In Mexico, we received a Premios Goula, recognizing our cooking oil recycling program as being among the best sustainability practices in the country’s food and beverage industry. And we recently signed new agreements to increase the amount of renewable energy sources we use in our operation, which we will tell you more about on our next call. To learn more about the Recipe for the Future ESG platform, you can visit our website and download the audited ESG report for 2022. To wrap up our prepared remarks, I would like to share a few final thoughts with you. The strong results we reported today demonstrate the importance of a consistent long-term strategic approach to delivering value and convenience to restaurant customers. As you have heard many times, our objective is clear, to drive sustainable top-line growth over the long term, and as top-line growth, so should profitability.
As we open even more freestanding units, modernize even more existing restaurants and develop even more digital capabilities, we are strengthening and expanding the structural competitive advantages that make McDonald’s by far the preferred brand in the Latin American QSR industry. There is still so much work to be done to normalize our operations across the region. And there is still so much growth potential ahead of us. But thanks to the consistency of our strategy and execution, we are capturing our opportunities and tackling our challenges from a position of strength. We expect to have a solid final quarter to a very strong 2023, and we will provide you with our 2024 guidance for restaurant openings and capital expenditures early next year.
Thank you all for your continuing support. Dan, over to you to start the Q&A session.
A – Daniel Schleiniger: Thanks, Marcelo. In order to get started, please minimize the presentation slides so that you can access the chat function on the left-hand side of the webcast platform. Please limit yourself to one or two questions so that I can read, understand and convey them to our speakers. We will now pause briefly to compile your questions. Okay. Well, actually, we have quite a few questions today, and we’re going to try to get to as many of them as we possibly can. Thanks, everybody, for your participation. And we’ll get started today with Thiago Bortoluci from Goldman Sachs, who says, “Hi Arcos team, congrats on another solid quarter, and thanks for taking questions.” Thiago has a multipart question or set of questions that I want to split among our speakers here.
The first for you, Marcelo. Thiago says, “Repeating my question from the second quarter, once again, you outperformed the industry by far. While your competitors continue to note a weak consumption backdrop, not just in burger but across multiple QSR categories. How are you seeing demand going forward? Do you think this trend is exclusive for McDonald’s or broad market based?”
Marcelo Rabach: Okay. Good morning, Thiago, and thank you for your questions. For sure, we are very pleased with the results we published today in terms of sales growth, particularly. And it’s important to mention that we expect to have a solid fourth quarter too and in that sense, to close a very, very strong 2023. The momentum we captured at the beginning of the year in the first half continued throughout the third quarter. And comparable sales growth well above inflation was driven by several things, and most of them, I would say, that are long-term things or fundamentals of the business. Beginning with the structural advantage that we have in terms of our footprint, the freestanding restaurants, the amount of freestanding restaurant that we have is a huge advantage.
And this is getting bigger since we are accelerating our expansion and 90% or more of the new restaurant units are freestanding. Then, we have the consistent execution of our 3D’s strategy. our robust digital platform. And finally, I think that it is important to mention that we are executing a pricing strategy based on offering compelling value across the entire menu board, which is huge — it has a huge impact in terms of the value perception of the customers. That’s why not only comparable sales results are very strong, but the McDonald’s brand strength is at an all-time high in the region. So our plan is clear, is to continue to drive sustainable sales growth and in that way, generate operating leverage and improve long-term profitability, and we are pretty confident in our ability to continue capturing opportunities to sustain strong operating results since none of the current growth drivers are short term.
Daniel Schleiniger: Great. And then Thiago has a sequence of questions that I think are most appropriate for you, Luis. First is, “We’re seeing your closest competitor being selectively more aggressive on pricing. I believe he’s talking about Brazil here. What is your strategy to fight this? And what were the implications in terms of traffic and tickets in same-store sales in the third quarter of ’23?”
Luis Raganato: Yeah. Okay. Thank you, Thiago. Between going to the part of the question that is talking about the traffic and the ticket, they are evenly split, okay, as we’ve already mentioned. And the second part of the question, the answer is that we’re going to sustain the growth, like Marcelo already remarked, primarily focusing on improving first, our operations that today, operational excellence, we believe, is an important competitive advantage and strategic pillar for us. We will keep on offering good value for our guests through every channel, Digital, Delivery, Drive-thru, front counter, and, of course, these are centers, and we’re very confident that we have a very solid strategy for the near future.
Daniel Schleiniger: Great. Well, this is also — sorry, Thiago also asks, “You apparently gained significant market share in delivery in Brazil this quarter. Could you please share more color on the performance within the on-premise channel for both freestanding and food courts?”
