Fast-food chain Arcos Dorados (NYSE: ARCO) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 10.7% year on year to $1.27 billion. Its GAAP profit of $0.12 per share was 40.5% below analysts’ consensus estimates.
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Arcos Dorados (ARCO) Q4 CY2025 Highlights:
- Revenue: $1.27 billion vs analyst estimates of $1.27 billion (10.7% year-on-year growth, in line)
- EPS (GAAP): $0.12 vs analyst expectations of $0.20 (40.5% miss)
- Adjusted EBITDA: $172.7 million vs analyst estimates of $143.9 million (13.6% margin, 20% beat)
- Operating Margin: 1.1%, down from 9% in the same quarter last year
- Locations: 2,520 at quarter end, up from 2,428 in the same quarter last year
- Same-Store Sales rose 16% year on year (14.3% in the same quarter last year)
- Market Capitalization: $1.62 billion
MONTEVIDEO, Uruguay--(BUSINESS WIRE)--Arcos Dorados Holdings Inc. (NYSE: ARCO) (“Arcos Dorados” or the “Company”), Latin America and the Caribbean’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, today reported unaudited results for the three months, and audited results for the twelve months, ended December 31, 2025.
Company Overview
Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE: ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years.
With $4.68 billion in revenue over the past 12 months, Arcos Dorados is one of the larger restaurant chains in the industry and benefits from a well-known brand that influences consumer purchasing decisions.
As you can see below, Arcos Dorados’s 7.9% annualized revenue growth over the last six years was decent as it opened new restaurants and increased sales at existing, established dining locations.
This quarter, Arcos Dorados’s year-on-year revenue growth was 10.7%, and its $1.27 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 12% over the next 12 months, an acceleration versus the last six years. This projection is noteworthy and implies its newer menu offerings will spur better top-line performance.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations influences how much it can sell and how quickly revenue can grow.
Arcos Dorados sported 2,520 locations in the latest quarter. Over the last two years, it has opened new restaurants quickly, averaging 3% annual growth. This was faster than the broader restaurant sector.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Arcos Dorados has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 21%. This performance suggests its rollout of new restaurants is beneficial for shareholders. We like this backdrop because it gives Arcos Dorados multiple ways to win: revenue growth can come from new restaurants or increased foot traffic and higher sales per customer at existing locations.
In the latest quarter, Arcos Dorados’s same-store sales rose 16% year on year. This growth was a deceleration from its historical levels, showing the business is still performing well but losing a bit of steam.
Key Takeaways from Arcos Dorados’s Q4 Results
We were impressed by how significantly Arcos Dorados blew past analysts’ EBITDA expectations this quarter. We were also excited its same-store sales outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS missed and its revenue was in line with Wall Street’s estimates. Overall, this print was mixed. The market seemed to be hoping for more, and the stock traded down 2.9% to $7.48 immediately following the results.
Is Arcos Dorados an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
