Arcos Dorados’ business model

Arcos Dorados — which translates to 'Golden Arches', inspired by the brand’s famous logo — is headed by Colombian entrepreneur Woods Staton, though it is headquartered in the Uruguayan capital of Montevideo. The company generates most of its revenue by directly managing McDonald's-branded outlets, unlike the U.S.-based McDonald's Corporation, which earns the largest share of its revenue by franchising restaurants around the world. Considered one of the most successful foodservice companies in the Americas, the annual revenue generated by Arcos Dorados fluctuated between three and four billion U.S. dollars in recent years. Nevertheless, due to the COVID-19 pandemic, this figure registered a year-on-year decline of more than 30 percent in 2020, sinking below two billion dollars.

Latin America’s most successful market for McDonald’s

Brazil is the Latin American country where the fast-food brand has proved most profitable in the past years. The first McDonald’s was established in the country in the late 1970s. By 2020, the region’s largest economy was home to more than one thousand establishments, roughly half of the restaurants operated by Arcos Dorados. The country was followed by the North and Central American company’s subregion, which encompasses Mexico, Panama, and Costa Rica. Brazil also harbors the highest amount of McDonald's Dessert Centers in Latin America. In the case of McCafé outlets, the holding’s South American subregion (which includes Argentina, Chile, Ecuador, Peru, and Uruguay) takes the lead. However, Brazil alone accounts for nearly one-third of establishments of this sort.

The role of advertising

In Latin America and around the world, the McDonald's brand plays in the big leagues of advertisement. In 2019, McDonald’s ranked only behind Amazon among the top outdoor advertisers in the United States, with an ad spend above 70 million U.S. dollars. In the case of Arcos Dorados, the advertising expenses surpassed 150 thousand U.S. dollars each year before the COVID-19 pandemic.

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