The debut of McDonald's snack wrap earlier this month triggered so much unexpected demand that it temporarily depleted its lettuce supplies.  Less than a week after the Snack Wrap, fried chicken strips rolled in a tortilla, returned to menus, McDonald's sent notices to U.S. franchisees to hold off on adding shredded lettuce to its McChicken sandwiches in order to conserve supplies, according to a company memo seen by The Wall Street Journal.The directive, sent to franchisees last week, aimed to help locatio ...

The debut of McDonald's snack wrap earlier this month triggered so much unexpected demand that it temporarily depleted its lettuce supplies.  Less than a week after the Snack Wrap, fried chicken strips rolled in a tortilla, returned to menus, McDonald's sent notices to U.S. franchisees to hold off on adding shredded lettuce to its McChicken sandwiches in order to conserve supplies, according to a company memo seen by The Wall Street Journal.The directive, sent to franchisees last week, aimed to help locatio ...

Financial Data and Key Metrics Changes - Total revenue for the first quarter of 2025 reached $1.1 billion, approximately equal to the previous year [5] - Consolidated adjusted EBITDA was $91.3 million, down from the previous year primarily due to weaker local currencies and margin pressure in Brazil [6][17] - Constant currency revenue remained solid, supported by a 11.1% increase in system-wide comparable sales, aligning with blended inflation for the period [6] Business Line Data and Key Metrics Changes - Brazil's total revenue in constant currency grew by 5.5% in the first quarter, despite a challenging operating environment [10] - NOLAD's total revenue was flat in constant currency but declined in US dollars due to the depreciation of the Mexican peso [11] - SLAD's comparable sales rose by 38.7% in the first quarter, with Argentina showing strong recovery [13] Market Data and Key Metrics Changes - Digital sales accounted for nearly 60% of system-wide sales in the first quarter, with significant growth in loyalty and mobile order channels [8][21] - In Brazil, digital channels generated almost 70% of system-wide sales, supported by marketing activities [10] - The loyalty program had 18.8 million registered members across five markets by the end of the first quarter [8] Company Strategy and Development Direction - The company aims to provide an omnichannel experience for guests, allowing flexibility in how they enjoy McDonald's menu items [7] - Focus on digitalization to enhance guest experience and operational efficiency, with plans to expand the loyalty program across all main markets by the end of 2025 [23][29] - The company is committed to sustainability and will publish its annual social impact and sustainable development report [30] Management's Comments on Operating Environment and Future Outlook - Management views the first quarter of 2025 as the low point of the year, with expectations for improved operating conditions in subsequent quarters [4][16] - The company remains cautiously optimistic about sales performance improving as the year progresses, driven by a robust marketing plan [28] - Management acknowledges the challenges posed by weaker currencies and reduced consumer purchasing power but believes in the brand's strong market position [31] Other Important Information - The company added 12 new restaurants during the quarter and plans to accelerate openings to meet annual guidance [27] - The capital structure remains strong, with an investment-grade rating from Fitch and no material debt maturities until 2029 [26] Q&A Session Summary Question: Sales trends in early second quarter 2025, especially in Brazil and NOLAD - Management noted reduced traffic in the QSR industry, particularly in Mexico, with calendar effects significantly impacting sales [34][36] - April showed strong recovery in Mexico, indicating positive trends moving forward [38] Question: Impact of beef prices on Brazil's margins and recovery expectations - Management confirmed that beef prices negatively impacted margins in Brazil, but they expect stabilization through pricing adjustments and supplier negotiations [42][45] Question: Recent consumption trends in Argentina and SLAD's outlook - Management reported strong sales growth in Argentina, with expectations for continued positive performance throughout the year [56] Question: Royalty expense expectations and midterm EBITDA margin outlook - Management explained that royalty rates have changed, leading to a small positive impact on EBITDA margins, with expectations for similar margins to 2024 [59][60]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 reached $1.1 billion, approximately equal to the previous year [5] - Consolidated adjusted EBITDA was $91.3 million, down from last year primarily due to weaker local currencies and margin pressure in Brazil [6][16] - Constant currency revenue remained solid, supported by an 11.1% increase in system-wide comparable sales, aligning with blended inflation for the period [6] Business Line Data and Key Metrics Changes - Brazil's total revenue in constant currency grew by 5.5% in Q1 2025, despite a challenging operating environment [10] - NOLAD's total revenue was flat in constant currency but declined in USD due to the depreciation of the Mexican peso [11] - SLAD's comparable sales rose by 38.7% in Q1 2025, with Argentina rebounding strongly [13] Market Data and Key Metrics Changes - Digital sales accounted for nearly 60% of system-wide sales in Q1 2025, with significant growth in loyalty and mobile order channels [8][21] - In Brazil, digital channels generated almost 70% of system-wide sales, supported by marketing activities [10] - The loyalty program had 18.8 million registered members across five markets by the end of Q1 2025 [23] Company Strategy and Development Direction - The company aims to provide an omnichannel experience for guests, allowing flexibility in how they enjoy McDonald's menu items [7] - Focus on digitalization to enhance guest experience and operational efficiency, with plans to expand the loyalty program across all main markets by the end of 2025 [29][30] - The company is committed to maintaining a strong balance sheet while investing in growth opportunities [27][29] Management's Comments on Operating Environment and Future Outlook - Management views Q1 2025 as the low point of the year, with expectations for improved operating conditions in Q2 [4][16] - The company remains cautiously optimistic about sales performance improving as the year progresses, driven by a robust marketing plan [28] - Management acknowledges the challenges posed by currency depreciation and inflation but believes in the long-term growth potential of the McDonald's brand in Latin America [31][32] Other Important Information - The company added 12 new restaurants during the quarter, with plans to accelerate openings to meet annual guidance [27] - The company expects to maintain a net debt to adjusted EBITDA ratio of about 1.4 times throughout the year [26] Q&A Session Summary Question: Comments on sales trends in early Q2 2025, especially in Brazil and NOLAD - Management noted reduced traffic in the QSR industry, particularly in Mexico, with calendar effects significantly impacting sales [34][36] - April showed strong recovery in Mexico, indicating positive trends moving forward [38] Question: Impact of beef prices on Brazil's margins and recovery expectations - Management confirmed that beef prices negatively impacted margins in Q1 but expects stabilization through pricing adjustments and revenue management initiatives [42][46] - The company plans to increase prices in line with inflation while protecting traffic to create shareholder value [52] Question: Recent consumption trends in Argentina and SLAD - Management reported strong sales growth in Argentina, with expectations for continued positive performance throughout the year [56][58] Question: Clarification on royalty expenses and their impact on EBITDA margin - Management explained that the new royalty structure would lead to a slight reduction in consolidated royalty fees, positively impacting EBITDA margins [60][62]