Arcos Dorados (NYSE: ARCO) reported Q1 EPS of ($0.26), $0.30 worse than the analyst estimate of $0.04. Revenue for the quarter came in at $617.5 million versus the consensus estimate of $564 million.

Recent Developments

Long-term Outlook, Restaurant Opening Plan and Reinvestment Plan

On April 22, 2020, the Company withdrew its 2020-2022 outlook for restaurant openings and total capital expenditures provided on March 18, 2020. Additionally, as a result of the business disruptions caused by the COVID-19 outbreak, the Company has agreed with McDonald’s to withdraw its previously-approved 2020-2022 restaurant opening plan and reinvestment plan and it does not expect to finalize a revised 2020-2022 plan at least until the COVID-19 outbreak is under control.

For the full year 2020, the Company expects to limit total capital expenditures to $80 million.

Growth Support

McDonald’s Corporation had previously agreed to provide growth support, which the Company planned to use to support its ambitious restaurant opening plan and reinvestment plan for the 2020-2022 period. Until the Company is able to finalize a revised 2020-2022 restaurant opening plan and reinvestment plan, it can make no assurances related to receiving growth support for 2020-2022.

Franchise Fees

In connection with the COVID-19 pandemic, McDonald's has agreed to defer all royalty payments, whether they are related to Company-operated or sub-franchisee-operated restaurants, for March, April, May and June 2020 sales, until 2021.

Advertising and Promotion Spending Requirement

In connection with the COVID-19 outbreak, McDonald’s provided the Company with the flexibility to reduce its advertising and promotion spending requirement down to 4%, from 5%, of its gross sales for the full year 2020.

For earnings history and earnings-related data on Arcos Dorados (ARCO) click here.