McDonald's largest franchisee plans to suspend dividends through 'soft market'

Arcos Dorados Holdings, McDonald’s largest global franchisee, reported unaudited results for Q3, which included an 11.5 percent decrease in revenues. Also:

• Systemwide comparable sales increased by 7.4 percent year-over-year.
• Adjusted EBITDA was $66.1 million, or 26.9% lower year-over-year.  
• The company reported net income of $240,000, compared to net income of $19.6 million in the year-ago period, mainly due to lower operating results and higher foreign exchange losses.

"Third quarter results were below our expectations due to continued underlying weakness in the operating environments of our key markets. At the start of the fourth quarter, we are seeing some evidence of stabilizing volume trends and are optimistic that we can benefit from a seasonal pick-up in consumer activity and the promotional campaigns that we have planned through year-end," CEO Woods Staton said in a news release.

The company’s strategy is to focus on unit growth in its "most promising" markets. Additionally, technology investments are expected to reduce labor costs while enhancing guest experience.

"Additionally, efficiencies in both G&A and other non-product purchasing will help us recover margins beginning in 2015. In response to expectations for continued soft markets next year, I will recommend at our December board meeting that we suspend dividends in 2015," Staton said.