ARCO Filings — Arcos Dorados Holdings Inc. - FilingSpy
ARCO
Arcos Dorados Holdings Inc.
A maker of Big Macs, McNuggets, and Happy Meals across Latin America and the Caribbean, Arcos Dorados is the world's largest independent McDonald's franchisee, running thousands of restaurants in dozens of countries. The company was born in 2007 when a consortium led by Woods Staton bought McDonald's Latin American operations from the corporation itself. Its name is simply Spanish for "Golden Arches," and its restaurants serve local twists like the McMolletes breakfast in Mexico that you won't find on a U.S. menu.
20-F · Fiscal year ended Dec 31, 2025 · SEC filing ↗
Net income rose 42.6% to $212.1M, but the increase was driven by a $109.6M tax credit, not operations.
A one-time tax credit in Brazil reshaped the . rose 4.7% to $4.68 billion and rose 12.3% to $364.4 million, but the increase in operating income was primarily due to a $109.6 million net tax credit recovery, while food and paper costs rose 0.8 points to 36.0% of company-operated sales. The company's core profitability is under pressure from costs rising faster than prices, even as it extended its debt maturities.
Key takeaways
rose 42.6% to $212.1 million, but the increase was primarily due to a $109.6 million net tax credit recovery in Brazil recorded in other , not from restaurant-level improvements.
Systemwide rose 13.0%, driven by average check increases in Brazil and SLAD and higher traffic in SLAD and NOLAD, partially offset by lower traffic in Brazil.
Food and paper costs as a percentage of company-operated sales increased 0.8 percentage points to 36.0%, as cost increases outpaced price hikes in several markets.
Section summaries
Quantitative and Qualitative Disclosures About Market Risk
The company faces foreign exchange risk from local-currency revenues vs. USD debt and imports, plus commodity price risk, partially hedged with derivatives.
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Primary FX risk arises because revenues are in local currencies (e.g., Brazilian real, Mexican peso) while a significant portion of is USD-denominated.
Royalty payments to McDonald’s under the MFAs must be converted to and paid in USD, creating additional FX exposure between month-end and payment date.
The company uses and other derivatives to partially hedge FX risk on , forecasted imports, and .
rose 4.7% to $4.68 billion, with SLAD leading growth at 11.2% due to inflation-driven pricing in Argentina and Venezuela, while Brazil was nearly flat at 0.1%.
fell to $281.4 million from $327.6 million in 2024, as the 2022-2024 growth plan concluded, but remained negative.
The company issued $600 million in 2032 Senior Notes and fully redeemed its 2027 Senior Notes, extending its debt maturity profile.
What changed
The 2022-2024 growth plan, which committed to opening at least 200 restaurants, concluded. fell to $281.4 million in 2025 from $327.6 million in 2024, but remained negative, a key item flagged for improvement.
The Master Franchise Agreements with McDonald's, previously flagged for renewal by August 2024 ahead of a 2027 expiration, were extended to 2044, removing a major existential risk.
Digital channel penetration continued to rise, reaching 61% of systemwide sales in 2025, up from 57% in 2024, driven by a mobile app that now has over 187 million cumulative downloads.
The trajectory of food and paper costs worsened, rising 0.8 percentage points to 36.0% of company-operated sales, reversing the improvement seen in 2023 and marking a new high relative to recent years.
A new risk factor highlights that U.S. government tariffs and trade policy uncertainty could increase operational costs and negatively impact the economies in which the company operates.
What to watch
Whether food and paper costs as a percentage of company-operated sales continue to rise from 36.0%, and if the company can pass through inflation without further traffic declines, particularly in Brazil.
The level of and whether turns positive now that the 2022-2024 growth plan has concluded.
Progress toward the goal of approximately 90% of restaurants in the EOTF format by the end of 2027, up from 67% at year-end 2024.
The impact of Brazil's recently enacted tax reform and new U.S. tariffs on the company's largest market, which generated 39.6% of total revenues in 2024.
A 10% appreciation of the euro, Costa Rican colon, or Uruguayan peso against the USD would cause FX losses of $8.7M, $7.9M, and $5.4M, respectively, as of December 31, 2025.
Commodity price risk on beef, poultry, grains, dairy, and other inputs is managed through supplier hedges, pricing agreements, open-book contracts, and volume .
The company does not enter into market risk sensitive instruments for trading or speculative purposes.
Arcos Dorados faces material risks from its dependence on McDonald's, volatile Latin American economies, and stringent foreign exchange controls.
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The business is entirely dependent on the Master Franchise Agreements (MFAs) with McDonald's, which expire in 2044; non-renewal or termination would force the company to cease McDonald's operations and face a two-year non-compete.
McDonald's can acquire all non-public shares at 80% of upon a material breach of the MFAs, or at 100% upon the death or incapacity of the controlling shareholder, Mr. Woods Staton.
Argentina's strict currency controls, including mandatory repatriation and settlement of export proceeds, and prior approval requirements for intercompany debt payments, severely restrict the ability to transfer funds abroad.
Inflation and government measures to curb it, particularly in Argentina and historically in Venezuela, increase costs and may not be fully passed on to customers, pressuring operating margins.
The company is exposed to significant foreign exchange risk as 63% of revenues come from Brazil, Argentina, and Mexico, while costs, debt, and are often dollar-denominated.
A new risk highlights that the U.S. government's imposition of new tariffs and resulting trade policy uncertainty could increase operational costs and negatively impact the economies in which the company operates.
Arcos Dorados is the world's largest independent McDonald's franchisee, operating 2,520 restaurants across 21 Latin American and Caribbean countries.
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The company operates through three geographic divisions: Brazil (48.8% of restaurants), NOLAD (26.6%), and SLAD (24.6%), with 71.4% of restaurants being company-operated.
Revenues are generated from company-operated restaurant sales and franchised restaurant rents, with total revenues reaching $4.68 billion in 2025.
A key growth strategy involves expanding digital channels, which comprised 61% of in 2025, driven by a mobile app with over 187 million cumulative downloads and a loyalty program active in nine markets.
The company is executing a significant capital expenditure plan, investing $360.1 million in 2023, $327.6 million in 2024, and $281.4 million in 2025 to open new restaurants and reimage existing ones.
Brand extensions like McCafé (467 locations) and Dessert Centers (3,279 locations) are used to attract new customers and increase market penetration with higher-margin offerings.
Supply chain management is centralized, with 76% of supplies coming from 32 major suppliers, and the company is subject to multi-jurisdictional regulations including price controls in Venezuela.
Arcos Dorados' 2025 revenue rose 4.7% to $4.68B driven by SLAD comparable sales growth, while net income surged 42.6% to $212.1M aided by a $109.6M tax credit.
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Systemwide grew 13.0% in 2025, driven by average check increases in Brazil and SLAD and higher traffic in SLAD and NOLAD, partially offset by lower traffic in Brazil.
Total revenues increased 4.7% to $4.68 billion, with SLAD leading growth at 11.2% due to inflation-driven pricing in Argentina and Venezuela, while Brazil was nearly flat at 0.1%.
rose 12.3% to $364.4 million, primarily due to a $109.6 million net tax credit recovery in Brazil recorded in other operating income.
Food and paper costs as a percentage of Company-operated sales increased 0.8pp to 36.0%, reflecting cost increases outpacing price hikes in several markets.
Net was $296.3 million; the company issued $600 million in 2032 Senior Notes and used proceeds to fully redeem its 2027 Senior Notes, extending its debt maturity profile.
The company expects near-term trends to include continued inflationary pressure on costs, increased currency volatility, and a cautious consumer environment, particularly in Brazil.