Arcos Dorados Holdings Inc. (NYSE: ARCO)

Arcos Dorados Holdings Inc. is the world's largest independent McDonald's franchisee measured by systemwide sales and restaurant count. The company operates McDonald's branded restaurants across twenty countries and territories in Latin America and the Caribbean. It provides food and beverage services through a network of company operated and franchised outlets. The business focuses on quick service restaurant offerings that emphasize convenience speed and value for consumers.

The company generates revenue primarily from two streams. First it records sales from its company operated restaurants where it retains operating profits after paying fees to McDonald's. Second it earns income from franchised locations mainly through rental payments that are based on either a fixed fee or a percentage of the franchisee's sales. Additional revenue comes from initial franchise fees and transfer fees shared with McDonald's.

The company operates through the following segments: company operated restaurants and franchised restaurants.

• The company operated segment consists of restaurants that Arcos Dorados owns and operates directly. The company bears the capital costs for buildings equipment and land when owned and retains operating profits after paying operating expenses and fees to McDonald's.

• The franchised segment includes restaurants run by sub-franchisees under the company's master franchise agreement. Arcos Dorados owns or leases the real estate and collects rent based on a fixed fee or a percentage of sales while also collecting royalties to pass on to McDonald's.

Arcos Dorados holds a leading position in the Latin American and Caribbean quick service restaurant market as the largest independent McDonald's franchisee. Its scale gives it bargaining power with suppliers and enables investments in technology and remodeling. Competitors include international brands such as Burger King and Wendy's as well as regional operators that offer similar fast food options. The company's competitive advantages stem from its exclusive rights to the McDonald's brand in the region its diversified footprint across Brazil NOLAD and SLAD and its strong digital and delivery platforms.

The company serves a broad consumer base consisting of individuals families and young adults who seek fast convenient meals across its restaurant network. No specific corporate customers are disclosed as the business sells directly to the public.