Largest McDonald's franchisee impacted by slow Brazilian economy

Nov. 2, 2012

Arcos Dorados Holdings Inc., Latin America's largest restaurant chain and the world's largest McDonald's franchisee, today reported its results for Q3 ended Sept. 30. Revenues were down 2.2 percent compared to last year.

However revenues increased 11.6 percent on an organic basis as comp sales growth and revenues from new stores didn't fully offset a reduction in reported revenues from the impact of the depreciation of local currencies versus the U.S. dollar.

Systemwide comparable sales increased 6.5 percent year-over-year. The result is in addition to a 15.7 percent increase in comparable sales in 3Q11

The company has opened 103 net new restaurants during the past 12 months, contributing US$ 47.7 million to revenues in constant currency.

Net income amounted to $32.6 million (U.S.) compared to $19.6 million one year ago, when the company incurred debt restructuring charges

"Third quarter results were impacted by continued low consumer activity in Brazil. Excluding the depreciation of local currencies versus the U.S. dollar, we achieved double-digit organic revenue growth in addition to strong growth in the year-ago period," said Woods Staton, chairman and CEO of Arcos Dorados. "While the long-term prospects of this region remain strong, the recovery in Brazilian consumption is taking longer to materialize."

Still, Arcos Dorados plans to continue expanding its regional footprint and is on track to continue opening restaurants at a strong pace as the region experiences rapid population and middle class growth.

The company operates or franchises 1,840 McDonald's-branded restaurants throughout Latin America.

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Topics: Franchising & Growth , International , Operations Management

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