Arcos Dorados Secures Game-Changing 20-Year McDonald's Deal

GuruFocus.com01-02

Big news for Latin America's fast-food powerhouse: Arcos Dorados (NYSE:ARCO), the region's top McDonald's (NYSE:MCD) operator, just locked in a fresh 20-year Master Franchise Agreement (MFA) with the ...

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Effective January 1, 2025, this deal guarantees Arcos exclusive rights in over 20 countries and more than 2,400 restaurants. The new agreement features a tiered royalty system6.0% of gross sales for the first decade, nudging up to 6.25% and 6.5% over the following two five-year terms. McDonald's has even thrown in an option to extend the deal for another 20 years starting in 2045, at its discretion.GuruFocus has detected 2 Warning Sign with ARCO.For investors, this deal checks all the right boxes. It shores up Arcos's dominance in an underpenetrated market, eliminates near-term uncertainty, and clears the runway for strategic investments. As organized food services in Latin America play catch-up to developed markets, Arcos's position looks unshakable. With the MFA locked and loaded, Arcos isn't","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","ARCO":"Arcos Dorados Holdings","LU0868494617.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) ACC","BK4585":"ETF&股票定投概念","LU1585245621.USD":"EASTSPRING INV GLOBAL LOW VOLATILITY EQUITY FUND \"A\" (USD) ACC B","BK4534":"瑞士信贷持仓","LU1244550577.SGD":"FTIF - Franklin Global Multi-Asset Income A (Mdis) SGD-H1","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU1430594728.SGD":"Eastspring Investments - Global Low Volatility Equity AS SGD","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1718418525.SGD":"JPMorgan Investment Funds - Global Select Equity A (acc) SGD","BK4566":"资本集团","LU2133065610.SGD":"JPMorgan Investment Funds - Global Dividend A (mth) SGD","MFA":"MFA Financial","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","MCD":"麦当劳","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","BK4550":"红杉资本持仓","BK4588":"碎股","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU0942090050.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD)  INC","BK4581":"高盛持仓","BK4504":"桥水持仓","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","LU0868494708.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) INC","BK4209":"餐馆","BK4110":"抵押房地产投资信托"},"translate_title":"Arcos Dorados与麦当劳达成改变游戏规则的20年协议","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MFA":1,"ARCO":1,"MCD":1},"content_text":"Big news for Latin America's fast-food powerhouse: Arcos Dorados (NYSE:ARCO), the region's top McDonald's (NYSE:MCD) operator, just locked in a fresh 20-year Master Franchise Agreement (MFA) with the global burger giant. Effective January 1, 2025, this deal guarantees Arcos exclusive rights in over 20 countries and more than 2,400 restaurants. The new agreement features a tiered royalty system6.0% of gross sales for the first decade, nudging up to 6.25% and 6.5% over the following two five-year terms. McDonald's has even thrown in an option to extend the deal for another 20 years starting in 2045, at its discretion.\n\nWarning! GuruFocus has detected 2 Warning Sign with ARCO.\n\nHere's why this matters: Arcos's foothold in Latin America's booming quick-service restaurant market just got even stronger. Woods Staton, Arcos's Executive Chairman, called the deal a testament to their market leadership and commitment to growth. Analysts agree, framing this as a long-term win. Sure, the royalty bump will test margins, but it's a manageable trade-off for the stability and growth potential baked into this agreement. With clear cost structures locked in until 2045, Arcos can double down on its regional expansion, modernize its operations, and push ahead with digital innovationsall while riding the tailwind of increasing demand.\nFor investors, this deal checks all the right boxes. It shores up Arcos's dominance in an underpenetrated market, eliminates near-term uncertainty, and clears the runway for strategic investments. As organized food services in Latin America play catch-up to developed markets, Arcos's position looks unshakable. With the MFA locked and loaded, Arcos isn't just survivingit's set to thrive.This article first appeared on \nGuruFocus.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"2","news_tag":"corporation","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2500973179"}