Arcos Dorados Q1 revenue rises 13% to $1.2 billion
Arcos Dorados Holdings Inc reported a 13% increase in Q1 2026 revenue to over $1.2 billion, driven by a 16% rise in system-wide comparable sales. Adjusted EBITDA hit a record $119 million for the first quarter, with margins expanding by 120 basis points. Digital channels accounted for 64% of sales, and the company added 19 new restaurants during the period.
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Arcos Dorados Holdings Inc reported a 13% increase in total revenue for Q1 2026, surpassing $1.2 billion for the first time in the first quarter, driven by a 16% growth in system-wide comparable sales. The company achieved the highest adjusted EBITDA for a first quarter in US dollars at $119 million, supported by strong top-line growth and margin expansion, particularly in Brazil. Digital channels continued to gain traction, contributing 64% of system-wide sales, while the loyalty program grew to 30 million registered members.
Financial Performance
The company's financial results for the quarter reflect growth across key metrics, with adjusted EBITDA increasing nearly 30% year over year to $118 million. Consolidated margin expanded by 120 basis points, with contributions from food and paper costs as well as general and administrative (G&A) expenses. The following table outlines the primary financial highlights for the quarter:
| Metric | Q1 2026 Result | Key Driver |
|---|---|---|
| Total Revenue | >$1.2 billion | 16% system-wide comparable sales growth |
| Adjusted EBITDA | $119 million | Strong top-line growth, margin expansion |
| Consolidated Margin Expansion | 120 basis points | Food and paper, G&A efficiency |
| Digital Sales Contribution | 64% of system-wide sales | Mobile app, delivery, kiosks |
Operational Highlights
During the quarter, Arcos Dorados added 19 new restaurants to its footprint, including 13 freestanding units, focusing on efficient capital deployment. Marketing initiatives emphasized value platforms and partnerships to drive sales, with specific strategies deployed across different regions. In Brazil, campaigns focused on core menu affordability and partnerships, while Mexico, Panama, and Costa Rica leveraged affordability platforms and localized offerings. The Southern Latin America (SLAD) division saw menu innovation as a key growth driver.
Strategic Outlook
Management expressed optimism for the second quarter, citing positive guest traffic and solid average check growth in April and the first half of May. The company remains focused on operational efficiency and cash flow generation, targeting greater shareholder value. For the 12 months ended March 31, adjusted free cash flow generation reached almost $110 million, compared to a negative $3 million in the previous period. The net debt to adjusted EBITDA ratio remained unchanged compared with year-end 2025.
Can the 16% system-wide comparable sales growth be sustained throughout the remainder of 2026 given potential economic volatility?
How does the company plan to further leverage the 30 million loyalty members to increase frequency and average check size?
Will the strong margin expansion in Brazil be replicated in other operating divisions in the coming quarters?
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