Arcos Dorados Holdings Inc. (NYSE:ARCO) shares climbed 7% after the Latin American McDonald's franchisee delivered second-quarter earnings and revenue above Wall Street forecasts. Record quarterly sales, stronger customer traffic and double-digit comparable sales growth helped the company overcome a challenging consumer environment across its markets. Arcos Dorados reported earnings of $0.22 per share for the second quarter, beating the analyst consensus of $0.15 by $0.07.
Revenue reached $1.31 billion, ahead of Wall Street expectations of $1.28 billion and 14.3% higher than in the comparable period last year. The result represented the highest quarterly revenue in the company's history, supported by improved customer traffic and continued sales growth across its restaurant network. Net income increased to $45.0 million, or $0.22 per share, compared with $0.11 per share in the prior-year quarter.
"Total Revenues, Adjusted EBITDA and Net Income all grew strongly in US dollars, despite challenging consumer dynamics in the second quarter of 2026," said Luis Raganato, Chief Executive Officer. "In fact, total revenues of $1.3 billion were our highest-ever quarterly revenues, supported by the best guest volume performance of the last six quarters." Systemwide comparable sales increased 15.3% during the quarter, supported by the company's strongest guest volume performance in six quarters. The improvement in customer traffic helped Arcos Dorados generate growth despite pressure on consumers in several Latin American markets.
Consolidated adjusted EBITDA rose 15.2% year over year to $126.8 million, setting a company record for a second quarter. Adjusted EBITDA margin reached 9.7%, representing an improvement of 10 basis points from the previous year. Excluding gains associated with a sub-franchisee transaction recorded in the second quarter of 2025, the underlying year-over-year margin improvement was 70 basis points.
Arcos Dorados also delivered a significant improvement in its bottom-line profitability. Net income margin expanded by 150 basis points year over year to 3.4%. The increase was supported by improved net interest expense and financing results, together with a lower effective tax rate.
Combined with the growth in adjusted EBITDA, the figures indicate that the company was able to translate higher sales and customer traffic into stronger earnings during the quarter. Digital channels remained an important growth engine for Arcos Dorados, with sales through digital platforms increasing approximately 25%. Digital transactions represented 66% of systemwide sales during the quarter, highlighting the increasing importance of mobile ordering, delivery and other digital channels to the company's restaurant operations.
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