Arcos Dorados Holdings Inc. (NYSE: ARCO) delivered its strongest quarterly performance to date in Q2 2026, reporting record total revenues of $1.306 billion. This figure beat the analyst consensus estimate of $1.290 billion by 1.20% and marked a 14.3% increase year over year. Earnings per share reached $0.22, surpassing the consensus estimate of $0.15 by 46.67% and representing a 100% increase from the $0.11 per share reported in Q2 2025.

The Latin American and Caribbean restaurant chain’s growth was fueled by a 15.3% rise in systemwide comparable sales, reflecting the best guest volume performance in six quarters. Digital sales penetration hit an all-time high, with digital channels accounting for 66% of systemwide sales. CEO Luis Raganato noted that FIFA World Cup sponsorship campaigns helped push digital sales penetration and support market share gains across the region.

Financial Performance

Total revenues grew 14.3% in US dollars compared to the prior year period, reaching $1.306 billion. On a constant currency basis, revenue growth was even stronger at 18.5%. Company-operated restaurant sales rose 14.2% as reported, while revenues from franchised restaurants increased 15.4%.

Adjusted EBITDA margin expanded by 10 basis points to 9.7%, supported by lower Food and Paper costs and general and administrative expenses as a percentage of revenue. Excluding gains from sub-franchisee transactions recorded in the prior year, margin expansion was 70 basis points. Higher payroll and occupancy expenses partially offset these operational efficiencies.

What the Numbers Show

The divergence between operating leverage and bottom-line growth highlights significant non-operational tailwinds. While Adjusted EBITDA grew 15.2%, net income nearly doubled (+99.3%). This acceleration was driven primarily by better results below the operating line, including lower net interest expense, favorable foreign currency exchange results, and a reduced effective tax rate, rather than purely from top-line or operating margin expansion.

Regional Highlights

Brazil was the standout market, with revenue jumping 25.3% to $520.6 million and adjusted EBITDA surging 43.2% to $75.8 million. Systemwide comparable sales increased 5.4% in Brazil. In contrast, NOLAD revenue increased 9.3%, but adjusted EBITDA declined 18.3%, with systemwide comparable sales falling 2.2%. SLAD revenue rose 7.0% as reported but surged 38.1% on a constant currency basis due to local currency appreciation against the US dollar, with comparable sales up 42.9%.

Operational Updates

• Store Count: Total restaurants increased to 2,548 units from 2,457 in the prior year, with 16 new units opened in the quarter, including 10 freestanding locations.
• Digital & Loyalty: The loyalty program grew to 34.3 million registered members. Active redeeming members visited restaurants five times more frequently than non-members. Kiosk sales benefited from restaurant modernization, with 77% of the systemwide portfolio now offering the most modernized experience.
• Capital Expenditure: The company spent $49.1 million on capital expenditures during the quarter and nearly $86 million in the first half.

Cash Flow and Balance Sheet

The company generated $143.4 million in Adjusted Free Cash Flow over the last twelve months ended June 30, 2026, a substantial improvement from $16.1 million in the prior-year comparable period. Net cash provided by operating activities totaled $362.1 million for the same period.

Net financial debt stood at $692.5 million as of June 30, 2026, resulting in a net debt-to-Adjusted EBITDA leverage ratio of 1.1x, down from 1.2x at year-end 2025. Total financial debt decreased to $962.5 million from $1.1 billion at the end of 2025, aided by the redemption of remaining 2029 Sustainability-Linked Senior Notes completed on July 16, 2026. Arcos Dorados ended June with $260 million in cash and cash equivalents, or about $270 million including short-term investments.

Outlook

Management expects conditions to remain dynamic through the second half of 2026 but remains confident in its operating plans and financial discipline. Executives pointed to encouraging early third-quarter trends in Brazil, noting that the country’s quick-service restaurant industry appears to be returning to volume growth. The company plans to remain prudent on pricing while leaning on value offerings, digital campaigns, and operational execution to sustain traffic and market share gains.

Arcos Dorados Holdings Inc., the world’s largest independent McDonald’s franchisee, will host its 2026 Investor Day on October 1, 2026, in New York. The event provides institutional investors and sell-side analysts with a direct channel to the executive team to discuss strategic priorities driving long-term growth and shareholder value creation in Latin America and the Caribbean.

The agenda focuses on the company’s business strategy, encompassing both current operations and future growth vectors. Leadership will detail specific initiatives supporting these pillars, with emphasis on technology and digital strategy, operational priorities, and the framework for sustained value generation. A live Q&A session will follow the presentations.

Event Details

The event is open to institutional investors and sell-side analysts. Attendance is available both in-person and via live webcast. Due to limited capacity, in-person attendance is subject to confirmation, with additional details provided to confirmed attendees. A webcast replay and presentation materials will be available after the event.

Pre-registration is mandatory by September 23, 2026. Participants must register through the official link provided by the company. Arcos Dorados operates more than 2,500 restaurants across 21 countries and territories, employing over 100,000 people as of March 31, 2026. The company is listed on the New York Stock Exchange under the ticker ARCO.