Abstract

Arcos Dorados will report first‑quarter 2026 results on May 20, 2026, Pre‑Market, with market expectations pointing to double‑digit revenue growth and modest year‑over‑year EPS expansion supported by stronger sequential comparable sales momentum.

Market Forecast

For the first quarter of 2026, the market projects revenue of 1.21 billion US dollars, implying 14.91% year‑over‑year growth, EBIT of 60.04 million US dollars with a 15.44% year‑over‑year increase, and adjusted EPS of 0.12, up 4.35% year over year. Forecasts for gross profit margin and net profit margin are not formally provided, but the company previously indicated that first‑quarter comparable sales growth would exceed the fourth quarter’s run‑rate, setting up a constructive revenue mix and volume backdrop for the period.

Company‑operated restaurants are expected to remain the primary driver of top‑line expansion, with pricing discipline and product mix aiding traffic initiatives and operational throughput while digital ordering continues to lift average ticket and frequency. The most promising non‑company‑operated revenue stream, franchised restaurants, contributed 213.08 million US dollars in the last reported period, and the systemwide comparable sales base rose 16% year over year in the fourth quarter, underscoring durable demand that can translate into franchise royalty growth.

Last Quarter Review

Arcos Dorados delivered revenue of 1.27 billion US dollars in the fourth quarter of 2025, with a gross profit margin of 14.25%, GAAP net profit attributable to shareholders of 25.17 million US dollars (net profit margin 1.99%), and adjusted EPS of 0.12; revenue increased 10.88% year over year while adjusted EPS decreased 57.14% year over year, and net profit declined 83.27% sequentially.

Operationally, systemwide comparable sales rose 16% year over year in the fourth quarter, with a rising digital mix supporting check growth; EBIT climbed 6.49% year over year even as earnings per share trailed consensus due to non‑operating and mix effects. By business mix in the last reported period, company‑operated restaurants generated 4.47 billion US dollars and franchised restaurants contributed 213.08 million US dollars over the broader reporting horizon, with the 16% year‑over‑year systemwide comparable sales gain evidencing broad‑based demand support across formats.

Current Quarter Outlook (with major analytical insights)

Company‑Operated Restaurants

The company‑operated estate should remain the central engine for first‑quarter revenue, with management having signaled that comparable sales growth would outpace the fourth quarter’s level. That guidance aligns with sustained pricing power in core markets and a healthier transaction base supported by targeted value platforms and premium limited‑time offerings. With mix and ticket benefits increasingly influenced by digital ordering and loyalty, store‑level execution can keep throughput high even during peak periods, supporting positive operating leverage on the top line.

Gross margin dynamics will be a focal point. The fourth‑quarter gross margin was 14.25%, and while near‑term commodity cost pressures can ebb and flow across proteins, packaging, and beverages, a higher digital order share can streamline labor deployment and minimize waste, cushioning store‑level costs. The balance between price and value remains important: price realization achieved in late 2025 flows into first‑quarter 2026, but elasticity will be monitored to avoid volume trade‑offs. Efficiency in crew scheduling and ongoing kitchen process improvements should help preserve contribution margin as promotions cycle in and out.

Sequentially, the key swing within company‑operated results will be whether operating expense growth normalizes after the year‑end promotional period. If pre‑opening, advertising, and incentive timing ease versus the fourth quarter, EBIT could track the 15.44% forecast year‑over‑year lift despite wage inflation in select markets. The sequential comparison will also be influenced by calendar shifts around holidays and an anticipated return to more typical seasonality patterns, so investors will watch reported traffic and average check deltas closely.

Digital and Delivery Ecosystem as a Growth Engine

Digital channels — including the mobile app, self‑order kiosks, and delivery aggregator integrations — remain a structural growth vector for revenue quality and frequency. Commentary around the last reported period highlighted that digital revenue continued to drive growth alongside the 16% year‑over‑year systemwide comparable sales increase, reinforcing the thesis that higher‑margin add‑ons and bundles benefit from personalization and ease of ordering. As loyalty adoption deepens and personalized offers rotate, ticket uplift and visit frequency trends should stay constructive.

From a profitability standpoint, higher digital penetration typically improves checkout speed and expands attachment rates while generating valuable behavioral data. That data informs targeted promotions and menu engineering, raising the odds that merchandising supports both incremental units and premium mix without resorting to broad‑based discounting. In the near term, continued kiosk rollouts and mobile app updates can streamline front‑of‑house operations, which, combined with better labor positioning, support margin defense even if commodity costs fluctuate.

Delivery remains a potent complement. While delivery takes a commission and can dilute margins versus dine‑in, bundled pricing and the convenience premium can offset a meaningful portion of that impact. The emphasis is on optimizing delivery menus and dynamic pricing to protect contribution margin. As urban areas sustain dense order pools and delivery batching efficiency improves, the per‑order economics should benefit. All in, the digital and delivery ecosystem is positioned to sustain top‑line momentum into the first quarter while adding resilience to margins through mix and efficiency.

Key Swing Factors for This Quarter’s Stock Performance

The first determinant is whether reported comparable sales meet or exceed management’s indication of stronger sequential momentum. A print that confirms mid‑teens top‑line growth — consistent with the revenue forecast of 1.21 billion US dollars, up 14.91% year over year — would validate demand resiliency across dayparts and geographies and could support multiple stability. Conversely, a shortfall would raise questions about elasticity and the staying power of digital lift following the holiday quarter, with the EPS outlook of 0.12 and EBIT of 60.04 million US dollars serving as benchmarks.

Foreign‑exchange translation is the second major swing factor. With a multi‑country footprint reporting in US dollars, translation can amplify or dampen local‑currency performance in any given quarter. Management has indicated that favorable exchange rates in primary markets should support reported revenue growth in US dollars for the first quarter. If local currencies remain firm or appreciate against the US dollar, the top‑line growth could skew toward the higher end of projections; if there is renewed volatility, reported growth may compress even if local trends hold steady.

Cost normalization and investment cadence comprise the third lever. Wage trends, utilities, and select commodities will shape store‑level margins, while technology and remodel investment can temporarily elevate operating costs but seed future throughput and digital conversion. The year‑over‑year EPS growth forecast of 4.35% suggests some conservatism on below‑the‑line items and D&A, but a cleaner run‑rate on promotions and marketing after the fourth quarter can assist margin progression. Investors will parse whether any non‑recurring items affected fourth‑quarter EPS and how that compares with a cleaner first‑quarter base.

Analyst Opinions

Recent commentary skews bullish ahead of the first‑quarter release, with the balance of views emphasizing a constructive demand setup anchored by management’s indication of stronger sequential comparable sales and a sustained digital mix tailwind. Aggregating views since January shows a majority leaning positive versus a minority cautious after the fourth‑quarter EPS miss; a practical split is roughly three bullish notes to one bearish, suggesting the prevailing institutional stance expects a solid top‑line print and manageable margin variability.

The bullish camp points to several reinforcing elements. First, the explicit indication that first‑quarter comparable sales growth would exceed the fourth quarter’s pace aligns neatly with revenue forecasts calling for a 14.91% year‑over‑year advance to 1.21 billion US dollars. That guidance underpins confidence in both traffic and ticket drivers, with digital ordering, loyalty, and delivery continuing to influence mix positively. Second, fourth‑quarter revenue of 1.27 billion US dollars and a 16% systemwide comparable sales increase demonstrated that momentum remained intact exiting 2025, which, when coupled with anticipated foreign‑exchange support in core markets, forms a favorable base effect into early 2026. Third, forecast EBIT growth of 15.44% year over year and a modest 4.35% EPS uplift are seen as achievable given cost normalization from year‑end peaks and operational efficiencies tied to digital channels and process improvements.

On the margin front, bullish commentary acknowledges the fourth‑quarter gross margin of 14.25% and net margin of 1.99% as starting points that can improve with better sales density and labor scheduling in the first quarter. The view is that digital penetration helps stabilize margin even when commodities are choppy, while company‑led pricing and engineered bundles can protect unit economics without eroding traffic. Moreover, the rising contribution of company‑operated restaurants to growth provides more direct control over cost levers and promotional cadence, making it easier to align incentives with profitability objectives during key campaigns.

The positive case also highlights resilience in franchise royalties as systemwide sales expand. With franchised restaurants contributing 213.08 million US dollars in the last reported period, a continuation of double‑digit comparable sales growth can translate into a high‑margin royalty stream that smooths consolidated earnings. Analysts expecting a favorable print argue that the combination of company‑operated momentum and franchise royalty stability should keep EBIT tracking close to the 60.04 million US dollars projection even if certain cost lines, such as wages or utilities, remain elevated.

In aggregate, the majority view is that Arcos Dorados is positioned to post a first‑quarter result consistent with mid‑teens revenue growth and slight EPS expansion against easier year‑over‑year comparisons, powered by operational execution, price/mix, and digital engagement. While some caution persists due to the fourth‑quarter EPS shortfall, the dominant expectation is that underlying sales strength and cost control will be sufficient to deliver on the 1.21 billion US dollars revenue, 60.04 million US dollars EBIT, and 0.12 EPS framework, leaving the focus on how sustainable the pace of comparable sales will be into the second quarter and whether gross margin exhibits sequential improvement from the holiday‑impacted base.