Arcos Dorados extends master franchise agreement with McDonald’s

SOUTH AMERICA – The largest McDonald’s franchisee in Latin America and the Caribbean, Arcos Dorados has revealed it has renewed its master franchise agreement with QSR giant McDonald’s.

The new 20-year agreement between Arcos Dorados and McDonald’s took effect on January 1, 2025, following the expiration of the previous Master Franchise Agreement (MFA) on December 31, 2024.

The updated MFA includes a structured royalty fee schedule based on gross sales: 6% for the first ten years, 6.25% for the next five, and 6.5% for the final five years.

McDonald’s has the option to renew the agreement for an additional 20 years, starting January 1, 2045.

Woods Staton, Executive Chairman of Arcos Dorados, expressed his satisfaction with the renewed agreement, highlighting the company’s leadership as the best restaurant operator in Latin America and the Caribbean.

He emphasized the positive impact the company had on local communities and its commitment to long-term shareholder value.

Over the next two decades, Staton stated that the company would work diligently to strengthen its market position for the benefit of all stakeholders.

Arcos Dorados holds exclusive rights to own, operate, and grant franchises for McDonald’s in 20 countries and territories across Latin America and the Caribbean, with over 2,400 restaurants either directly operated or managed by subfranchisees.

The decision to extend the franchise agreement was driven by the franchisee’s strong performance.

In March 2024, Arcos Dorados reported an attributable net income of US$55.8 million for Q4 2023, a 2.3% increase from the previous year.

Total revenues for the quarter reached US$1.2 billion, a 15.4% increase in U.S. dollars compared to Q4 2022.

The company’s systemwide comparable sales rose by 32.4%, and consolidated adjusted EBITDA for the quarter was US$132.6 million, a 16.3% increase year-over-year. The company’s adjusted EBITDA margin for the quarter was 11.3%, up by 10 basis points from Q4 2022.

Arcos Dorados opened 36 new restaurants during the quarter, including 31 free-standing locations and 18 new restaurants in Brazil.

CEO Marcelo Rabach commented on the strong finish to 2023, emphasizing the company’s evolving strategy focused on Digital, Delivery, and Drive-through, which continued to leverage its extensive free-standing restaurant portfolio to meet changing consumer preferences.

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