Luis Raganato: Yes, we had a very expressive increase in our delivery, not only sales, volumes and market share. And we did this despite a very important recuperation in front counter and dessert centers in both restaurant formats, freestanding and front counters — and food courts, I’m sorry. This recuperation in the sales in front counter and desserts were aided by a very effective, affordable platform and a special focus, like I said, on operational excellence.
Daniel Schleiniger: Great. And then finally, for you, Luis, “NOLAD posted a nice sequential acceleration in growth.” And Thiago asks, “What drove this?”
Luis Raganato: Okay. NOLAD’s evolution, the explanation is not one single bullet. We have a very solid plan in the division. It includes a product mix strategy. And when I said product mix, I’m talking about the cores, the premiums, desserts, chicken, a very aggressive set of actions in Delivery, Drive-thru and Digital. And in many markets, several brand-building campaigns, okay? So very solid and aggressive plan. But the beauty is that most of the divisions country are contributing to this result and mostly in hard or very consistent currencies.
Daniel Schleiniger: Great. Thanks, Luis. The next one also from Thiago for you, Mariano. “You mentioned some pressure on rents in Brazil despite the negative IGPM index. How should we add this up and how much of a tailwind could this be to margins going forward?”
Marcelo Rabach: Hi, Thiago, thank you for the question. Actually, it’s not rent itself. The line with some modest pressure is occupancy and other operating expenses, which consists of many items with different trends, and we are not seeing a specific pressure in rent in particular, in Brazil. Having said that, we are, of course, very pleased with the 25% growth in EBITDA in the quarter.
Daniel Schleiniger: And actually, back to Luis, last one from Thiago. “Can you share more about your apps Net Promoter Score and potential areas for improvement in Brazil?”
Luis Raganato: Yeah. The app has the greatest rating in the country, and we will continue to invest to maintain the connection, and I would say, Thiago, the level of favoritism that it has with our customers, okay? So, we’re going to keep on investing on features or new functionalities.
Daniel Schleiniger: Perfect. Let’s move now to Bob Ford from Bank of America. “Congratulations on the quarter.” Bob also with a multipart question, he starts with, “How do you expect results like this to influence your MFA renewal? Does McDonald’s appreciate the high cost of capital and volatility in the region? What are your early thoughts on the new MFA in terms of royalty rates and capital investment commitments?” And I’ll give that one to you, Marcelo.
Marcelo Rabach: Okay, thank you, and thank you, Bob, for your questions and being here today. I think that this renewal process is taking place in a very favorable time for the McDonald’s system in general and for Arcos Dorados. The McDonald’s brand attributes are at the strongest they have ever been in the region in almost all countries in Latin America and the Caribbean. Both companies have been generating strong financial results, which is very important. Arcos Dorados is consolidating its leadership position with historically high market share, including, in some cases, 2 times or 3 times as much market share as our nearest competitor in main markets in very important markets. And Arcos is also generating returns on investment for both openings and modernizations well above our historical average.
And maybe a very important point, I think that both companies see significant growth potential in the region for many years to come. So that’s why I say that this renewal process is taking place in a favorable time. With all that said, we do not expect to have news and details with respect to the MFA renewal until next year. So stay in touch, and we will share as soon as possible any news around this process.
Daniel Schleiniger: Great. Thanks. Bob’s next question is also, “How are you thinking about labor reform risks in Mexico and the step-up in wages for 2024? Where do you perceive opportunities to mitigate?” And I’ll give that one to you, Mariano.
Mariano Tannenbaum: Thank, Bob. Thank you for being, again, in the call. In Mexico, in the last three years, in fact, we have seen payroll pressures having salaries growing well above inflation. And we have been able to mitigate this impact by improving productivity in our restaurants. And in fact, we have been doing that extremely well. But most important, I would remark that the increase of disposable income in consumers’ pockets, coupled, of course, with the right strategy to attract these customers to our stores, resulted in sales increases in Mexico well above inflation. And I think that they help to explain the great growth story we are seeing in that market.
Daniel Schleiniger: Great. Thanks, Mariano. And then last one from Bob that actually is also related to a question that we received from Ulises of JPMorgan. So, I’ll read it from Bob first. “Lastly, can you comment on your loyalty program so far in terms of adoption, costs and returns? Also are frequency and average ticket actually changing, or is there a selection bias?” And then Ulises asks a similar question or a related question to loyalty, Ulises Argote from JPMorgan. “With the broader rollout of the loyalty program, can you comment on the engagement you’re seeing both for in-store and digital channel dynamics?” So, all sort of loyalty related, and I’ll give those to you, Luis.
