Arcos Dorados Holdings Inc. (NYSE:ARCO) shares climbed in premarket as the McDonald’s operator delivered stronger profitability and momentum across key markets in the third quarter.
Investors cheered rising digital mix, improving comps, and a Brazil tax credit that may support future cash flow.
The company reported third-quarter sales of $1.192 billion, missing the Street view of $1.229 billion.
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Quarterly Metrics
Systemwide comparable sales climbed 12.7% from last year, fueling higher total company revenue. Digital channel revenue jumped 11.2% year over year and accounted for 61% of total systemwide sales in the quarter. Brazil’s systemwide comparable sales improved sequentially versus the second quarter of 2025, while Mexico and Argentina supported the consolidated result with systemwide comparable sales growth of 1.8x and 1.3x local inflation, respectively.
Arcos Dorados is the world’s largest independent McDonald’s Corporation (NYSE:MCD) franchisee, operating the largest quick service restaurant chain in Latin America and the Caribbean.
The company reported earnings per share of 71 cents, significantly higher than 17 cents per share in the prior-year period.
However, quarterly results reflected a $125.2 million net benefit from a federal tax credit in Brazil covering 2016-2023. Excluding the federal tax credit in Brazil, the firm reported adjusted earnings per share of 12 cents.
The company expects this credit to boost cash from operations starting in 2026.
“We are pushing to have a solid finish to 2025, while positioning ourselves for a stronger performance next year, targeting sustainable topline growth and improved operational efficiency to drive profitability, generate free cash flow and create shareholder value,” said CEO Luis Raganato.
Quarterly adjusted EBITDA of $201.126 million, higher than $124.999 million. Adjusted EBITDA margin expanded to 16.9% from 11% a year ago.
Arcos Dorados said it has opened 22 restaurants in the third quarter of 2025, 19 of which were free-standing locations.
At the end of the quarter, 72% of restaurants in the firm’s footprint welcomed guests with the “most modernized and compelling experience,” the company stated.
Arcos exited the quarter with cash and equivalents worth $182.797 million.
ARCO Price Action: Arcos Dorados shares are trading higher by 4.58% to $7.54 premarket at last check on Wednesday.
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