Arcos Dorados Holdings Inc. (ARCO): PESTLE Analysis [Nov-2025 Updated]

You're looking at Arcos Dorados, the McDonald's powerhouse across Latin America, and the 2025 outlook is a high-stakes bet on digital growth against macro-headwinds. Management is defintely targeting systemwide sales over $4.5 billion, powered by digital channels expected to exceed 40% of total sales, but that growth is constantly threatened by political instability and persistent high inflation across their 20 markets. To be fair, navigating currency controls in Argentina while rolling out self-ordering kiosks in Brazil requires a clear map of external forces, so let's break down the Political, Economic, Social, Technological, Legal, and Environmental (PESTLE) factors driving their next move.

Arcos Dorados Holdings Inc. (ARCO) - PESTLE Analysis: Political factors

You are operating in one of the world's most politically dynamic regions, so government policy isn't just a compliance issue; it's a core cost driver and a major factor in your repatriated earnings. The political landscape in Latin America and the Caribbean, where Arcos Dorados holds the master franchise for McDonald's across 20 markets, creates both significant tailwinds and immediate, quantifiable risks.

The key takeaway for 2025 is a divergence: Argentina's new government is easing capital controls, offering a major financial opportunity, but the political push for higher minimum wages across the region is increasing labor costs, and consumer confidence in your largest market, Brazil, remains fragile due to economic policy uncertainty. You need to focus on local market pricing power to offset these government-mandated cost hikes.

Shifting government regulations and trade policies across 20 markets

The sheer number of jurisdictions-over 20 countries-means you face a constant, complex regulatory burden. Each market has its own import tariffs, food safety standards, and tax codes, which directly impact the supply chain and cost of goods sold (COGS). For instance, a small change in trade policy regarding beef or potato imports can swing margins across an entire segment.

A notable positive development is the $125.2 million federal tax credit granted in Brazil, which Arcos Dorados secured in the third quarter of 2025. This credit, related to the treatment of government-related tax incentives from 2016-2023, is a direct, substantial financial benefit from a political/legal process, and is expected to positively impact cash flow starting in 2026. This is a huge win for liquidity.

Risk of capital and currency controls, especially in markets like Argentina

The risk of capital and currency controls, historically a major concern, has seen a dramatic, positive shift in Argentina in 2025. The Argentine government, as of April 14, 2025, eliminated most foreign exchange controls, often called the 'cepo cambiario.'

This policy change is critical because Argentina represented 15.8% of the company's total revenues in 2023. The new regulations allow Arcos Dorados to do three things that were previously restricted:

• Repatriate profits and distribute dividends to non-resident shareholders from retained earnings generated after January 1, 2025.
• Access the Official Exchange Market for foreign currency purchases without prior central bank approval.
• Pay for imported goods without the previous 30-day waiting period, which streamlines the supply chain and reduces import-related currency risk.

Honestly, this regulatory relief in Argentina is a game-changer for cash management and investor confidence in the South Latin America Division (SLAD).

Political instability in major economies like Brazil impacting consumer confidence

Brazil, your single largest market with 1,202 of your 2,479 total restaurants, remains the biggest near-term political-economic risk. While the political system is stable, the macroeconomic policies are creating a challenging environment for consumer spending.

The persistent inflation and high interest rates have directly impacted consumer sentiment. The Getulio Vargas Foundation (FGV) Consumer Confidence Index (ICC) in Brazil fell by 5.1 points to 86.2 in January 2025, reaching its lowest point since February 2023. This pessimism is not just an abstraction; it translates directly to lower traffic in your restaurants.

Here's the quick math: Brazil's comparable store sales growth in Q3 2025 was only 1.0% in local currency, which was significantly below the country's food inflation rate of 6.6% in September. When your sales growth is less than food inflation, it means guest traffic is declining substantially, forcing you to rely on price increases to maintain revenue.

Varying labor regulations and minimum wage policies by country

Labor laws and minimum wage policies are set by governments and represent a non-negotiable, rising cost floor. Given your high reliance on hourly workers, government-mandated minimum wage increases across the region are a direct headwind to your operating margin.

Argentina, for example, saw a nominal increase in its minimum wage of 51% from January 2024 to January 2025, though high inflation eroded the real purchasing power. Mexico also implemented a 12% increase for 2025. Brazil's minimum wage rose by 7.5% for 2025, a policy designed to ensure real gains above inflation through 2030, which creates regulatory predictability but guarantees rising labor costs.

The table below shows the stark difference in the government-set cost of labor across your key markets as of 2025, highlighting the complexity of managing a unified compensation strategy.

Key Market	2025 Monthly Minimum Wage (Local Currency)	Approximate 2025 Monthly Minimum Wage (USD)	Government-Mandated Increase for 2025
Brazil	R$ 1,518	$245	7.5% increase (effective Jan 2025)
Mexico (General Zone)	MXN 8,364	$412	12% increase (effective Jan 2025)
Argentina (March)	ARS 296,832	$274.04	51% nominal increase (Jan 2024 to Jan 2025)

What this estimate hides is the regional variation within countries like Mexico, where the Northern Border Free Zone minimum wage is significantly higher, at approximately $620 per month, forcing localized wage strategies and greater cost pressure in those border regions. You defintely need to factor these increases into your QSR pricing models immediately.

Arcos Dorados Holdings Inc. (ARCO) - PESTLE Analysis: Economic factors

Persistent high inflation driving up commodity and operating costs.

You are defintely right to focus on inflation; it's the single biggest headwind eroding margins for Arcos Dorados. While the company's systemwide comparable sales grew by a strong 12.7% in Q3 2025, that growth was essentially in line with the blended inflation rate across its markets, meaning real growth was minimal. The core problem is that input costs are rising faster than the company can push through price increases without losing customers.

In Brazil, Arcos Dorados' largest market, the inflation forecast for 2025 is expected to ease to 4.46% (Central Bank survey), but the cost of key commodities is spiking much higher. For example, the 'Food and beverages' category in Brazil saw a year-on-year inflation rate of 7.81% in April 2025, with beef inflation being a specific and persistent drag on profitability. Here's the quick math: if your primary cost component rises 7.81%, but you can only raise menu prices by 4.5% to stay competitive, your margin shrinks.

• Beef inflation: A primary driver of margin pressure in Brazil.
• Pricing lag: Cost increases outpace menu price adjustments.
• Margin compression: Adjusted EBITDA declined in Q3 2025 (excluding a one-off tax credit) due to these cost pressures.

Significant currency devaluation risk (e.g., Brazilian Real, Argentine Peso) hitting reported earnings.

The currency risk is a constant, brutal reality for any US-listed company operating heavily in Latin America. Arcos Dorados reports in US Dollars (USD), but most of its revenue is in local currencies like the Brazilian Real (BRL) and Argentine Peso (ARS). When these local currencies devalue, the strong local sales numbers translate into lower USD-reported earnings. This is a classic translation risk.

The Brazilian Real is currently trading around R$5.29 to the US Dollar, but analysts forecast a slight weakening to roughly R$5.40 by the end of 2025. That's a built-in headwind for your reported revenue. The situation in Argentina is far more volatile; while a new monetary framework brought some stability, the ARS/USD parity is still projected to reach around 1,400 by year-end 2025. That level of devaluation wipes out a significant portion of local currency profits when converted back to USD.

Currency/Metric	2025 Year-End Forecast	Impact on ARCO
Brazilian Real (USD/BRL)	~5.40	Translation risk on Brazil's 49% of total revenue.
Argentine Peso (USD/ARS)	~1,400	Severe translation risk on SLAD division (South Latin America).
Argentina Inflation (YoY)	~29.6%	Drives high local sales growth, but requires constant price hikes.

Consumer purchasing power remains constrained, limiting price increases.

This is the tightrope walk: you need to raise prices to offset the 7%+ commodity inflation, but your core customer is financially stressed. The challenging consumer environment, particularly in Brazil, is leading to a constrained purchasing power.

Arcos Dorados' Q3 2025 results showed a 'low single-digit decline in guest traffic' compared to the prior year, even with strong comparable sales growth. This means the revenue growth is coming from a higher average check (i.e., higher prices and upselling), not from more people walking through the door. The company is using digital channels and value campaigns to manage this, but it highlights a limit to how much price can be pushed before traffic declines become a major problem.

Strong revenue growth projected, with management targeting over $4.5 billion in 2025 systemwide sales.

Despite the economic headwinds, the company is still delivering on its top-line growth strategy. The trailing twelve-month revenue as of Q3 2025 already hit $4.56 billion, surpassing the $4.5 billion internal target. This resilience is driven by a few key factors that mitigate the macro risks.

The digital strategy is working, with digital channels (mobile app, delivery, self-order kiosks) contributing 61% of systemwide sales in Q3 2025. This operational efficiency, plus the expansion of the loyalty program to 23.6 million members, helps defend market share and drive volume even in tough times. The goal for you as an investor is to see if this strong revenue can finally translate into a commensurate increase in USD-reported Adjusted EBITDA margin.

Arcos Dorados Holdings Inc. (ARCO) - PESTLE Analysis: Social factors

The core social factors impacting Arcos Dorados Holdings Inc.'s performance in 2025 revolve around a digitally-driven, convenience-obsessed consumer base that is simultaneously demanding greater transparency and healthier options. The company's strategy is currently capitalizing on the digital shift, which is a clear opportunity, but it must continue to meet the evolving health and wellness mandate to mitigate long-term brand risk.

Growing demand for healthier, less processed menu options.

You are seeing a clear, sustained shift in consumer preference across Latin America toward food perceived as healthier or more responsibly sourced, even within the Quick Service Restaurant (QSR) space. While the primary revenue drivers remain the core menu items, the social license to operate depends on addressing this trend. Arcos Dorados is focusing on ingredient quality and transparency, a key pillar of its 'Recipe for the Future' strategy.

Here's the quick math on sourcing: The company is aggressively moving to cage-free sourcing, with a goal of 100% fresh shell eggs from cage-free hens by the end of 2025. As of the latest reporting, Arcos Dorados is at 37.6% of eggs sourced from this more sustainable and animal-welfare-oriented model. This is a crucial non-sales metric that shows commitment.

What this estimate hides is the lack of specific 2025 financial data on the sales contribution of reduced-calorie or healthier-choice menu items, meaning the market is not yet measuring the revenue impact of this social shift directly. The focus remains on reformulation to reduce sodium, fat, and sugar across the existing menu, rather than a separate 'healthy' sales channel.

Large, digitally-native youth population driving high mobile app usage.

The young, tech-savvy population across key markets like Brazil, Mexico, and Argentina is not just using the app; they are driving the majority of sales. This digital penetration is a massive competitive advantage, boosting both efficiency and customer retention through personalized offers.

For the third quarter of 2025 (Q3 2025), digital channels-which include the mobile app, delivery, and self-order kiosks-accounted for a remarkable 61% of systemwide sales. This digital channel sales figure grew 11.2% year-over-year in U.S. dollars, showing strong momentum. The loyalty program, a direct engagement tool, is foundational to this success.

The loyalty program, Meu Méqui, is a powerhouse. It reached 23.6 million registered members by the end of Q3 2025, representing a nearly 50% surge in membership from the end of 2024. This program is a massive data asset. The company expects the program to be available in about 90% of all restaurants by year-end 2025, ensuring this digital tailwind continues to accelerate.

Digital Engagement Metric (Q3 2025)	Amount/Value	Significance
Systemwide Sales from Digital Channels	61%	The majority of all sales now flow through the digital ecosystem (App, Kiosks, Delivery).
Digital Channel Sales Growth (YoY)	11.2% (in USD)	Demonstrates robust growth and adoption of the digital platform.
Loyalty Program Registered Members	23.6 million	A massive, engaged customer base for targeted marketing.
Loyalty Program Membership Growth (YoY)	Nearly 50%	Indicates rapid, successful adoption of the retention tool.

Increased focus on convenience and delivery as a standard service expectation.

Convenience is no longer a perk; it's a baseline expectation, and Arcos Dorados has successfully integrated it into its core operations. The inclusion of delivery and self-order kiosks within the 61% digital sales figure confirms this operational reality. It's an omnichannel play.

This focus is visible in the physical footprint too. The company is prioritizing its Experience of the Future (EOTF) model, which supports all these channels-Drive-thru, delivery, and in-store kiosks-and is a capital expenditure (CapEx) priority. The company plans to open 90 to 100 new restaurants in 2025, with a significant number being free-standing units optimized for convenience.

Brand strength remains high, but social media scrutiny is instant.

The McDonald's brand remains a leader, which is why Arcos Dorados has maintained significant market share leadership in Brazil through the first nine months of 2025, despite challenging consumer dynamics. They are actively leveraging this strength through marketing, including family-focused campaigns with licenses like Hello Kitty and Tiny Tan.

But the flip side is the instant, unforgiving nature of social media scrutiny. Any operational misstep, service failure, or perceived ethical lapse is immediately magnified. The company's profitability is fundamentally tied to consumer perception, and the speed of information dissemination means a crisis can develop in hours, not days. This constant, real-time public review necessitates a defintely proactive and transparent social media and customer service strategy.

The key takeaway is that the brand's resilience is being tested daily in the digital arena, requiring ongoing investment in both quality control and immediate, empathetic public relations response.

Arcos Dorados Holdings Inc. (ARCO) - PESTLE Analysis: Technological factors

Continued investment in digital transformation and the 'Experience of the Future' platform.

You can see Arcos Dorados Holdings Inc.'s commitment to technology in their capital spending, which is the real proof of their strategy. The company is doubling down on modernizing its restaurant base through the Experience of the Future (EOTF) platform, which integrates digital touchpoints and operational efficiencies. For the full year 2025, the company's capital expenditure (CapEx) guidance is substantial, projected to be between $300 million and $350 million.

This investment is not just about aesthetics; it's about driving higher sales. Restaurants converted to the EOTF model demonstrated a significant lift, showing 15% to 20% higher same-store sales in the first half of 2025. This is a clear, high-return investment. In the first nine months of 2025 alone, the company spent $179.9 million on property and equipment, which includes these EOTF upgrades and new restaurant development.

Digital sales (delivery, mobile, kiosks) expected to exceed 40% of total sales by late 2025.

The digital strategy has already blown past the 40% threshold. In the third quarter of 2025, digital channel sales-which include the mobile app, delivery, and self-order kiosks-contributed a massive 61% of total systemwide sales. This digital penetration is a game-changer, demonstrating the company's success in adapting to the tech-savvy Latin American consumer. Digital sales grew by 11.2% year-over-year in U.S. dollars in Q3 2025.

This is not a temporary spike; it's a structural shift. The loyalty program is the engine here, reaching 23.6 million members by the end of Q3 2025, which is almost a 50% growth rate compared to the end of 2024. The plan is to have the loyalty program available in about 90% of all restaurants by year-end 2025, which will continue to fuel this high-margin channel.

2025 Digital Performance Metric	Value (Q3 2025)	Context/Growth
Digital Channel Sales Share	61% of Systemwide Sales	Exceeded 40% expectation by a wide margin
Digital Sales Growth (YoY)	11.2% in US Dollars	Strongest growth in Brazil and SLAD
Loyalty Program Members	23.6 million	Grew nearly 50% vs. end of 2024
2025 Full-Year CapEx Guidance	$300 million to $350 million	Majority focused on EOTF and new restaurant growth

Rollout of self-ordering kiosks and dual-lane drive-thrus to boost service speed.

The EOTF modernization effort is the vehicle for deploying physical technology. Self-ordering kiosks are a core part of the digital sales mix, helping to manage traffic flow and reduce order errors inside the restaurant. This automation is critical for operational efficiency, especially in high-volume locations.

To be fair, the focus on speed extends to the outside of the restaurant, too. The rollout of dual-lane drive-thrus is a key component of the new restaurant design, allowing the company to process more customers per hour, which directly translates to higher throughput and better unit economics. This physical technology, coupled with digital ordering, is what gives EOTF restaurants their sales advantage. They opened 20 new EOTF restaurants in Q2 2025 alone.

Use of AI and data analytics to optimize inventory and personalize offers.

The technology stack goes beyond just taking orders; it's about intelligence. Arcos Dorados Holdings Inc. uses data analytics derived from its massive pool of loyalty members and digital transactions to optimize two critical areas: inventory and personalized marketing.

Here's the quick math: with 23.6 million loyalty members, the company has proprietary data on millions of transactions. They use this data to study user behavior and create highly targeted, personalized offers. This is why loyalty members visit at a much higher rate than non-loyalty guests.

On the back end, the focus on 'automation and process optimization' has helped reduce costs, particularly in payroll, service fees, and occupancy expenses. This indicates the use of advanced analytics, if not full-blown AI, to forecast demand more accurately, which then:

• Optimizes inventory ordering, cutting waste.
• Improves labor scheduling for peak hours.
• Drives productivity gains across the organization.

The combination of front-end personalization and back-end efficiency is defintely the key to their margin resilience in a high-inflation environment.

Arcos Dorados Holdings Inc. (ARCO) - PESTLE Analysis: Legal factors

You're operating the largest McDonald's franchisee in the world, Arcos Dorados, across 20 markets in Latin America and the Caribbean. That means you don't just follow one set of laws; you're managing 20 distinct, often conflicting, legal landscapes. The key takeaway here is that legal compliance is not a fixed cost, it's a variable one that rises with regulatory complexity, especially in areas like labor, food safety, and data privacy. This is a defintely a major operational expenditure.

Strict food safety and hygiene standards across all operating territories.

Food safety is non-negotiable and the legal standards are getting tougher, not easier. Every country, from Brazil to Argentina, has its own health inspectorate, and a single outbreak or violation can trigger massive fines and reputational damage. The legal framework demands rigorous Hazard Analysis and Critical Control Points (HACCP) compliance at every stage, from cold chain logistics to final preparation.

For example, a major violation in a key market like Brazil, which accounts for a significant portion of ARCO's revenue, could lead to a temporary closure and fines that easily run into the millions of Reais. While specific 2025 fine data is not publicly available, the cost of preventative compliance-audits, training, and facility upgrades-is a continuous, high-priority investment.

• Mandatory temperature checks for all incoming ingredients.
• Strict legal limits on permissible microbial counts in food.
• Regular, unannounced government health inspections.

Increasing legal scrutiny on advertising directed at children and nutritional labeling.

This is a major legal risk, particularly in high-growth markets like Mexico and Chile. Governments are actively using the law to combat childhood obesity, and the fast-food industry is a primary target. The legal trend is moving toward outright bans on using toys or cartoon characters to market high-sugar, high-fat, or high-sodium meals to children.

Chile's Law of Food Labeling and Advertising is one of the strictest examples. It legally mandates black octagonal warning labels (known as 'Alto en' labels) on products exceeding specific thresholds for calories, saturated fats, sugars, and sodium. Compliance means redesigning packaging, reformulating products, and completely overhauling marketing campaigns. The legal costs of non-compliance, including litigation and mandated advertising changes, are substantial. For instance, in 2024, the compliance costs for labeling changes across the region were estimated to be in the range of $5 million to $10 million, though specific 2025 figures for Arcos Dorados are proprietary.

Compliance with complex, localized labor laws regarding working hours and benefits.

Labor law is arguably ARCO's most complex and financially significant legal challenge. As a massive employer of young and part-time workers, the company faces thousands of individual labor claims annually across its operating countries. Each country has unique rules on maximum working hours, overtime pay, severance, and union rights.

Brazil and Argentina are particularly litigious. In Brazil, the labor court system is highly active, often resulting in significant financial provisions. As of the end of the 2024 fiscal year, Arcos Dorados reported a provision for legal contingencies, primarily related to labor and civil claims, which was a material amount on its balance sheet. This provision is a crucial indicator of the expected financial impact of ongoing and anticipated legal battles.

Here's the quick math: a provision of, say, $150 million to $200 million for legal contingencies demonstrates the scale of this ongoing labor risk.

Key areas of localized labor law risk include:

• Mandatory profit-sharing schemes (e.g., Brazil's PLR).
• Restrictions on night-shift and weekend work for minors.
• Strict rules on temporary and part-time contracts.

Varying data privacy and protection laws (like Brazil's LGPD) for customer data.

The digital transformation of the business-especially with the McDonald's app and delivery services-has introduced significant data privacy risks. The legal landscape is rapidly evolving to mirror the EU's GDPR, with Brazil's Lei Geral de Proteção de Dados (LGPD) being the most prominent example in ARCO's territory.

The LGPD mandates strict rules for collecting, processing, and storing personal data. Non-compliance can lead to massive fines-up to 2% of a company's revenue in Brazil, capped at 50 million Brazilian Reais (approximately $9.5 million USD) per infraction. This is a clear financial risk.

To mitigate this, ARCO must invest heavily in legal and IT infrastructure. What this estimate hides is the cost of internal process changes and staff training to ensure every employee handles customer data according to the local legal requirements. The compliance framework is a patchwork, requiring constant monitoring.

Legal Factor	Key Regulatory Body/Law	Example of Compliance Action	Potential Financial Impact (Illustrative)
Food Safety & Hygiene	ANVISA (Brazil), SENASA (Argentina)	Mandatory third-party audits and cold chain monitoring.	Fines up to $1 million USD for a severe contamination incident.
Advertising & Labeling	Chile's Law of Food Labeling and Advertising (Ley 20.606)	Reformulating menu items to avoid 'Alto en' warning labels.	Estimated regional compliance cost of $5M - $10M annually.
Labor Laws	Consolidation of Labor Laws (CLT, Brazil)	Managing a high volume of labor lawsuits regarding overtime and benefits.	Legal contingency provision often exceeding $150 million.
Data Privacy	Lei Geral de Proteção de Dados (LGPD, Brazil)	Implementing consent mechanisms for app user data collection.	Fines up to 50 million BRL (approx. $9.5M USD) per violation.

Finance: Review the current legal contingency provision against the projected 2025 revenue to assess the true risk exposure by the end of the quarter.

Arcos Dorados Holdings Inc. (ARCO) - PESTLE Analysis: Environmental factors

Pressure to reduce single-use plastics, with bans accelerating in multiple cities.

The regulatory landscape in Latin America is rapidly shifting against single-use plastics, creating an immediate operational challenge for Arcos Dorados. You are seeing national laws, like Colombia's Law 2232/2022, which began its phase-out of 21 single-use plastic items starting in July 2024, including straws and expanded polystyrene (Styrofoam) food containers. Chile also implemented a national ban on disposable plastics in 2024. This isn't a future risk; it's a current-year compliance mandate across your key markets.

Arcos Dorados has responded by setting an aggressive goal: to ensure 100% of its packaging comes from renewable, recycled, or certified sources by the end of 2025. To be fair, they are close; as of their last report, 90.5% of primary packaging was already made from renewable and recyclable materials. This is a strong position, but closing that final gap requires significant capital expenditure and supplier coordination. They have already removed an equivalent of 1,468 tons of single-use plastic from restaurants since 2020 through initiatives like eliminating plastic straws and replacing plastic salad bowls with 100% biodegradable fiber or cardboard containers.

Commitment to sustainable sourcing for key inputs like beef and coffee.

The environmental scrutiny on the quick-service restaurant (QSR) supply chain, particularly beef, is intense, and Arcos Dorados' scale makes them a primary target. They have a clear focus on deforestation-free sourcing, which is a critical differentiator in the region. Their commitment extends beyond beef to animal welfare, which is another major consumer concern.

Here's the quick math on their core sourcing progress as of the 2025 fiscal year:

Sourcing Commitment	Target (End of 2025)	Status / Achievement (2025 Data)	Impact Metric
Deforestation-Free Beef	100% Compliance	99.87% of beef from Argentina and Brazil complies with policy.	3.67 million hectares monitored monthly via satellite to ensure no deforestation.
Cage-Free Eggs	100% Sourced from Cage-Free Hens	37.6% of total eggs sourced cage-free across the region.	100% achieved in Brazil, Colombia, Costa Rica, Ecuador, Peru, Puerto Rico, and Uruguay.

The beef figure is defintely a win; they are essentially at full compliance for their largest sourcing countries. Still, the cage-free egg transition, while complete in seven countries, shows a regional lag at 37.6% overall, which means an accelerated push is needed to hit the 100% target by year-end.

Focus on energy efficiency and waste reduction in new and remodeled restaurants.

Operational efficiency is where environmental strategy directly reduces costs. Arcos Dorados is prioritizing energy efficiency and circular economy initiatives (Circular Economy is the practice of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems). This focus is visible in their new restaurant designs, known as 'Blue Spaces,' which incorporate sustainable features.

Their progress on energy and waste management is substantial:

• Renewable energy contracts cover 50% of the company's regional energy consumption as of August 2025.
• They have exceeded the supply of clean energy across their operations by more than 30% (based on 2023 reporting).
• The company collects over four million liters of used cooking oil annually, which is then transformed into biodiesel.
• A pilot program replaced plastic trays with a bio-based thermoplastic made from household waste, diverting 1,221 kg of waste from landfills in the initial test phase.

This is smart business; less energy use and less waste disposal cost directly boost the bottom line.

Climate change risk impacting agricultural supply chains across the region.

Climate change is no longer a long-term risk for a Latin American QSR operator; it is a near-term supply chain volatility factor. The increasing frequency and intensity of extreme weather events directly threaten logistics and input costs. For example, the region saw global losses from socio-environmental disasters reach about US$368 billion in 2024, with events like Hurricane Otis in Mexico causing over US$10 billion in damages, disrupting cargo transportation for months.

This volatility translates directly into financial pressure. The company noted persistent input cost pressures, particularly in beef, during its Q3 2025 financial results. To mitigate this, Arcos Dorados is exploring regenerative sourcing models and blended finance strategies. The goal is to create a more resilient food chain from farm to tray, not just to decarbonize, but to ensure a stable supply of key ingredients like beef despite the increasing climate-driven instability.