped support robust market share gains in many markets. More on that later.

We generated $110.1 million in adjusted EBITDA in the second quarter. Excluding last year's labor contingency reduction in Brazil, adjusted EBITDA grew by more than 7% and margin expanded by about 40 basis points. The growth plan for 2025 remains on target, and we opened 20 new Experience of the Future restaurants in the second quarter. This brings total openings for the first half of the year to 32 sites, and the plan remains to deliver 90 to 100 this year.

In addition to adding new restaurants through openings, we are excited to announce that last month we added a 21st market to the Arcos Dorados family. We acquired 3 existing restaurants and the exclusive franchise rights to Saint Martin in the Caribbean. The choice of Arcos Dorados as the new operator in Saint Martin is a testament to our operational excellence and commitment to growth in the region.

Marketing and digital campaigns drove strong comparable sales growth in NOLAD and SLAD during the quarter, while also helping to protect market share within a challenging consumer environment in Brazil. The digital ecosystem that accounted for about 60% of sales in the quarter supported campaigns designed to stay close to guests and adapt to changing consumer preferences. This included the Big Fest, which celebrated car favorites at a compelling value. The results were clear. Brand preference rose to almost twice that of the nearest competitor across the region. Brand attributes related to value, taste, and trust saw significantly higher favorable gaps versus the near competitor as well. And app downloads and loyalty program membership increased strongly during the campaign.

The digital loyalty program is now available in 6 countries with a seventh market currently in its prelaunch phase. The program already covers 2/3 of the restaurant portfolio, and we expect it to be available in 90% of all restaurants by the end of this year. Loyalty program members visit us at a much higher rate than non-loyalty guests and they represented almost 23% of total sales in the 6 available markets during the second quarter.

In Brazil, where the consumer environment has been challenging this year, we took steps to remain close to guests. For example, the Mequi do Dia campaign offered one menu favorite per day at a compelling value. Across the operating footprint, the Minecraft Happy Meal also strengthened ties with our guests. The game has significant crossover appeal to both kids and adults, which we optimized by offering a unique adult Happy Meal with chicken McNuggets.

We also used the regional Formula 1 sponsorship to strengthen ties with families and guests of all ages. Capitalizing on the appeal of Formula 1, the movie, we introduced a limited-edition sandwich and a collectible race car exclusive to McDonald's restaurants. The campaign was extremely successful, selling out in just a matter of days or weeks, depending on the market.

Finally, the dessert category has become increasingly competitive, so we kept the entry level comp price at an attractive price point. We also innovated by leveraging a favorite McDonald's character with the Grimace Shake and by adding more local flavors to the McFlurry platform.

Over to you, Mariano.

Thanks, Luis, and good morning, everyone. Brazil's total revenue in constant currency grew 2% in the second quarter, including positive comp sales despite operating within a context of negative industry volumes. We were able to offset volume pressure with higher average check with a combination of targeted pricing and product mix.

Importantly, market share remained steady versus the prior year and the brand attributes we track are as strong as we have ever seen. This undoubtedly positions us well for when consumer trends improve in the country. More than 70% of system-wide sales were generated by digital channels and the Meu Mequi loyalty program surpassed 18 million members who accounted for 26% of the division's total sales.

NOLAD's total revenue rose 6.9% in constant currency. U.S. dollar revenue growth was impacted mainly by the year-over-year depreciation of the Mexican peso. Comparable sales rose 1.8x blended inflation in the period. This included 12.4% comp sales growth in Mexico, much higher than all main competitor brands. Digital sales penetration remained steady in NOLAD, where we offer the loyalty program in Costa Rica, and we are in the test phase in Puerto Rico. We believe digital sales performance will ramp up in the division as we expand the loyalty program to additional markets by the end of this year. SLAD's revenue rose 37.8% in constant currency with comparable sales up 1.4x net inflation in the period.

Market share expanded strongly in several markets, including Argentina and Chile. Argentina built on last year's market share gains to boost its continued rebound from 2024. Digital sales penetration in SLAD surpassed 60% and loyalty generated 17% of total sales from the 4 SLAD markets currently offering the program.

Let's shift now to profitability and capital allocation during the second quarter. Adjusted for last year's labor contingency reduction in Brazil, second quarter consolidated EBITDA grew very solidly in U.S. dollars despite currency headwinds. While food and paper remained pressured due to higher beef prices in Brazil, improvements in all other restaurant expense lines supported a solid EBITDA performance. Similar to the first quarter, Brazil's margin contraction was mainly due to higher food and paper costs from rising beef prices in the market. As you already know, the royalty fee this year is higher in Brazil due to the normalization of the royalty rate across the 3 divisions.

Excluding last year's labor contingency reduction, the net result of the remaining expense lines had a positive margin impact in Brazil. NOLAD's margin included improved performance in all restaurants' expense lines, except food and paper, which rose modestly versus last year as a percentage of revenue.

Royalties were lower due to the normalization of rates across the 3 divisions and the result also included a gain from a sub-franchisee restaurant transaction in Mexico during the quarter. Margin performance was strong in nearly all the divisions market in the period. SLAD delivered another strong quarter of margin expansion with lower costs and expenses in nearly all line items.

Notably, last year's EBITDA included a positive impact from a sub-franchised restaurant transaction. Adjusting for that impact, SLAD's margin expanded by about 260 basis points versus the second quarter of 2024.

With these results, the company's balance sheet remains strong, and we continue making investments in future cash flow growth. As of the end of the second quarter, our debt was concentrated in 2 long-term bonds, the 2029 and 2032 notes with an average U.S. dollar cost of 6.28% and an average duration of almost 6 years. After receiving an upgrade to investment grade from Fitch in January, last month, S&P assigned an initial rating of BBB- to our debt.

As a result, Arcos Dorados' debt is now considered to be full investment grade, which should help support future capital market transactions. At the end of the second quarter, net debt to adjusted EBITDA ratio was a comfortable 1.4x, and we expect it to remain near this level for the remainder of the year.

Our growth strategy remains intact. And during the second quarter, we added 20 EOTF restaurants to the portfolio. As has been the case for the last 5 years, most openings were freestanding units and the majority were opened in Brazil. We invested $55.3 million in capital expenditures, including more than $26.8 million in growth CapEx associated with new restaurant builds. We expect to continue making prudent investments in growth as we remain convinced this is the best way to increase free cash flow generation in the long-term.

As Luis already mentioned, after the quarter ended, we acquired the 3 existing restaurants in Saint Martin and the exclusive franchise rights for that market, which will be subject to the same terms as our existing master franchise agreement with McDonald's. Saint Martin will be managed by NOLAD and will be included in the division's results beginning in the third quarter of 2025. We do not expect a material change in consolidated results from this acquisition.

Back to you, Luis.

I would like to touch on a topic that remains at the core of everything we do at Arcos Dorados. We recently published the 2024 social impact and sustainable development report for Arcos Dorados. In it, you can learn more about the initiatives we advanced within the Recipe for the Future framework.

This ESG platform is built on 6 pillars: Climate change, which saw us reach 50% renewable energy, allowing us to reduce energy costs while also meeting our targeted Scope 1 and 2 emissions reduction. Circular economy, which includes recycling of both packaging and used cooking oil. Sustainable sourcing, which supports local economies through local sourcing. Youth opportunity, which includes over 60,000 employees younger than 24 years. Family and well-being, which supports young people in partnership with local NGOs. And diversity and inclusion, which ensures a welcoming work environment and restaurant experience for collaborators and guests from all backgrounds. You can access the full report at recipeforthefuture.com.

Before we open the call up for questions, let me tell you about my priorities as CEO. To begin with, I have designed and implemented current strategy, so I do not expect to change the big picture. With that in mind, I would say that I have 3 main strategic priorities or pillars of focus.

First, today's business, the organic business. In other words, everything that goes into exceeding customer expectations today. That means the experience we offer through menu, quality, service, and cleanliness inside our restaurants, in customers' homes, and in the digital ecosystem.

Second, growing the business, our development strategy. I am challenging the entire team to revisit every element of our development process to further modernize and improve the way we grow. To increase our cash flow generation and create more value for our shareholders, we need to ensure that every dollar invested brings the best possible return.

And third, tomorrow's business. We will work to answer the question of where Arcos Dorados will be in 10 years. We need to begin preparing now to meet future customer expectations, and we'll do whatever it takes to maintain our leadership position beyond 2035.

Needless to say, this will be a collaborative effort within Arcos Dorados, with McDonald's, with our suppliers, and with our sub-franchisees. As we often say, there is nothing we can't accomplish if we work together. I look forward to speaking with all of you over the coming months and years as I am certain the best is yet to come for Arcos Dorados. Thank you for joining today's call. Dan, back to you.

Thanks, Luis. We will now begin the Q&A session. You can send in your questions using the Q&A function at the bottom of the screen. Please limit yourselves to 1 or 2 questions so that I can read, understand, and convey them to our speakers. We will now pause briefly to compile your questions.

Okay. Great. So we have actually quite a few questions already in the queue and a number that are related to the same topic or similar topics. So bear with me as I go through a few of these, and then we'll start with you, Luis, actually on this first set of questions.

First, Thiago Bortoluci from Goldman Sachs.

Good morning, everyone. It's always a pleasure to engage with the team. Before we begin, we would like to once again express our gratitude to Marcelo for his openness and constructive dialogue during his tenure, and we wish Luis, Francisco, and Carlos continued success in their extended responsibilities.

Regarding the results, they have 3 questions. The first -- 2 of the first 3, I'll combine here. And this is, #1, how do you assess the balance between foot traffic, pricing, product mix, and profitability in Brazil? Additionally, what internal initiatives should we anticipate from you to potentially reignite same-store sales growth in the back end of the year? Continuing with that concept, they also asked, do you have any preliminary insights on demand trends in July for Brazil and Mexico?

Related to Thiago's question, we have a question from Eric Huang from Santander. And he asks, Brazil's sales remain quite subdued in the second quarter of '25. How is the company perceiving the consumer environment as we turn into the second half of '25? And how are the revenue management initiatives expected to help in sales momentum ahead?

And finally, Melissa and Bob Ford from Bank of America asked, with respect to Brazil also, can you discuss consumption dynamics during the second quarter and in July/August? Was weather a factor in the second quarter deceleration?

So with all of that as background, Luis, I'll turn it over to you.

Thank you, Dan, and thank you, David, Eric, and Melissa. Let me -- I'll try to cover everything. First, about the context, the market continues to face a challenging macroeconomic environment, uncertainty, and weakening consumer confidence. But given this context, even though various sources point to a drop in the flow of visits in the QSR market, we managed to deliver positive comp sales. We offset a drop in traffic with a combination of targeted price increases and product mix. So the contribution to sales came more from average check than volume. What we're trying to do here is to balance between the sales growth and profitability, right? We are trying to increase our margins.

And regarding channels, Melissa, the impact on weather was mainly in the dessert center. But -- and we do have a more aggressive competition mainly in Brazil. We are addressing that with the plan. But the good news is that the strongest performance was through our front counter. And this is very good news for us because it is a proof that our brand and our on-premise is aspirational and it's going to be -- that on-premise experience is going to be very important.

About the most important marketing actions that we had in the market was, first, Mequi do Dia, it is a value campaign and the Mequi Fest digital campaign. Those were very successful and helped increase visit frequency and drive a 15% increase in identified sales. You know that for us, identified sales are very important. We had 26% in the region, but in Brazil, in particular, 32%, which is that share in June specifically. So even though we're trying to shield our market share by being prudent with pricing, we do have a comprehensive plan, which includes those short-term initiatives more transactional, but we complement that with long-term focus because we want to build on the brand's aspirational aspect.

And that's why we have, for example, the license of Minecraft in the Happy Meal or for example, the launch of the Grimace Shake or even the Formula 1 action that reaches all socioeconomic groups and builds on the coolness of the brand. As a result and very important, our market share in the market remains steady. We're leading our nearest competitor by a factor of 2.2 and attributes like favorite brand and brand awareness are at the highest scores according to internal research. So we are today in a position of strength.

And despite we see that the challenging macroeconomic environment will remain during the third quarter and maybe during the second semester, we are confident because we have a solid marketing plan. We're going to keep on working with our affordability platform to drive traffic, to shield our market share, like I said, and we remain close to our customers, building on the love of the brand because we're going to be having cool launches, too.

Regarding Mexico, Mexico had a very strong quarter with plus 12% in sales. And it was the highest in the market. And not only the market, the QSR and the entire industry, the good news is that it was driven by dessert centers, by delivery and by -- from counter. We are seeing a similar trend in the beginning of the third quarter. Daniel?

Thanks, Luis. So now over to you, Mariano. And again, this will be a combination of questions. Actually, to be fair, we received questions from [ Joaquin ] and [indiscernible] asking for more detail on the Brazil division and consumer demand and also Julia Rizzo from Morgan Stanley asked about same-store sales trends in Brazil, which I think you just answered, Luis. So I'm not going to come back to those. I just want to recognize both Joaq and Julia.

So now I'll move to Mariano and start with one of the questions that came in from Thiago from Goldman Sachs, combined with a question from Melissa and Bob at Bank of America and also Froylan at JPMorgan. So bear with me again, Mariano, please. From Thiago, could you elaborate on which regions and specific actions contributed most significantly to top line and margin performance in NOLAD? I think associated with that is Froylan's question from JPMorgan. Can you give us some sense on -- sorry, I think I'm confusing myself here. Yes, I am confusing myself. And then Froylan asked, can you -- how much of the 12% same-store sales growth in Mexico was driven by positive calendar effect? How sustainable is this going into the second half? And Melissa and Bob from Bank of America asked, additionally, can you comment on the underlying sales and margin performance of Mexico, specifically excluding the Holy Week impact? So this is kind of a general NOLAD/Mexico question for you, Mariano.

Perfect. Good morning, everyone, and thanks, Thiago, Melissa, and Froy for the question. We are very pleased with the performance of NOLAD during the second quarter of this year and, of course, on the first half of this year. First, we have seen in NOLAD, sales increasing at 1.8x inflation. So -- and as Luis already mentioned, Mexico stands out in this performance. So it is true, and we mentioned in the first Q that Holy Week has an impact in Mexico, strong impact and that we were expecting good results for the second Q. But if you consider the first half of the year, Mexico is performing much better and is growing above inflation compared with the first half of 2024.

In terms of impacts in margins, NOLAD is showing in this quarter an improvement of 450 bps compared to the same quarter of last year. And this -- the good news here is that this is due, first, despite a deterioration of the FX because the Mexican peso in the quarter averaged this quarter 19.5 versus 17.3 last year. So despite the devaluation of the Mexican peso, we are seeing a much better margin in Mexico and in the division.

And this is due to a better payroll, a better service fee, as we already explained, the new MFA, better occupancy, and other expenses with better margins in delivery. And in this particular quarter, we are seeing as well a better operating -- other operating income given the transaction on the new -- the restaurants acquired in Mexico. So all that together is improving the margin in NOLAD in 450 bps.

Of course, when we see sales in the division growing at almost 2x inflation, we see leverage in all the fixed cost lines, and that's also reflecting, of course, in the results.

Great. Thanks, Mariano. The next question comes from [ Fernandez ] from JPMorgan. And although we've talked about ticket and traffic trends with Brazil specifically, he asks for a view on a regional basis. And this question will be for you, Luis.

All right. Thank you, Fernand, for the question. In general, what we saw in the region was volatility and challenging marketing conditions. But despite that, we believe we have the best position to face this current situation or any that may arise. The sales performance was solid in local currency and consolidated comparable sales were in line with the company's blended inflation within the context of each division.

I already talked about Brazil. You know that our comps were up 1.8x blended inflation with a low single-digit contribution from traffic. So the contribution to sales, if you do the math, were 2/3 from average check. Like I said, Mexico stood out and is keeping that performance in this third quarter. And by channel, in NOLAD, the sales strength was driven by front counter, dessert centers, and delivery in local currency with positive volume growth in all 3 segments.

In SLAD, comps were -- they were up 1.4x than inflation with a mid-single-digit contribution from traffic and average check in line with inflation. So in general, all markets had a very good quarter, and we're seeing a similar performance in the beginning of this third one. By channel, the sales growth was strong across all the channels in the quarter.

For the remainder of the year, we're going to keep on focusing on the factors that we control, of course, the brand, the 4G strategy and taking advantage of the footprint and geographic diversification.

Thanks, Luis. Okay. The next one for Mariano again. This will be a series of questions, all of them related to the beef cost trends in Brazil. So Froy from JPMorgan. Can you please give us color as to the beef trend in Brazil? Eric from Santander, could you please elaborate on your expectations for margins, especially in Brazil? And how are you seeing beef prices impacting margins in the upcoming quarters?

Alvaro Garcia from BTG Pactual asks, how does management see beef prices evolving in the second half of the year in Brazil? And Jeronimo de Guzman from INCA Investments asks about, can you comment more on the beef cost pressures you're seeing in Brazil? Are you seeing any changes? And do you still think you can maintain margins stable ex one-offs on a consolidated basis for full year 2025? So multipart question that I'll turn over to you, Mariano.

Perfect. And thanks, everybody, for the question related to the beef prices in Brazil. Beef prices in Brazil, as I mentioned, impacted our results during the first half of the year. We have seen price increases of around 30% in the last 12 months.

Here, we have good news and that is that we do not expect further significant cost pressures versus current levels in the second half of this year. On top of that, for the other items in the food and paper line in Brazil, we have seen so far a devaluation of the Brazilian real that, of course, impacted the costs on imported goods. What we have seen or what we are expecting now in July, we have seen an appreciation of the Brazilian real to below BRL 5.4 to the dollar. Actually, today, last time I checked was at BRL 5.39. And this could have, if this FX trend persists, a positive impact on the gross margin for the rest of the year. So of course, we -- the outlook and what we know so far is that we are not expecting significant cost pressures from beef from the current levels.

Thanks, Mariano. Actually, I think you addressed it, but Eric also had asked if the tariffs on Brazil exports have prompted an improvement in commercial terms in prices of beef on the company side. We've already sort of addressed the beef trends. So I just wanted to mention that.

So the next question will be for Luis. So I'll let you catch your breath, Mariano, because the next one will be for you. And the next one is from Jack Gater with JO Hambro. And he asked if we can expand on the changing competitive landscape in desserts? What's the margin of dessert centers and what percentage of sales does this contribute to the total? And we'll give that one to you, Luis.

All right. Thank you for the question. Dessert centers as of the end of 2024 represented almost 10% of total sales. The segment has significantly higher margins in percentage, in relative numbers. And what we are seeing in the landscape is that we're seeing an increasing competition in general in the region, mainly in Brazil. But we have already implemented a solid plan regarding aggressive pricing and with innovations, like, for example, as I said, the Grimace Shake. Dan, back to you.

Okay. Thanks, Luis. And now another multiparter for you, Mariano. Starting with Melissa from Bank of America. How are you thinking about pricing and your ability to offset higher costs in the context of softer demand? I presume that's mostly a Brazil question, but in general. And then Jeronimo de Guzman from INCA asks a similar question. Given your focus on affordability and prudent pricing to drive traffic and protect market share, what does this mean for margins? And do you still think you can maintain margins stable ex one-offs on a consolidated basis? So that second part I had already said, but the piece about pricing versus margins, I think, is the crux here, and I'll give that to you, Mariano.

Perfect. Thanks, Melissa and Jeronimo, for the question. Related to pricing to offset costs, as we have seen in the first half of the year, a deterioration of margins in Brazil. In fact, we will continue with our strategy to increase prices in line with inflation. We are not going to -- in order to pursue a quick gains in margin gains to increase prices well above inflation because this will be maybe something that will have an impact -- positive impact in the short-term, but it's not going to be sustainable in the mid to long-term.

As an example, we have done that in Argentina last year. Argentina in 2024 experienced an important devaluation of the currency and impact in the whole economy. We have been very prudent with pricing in Argentina, and we are seeing the results this year with very, very good results in terms of sales, traffic, and margin recovery. And Argentina is going to be one of the key contributors to EBITDA growth during 2025.

In Brazil, we are not expecting to do anything different from our strategy. We will continue increasing prices in line with inflation. And when the consumer environment starts recovering, we are confident that our margins will start recovering, and we will see much better margins than what we have seen in the first half of the year.

And going to the second part of Jeronimo's question and how do we see the EBITDA margin for this year, excluding one-offs? First, during this quarter, we're very pleased with the EBITDA margin. We have seen that excluding labor contingencies from last year, we increased EBITDA margin by 40 basis points during the quarter compared, of course, to the same quarter of last year. For the full year 2025, we expect to have an EBITDA margin close to 2024, excluding, of course, the one-offs related to labor contingencies in Brazil.

As I explained, we are not expecting further deterioration on the gross margin line. And for example, during this quarter, we have seen gains in the payroll line with excluding one-off, 50 bps better than last year. We have also seen improvements in the occupancy and other expense line of 70 bps during this quarter. And if we continue focusing on cost efficiencies and trying to look at all the cost structure and trying to minimize those increases, we are confident that we will be able to maintain or to be very close to the EBITDA margin that we achieved in 2024, that was record for the company.

Thanks, Mariano. We have one more from Alvaro Garcia from BTG Pactual. And this one is going to be for you, Luis. And he asks about Argentina traffic trends in the quarter relative to the 2023 baseline?

All right. Thank you, Alvaro, for the question. What is happening in Argentina this year, since the second semester of last year is that it is showing a more stabilized macroeconomic environment. The inflation is dropping and the recovery of the economy is happening, but showing mixed behavior across different sectors.

If we compare with 2023, we are mostly in line with that performance. But what I want to highlight here is that in this context, in the context of that recuperation of the economy, our business is very solid with a strong evolution. And we have a local team that is doing a great job harvesting the investments that they did last year. Last year, they stayed close to the customers, the increased market share, and those gains that we had during 2024 are driving strong results this year. That's why it's so important that we keep and we are focusing on keeping that strategy in another market that have this similar challenging environment.

And so in Argentina, today, we continue to be very prudent with pricing. We're trying to take like across the region, all the opportunities possible to improve margins. And we have, for example, the Tasty Feat Cuarto as a highlight of marketing action or the Formula 1 action that is important in the market too. According to internal research, these actions helped us further increase our market share.

We are outgaining all players in the market. And in Argentina, the difference is of 3x the size when we compare with our main competitors. And another great news is that we are improving strongly the brand attributes. And we are seeing a similar trend in -- now in the third quarter of the year. Dan, back to you.

Okay. Thanks, Luis. The next one will be for you, Mariano, and this question comes from Julia Rizzo from Morgan Stanley. She says that CapEx was well below expectations. And could the company end the year with CapEx below initial expectations? What are the gains and improvements we're noticing, if any?

Perfect. Thanks, Julia, for the question. We actually maintained our 2025 openings guidance of between 90 to 100 EOTF restaurants with a CapEx guidance of between $300 million to $350 million. The CapEx this year, as usual, is a bit more back-ended. So we expect for the full year to keep on and maintain our -- we maintain our guidance. In terms of improvement, we are always looking at improvements and ways to reduce the cost of each opening, and we are doing that all the time. We are looking at efficiencies. We are looking at reducing costs, localizing the core packages to reduce the impact of currency movements. So my team and the development team is continuing focusing on these improvements and cost reductions to make our investments more profitable.

Great. Thanks, Mariano. The next question comes from [ Max Joseph ]. This one will be for you, Luis. He goes, congratulations on the promotions and the strong results. Luis, could you share more about how you're challenging the team to ensure that every dollar in growth generates the best possible return? Where do you see the biggest opportunities to further maximize those results? And I think maybe you can get started. And of course, Mariano, if you have anything to add there, please feel free.

Yes. Thank you. Thank you very much for the message, Max, and for the question. Yes. Well, as I said, I'm going to have those 3 priorities, today's business, tomorrow's business, and the development strategy. As I said in the opening remarks, what we are doing is revisiting the whole process, starting with people, the teams, and how we look in the field for the sites and how we build the sites and working as a team with Mariano, how we measure those returns.

I would say that we would like to focus on the modernization of the process and implementing innovative and more sophisticated tools like artificial intelligence. So we better estimate our sales. We better manage the whole construction and measuring the process afterwards with finance when we already have the outcome of the performance. I don't know, Mariano, if you want to add.

No, what Luis just mentioned, and I also mentioned in the previous question from Julia. Return on investments is one of our top priorities, and we are, as a team, looking ways always to reduce costs and make our investments more profitable, driving a better and a higher shareholder return in terms of investments. So we are focused. This is one of our top priorities. And yes, that would be my add to this answer.

Great. Thanks, Mariano. We have a question from Lorena Reich from Lucror Analytics. And actually, it's let's call it a 4-parter. I'll take the first one, which is why did we stop releasing detail by region.

Actually, Lorena, I think if you take a look at our earnings release, what you'll find is that what we eliminated was redundancies from the previous version. The information by region or by division is still in the release, toward the end, you'll find all of the sales, EBITDA, operating income, same-store sales information that has always been in the release. What we did is just eliminate that redundancy that was in the document previously.

And our discussion of both sales growth as well as EBITDA performance at the consolidated level includes commentary on the divisional performance. And as I'm sure you saw in today's presentation, we further explained some of those details. So I think that the information is still there. It's just a little bit different format.

The second question from Lorena has also, I think, already been answered, which is related to Julia's question around CapEx and store openings, which is, do you expect to reach the annual guidance for store openings? Mariano, you just answered that. So we're good.

And then we have 2 more from her. These are a little bit sort of quick fire and they'll be for you, Mariano. The first one is what's the amount paid for Saint Martin acquisition?

Yes. Thanks, Lorena, for the question. The cash payment for the rights to Saint Martin was not a material sum within the context of our consolidated cash flow. And this payment will be reflected within the investing activities in our statement of cash flows by the end of September 2025.

Great. And then another question that relates, I guess, to our cash flow statement. Can you provide more detail on the acquisition of short-term investments of $106 million in the investment cash flow? That's again for you, Mariano.

Yes. This is simply time deposits executed with relationship top-tier banks and was done in order to minimize the current cost of the new money funds raised on our latest bond issuance in January of this year.

Okay. And then we have -- thank you, Mariano. We have a question for you, Luis. This one comes from Jeronimo de Guzman from INCA Investments. Can you please give us an update on the competitive environment in Brazil? Are you seeing any significant changes given the softer consumer environment?

Yes. Thank you, Jeronimo, for the question. What we are seeing in Brazil is that there is reducing guest traffic in the sector. We saw that in the second quarter. For this reason is that for us, it's very important to remain focused on offering a compelling value proposition with competitive pricing and delivering a great experience through all the channels.

In general, in the industry, the competition continue to focus on promotional activities. We have a comprehensive plan that complements actions targeted to increase traffic and gain or shield our market share like Combo del Dia with aspirational aspects like Minecraft and the Formula 1 menu. So that's why you're seeing as a result of that regarding to CREST, we are being able to maintain our market share and keeping the difference -- the distance that we have in market share when we compare with our nearest competitor, that difference is of 2.2x. So what we are trying to do is combine that healthy comp sales, new restaurant openings with a much healthier margin. And we are convinced that we are in a position of strength here in Brazil to face the current situation and any situation that may arise.

Thanks, Luis. We have -- we actually had a question from Max Joseph, a follow-up question. I think we've already answered it. Just to recognize you, Max. I know you asked about our perspective on pricing strategy and how we think about raising prices in line with inflation versus keeping them below inflation to drive traffic. I think we touched on that.

We have one more question here, and it's from Alvaro Garcia from BTG Pactual. This one will be for you, Luis. And he says, I'm not sure if this has been asked or answered already, but I'd like to ask about Francisco Staton's new role as Chief Strategy Officer. What's the nature of his new role?

All right. Thank you, Alvaro, for the question. Francis has been with us for more than 10 years now in increasingly senior leadership positions. We believe he's uniquely qualified to help develop a long-term strategy for every aspect of the business. He has supported brand building and sales generation in Brazil and Mexico, and he gained experience leading operations in Colombia as Managing Director, not only in Colombia, but Colombia, Curacao, Aruba, and Trinidad at the time. And he gained experience as Divisional President for SLAD also. So I can tell you that I am already working with Francis very close in the pillar of especially tomorrow's business. Dan?

Thanks, Luis, and thanks, everyone, for participating today, a longer than usual Q&A session, but very happy to see all the engagement. This is the end of the Q&A session. And I'd like to thank you for your interest for joining the call today. We look forward to speaking with you again in the middle of November on our third quarter 2025 earnings webcast. Until then, stay safe, and have a great day.