Good morning, everyone, and thank you for joining our Second Quarter 2024 Earnings Webcast. With us today are Marcelo Rabach, our Chief Executive Officer; Luis Raganato, our Chief Operating Officer; and Mariano Tannenbaum, our Chief Financial Officer. Today's webcast, which is being recorded, will consist of prepared remarks from our leadership team, which will be accompanied by a slide presentation, also available in the Investors section of our website. As a reminder, to better view the presentation on the webcast platform, please scroll over the upper left-hand part of the screen and click on the arrows to maximize the slides. After we conclude our opening remarks, we will answer your questions, which you can submit using the chat function on the left-hand side of the screen. You will need to minimize the slides to access the chat function. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. In addition to reporting financial results in accordance with Generally Accepted Accounting Principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial results and unaudited financial statements filed today with the SEC on Form 6-K. Marcelo, over to you.

Thank you, Dan. Good morning, everyone, and thank you for joining us. Today, we will take you through our results for the second quarter, which we believe demonstrate how our business model has evolved to perform strongly in any operating context. Sales and profitability growth through June have been consistent with our strategy, especially when you consider the tougher-than-expected macroeconomic and consumer environments we are facing this year. We are focused on the factors we can control to minimize short-term volatility and maximize long-term growth. Top-line growth in the second quarter was strong, with comparable sales growing well above inflation in just about every market, leading to continued market share gains for the McDonald's brand in our footprint. Total revenue rose 6.8% in the second quarter, reaching the highest level ever for the second quarter in US dollars. Guest traffic grew for the 13th consecutive quarter, continuing to support comparable sales growth, even as consumers have become more discerning with their discretionary spending. This is where our omnichannel approach, strong value proposition, and operational excellence have established McDonald's as the region's favorite quick service restaurant. Systemwide comparable sales growth was 2.4 times the company's blended inflation, excluding Argentina. According to market sources, as well as our own research, market share expanded in our biggest markets, outpacing the main competitors in nearly every market. The 3D strategy of digital, delivery, and drive-thru has set a new standard of quality, service, and value for the quick service restaurant industry in Latin America and the Caribbean. Today's guests expect their quick service restaurant experience to be convenient and versatile, with multiple alternatives to receive great service and high-quality food at a fair value. And we are meeting their expectations with sophisticated digital capabilities, a dedication to operational excellence, convenient freestanding restaurant locations, and the best menu offerings in the quick service restaurant industry. No other restaurant brand in the region can match these structural competitive advantages. We remain on pace to extend this leadership position, with 37 EOTF restaurant openings in the first half of the year, including 34 freestanding locations. In our biggest market, Brazil, we added 21 EOTF restaurants in the first half, including 20 new freestanding units. Importantly, first-year returns on investments for new restaurant openings remain strong and will support additional unit growth for many years to come. Luis will now take us through sales performance in each division.

Thanks, Marcelo, and good morning, everyone. Long-term sustainable customer growth starts with sales. So far this year, sales growth has been strong in US dollar terms. Brazil's comparable sales rose 10.2%, up 2.6 times inflation in the period, with volume and average check contributing about equally to growth. Digital channels that include the mobile app, delivery, and self-order kiosks generated almost 70% of total sales in Brazil, and identified sales now represent about 28% of division sales. Please keep in mind that for a sale to be identified, we need customers to explicitly authorize us to track and use their data. The Meu Méqui loyalty program that we launched in October of last year is performing very well in Brazil. I will tell you more about the loyalty program in a few minutes. Brazil's marketing campaigns included strong Happy Meal properties, such as Disney's Inside Out 2, boosting the family business. We also continued sponsoring Big Brother Brazil, the country's most popular reality TV program, using it to support the chicken category. We also run promotions and limited-time offers to strengthen brand affinity with menu favorites, such as McFish, McFries, Tasty Sauce, and desserts. NOLAD's comparable sales grew 2.5 times the division's blended inflation. Higher guest volume accounted for most of the quarter's sales growth. Mexico sales grew strongly despite a tough comparison with Holy Week in the prior year quarter. Digital sales grew at least 70% in markets like Mexico, Puerto Rico, and French West Indies. And for the entire division, digital sales grew more than 60% versus the prior year, leading to a significant jump in NOLAD's digital channel penetration. NOLAD's marketing initiatives included the launch of Best Burger in Mexico, leading to around 50% higher comparable volume growth for the Big Mac, cheeseburger, and the Quarter Pounder with cheese in the country. Strong properties supported Happy Meal sales in the quarter as well. In addition, we leveraged the regional Formula One sponsorship with the indulgent Grands platform to drive growth in the Three D's. Finally, we introduced new menu offerings in the important chicken and dessert categories in several of the division's markets. Comparable sales grew 2 times SLAD's blended inflation, excluding Argentina. Guest volumes accounted for almost half this growth, with markets like Colombia, Chile, and Venezuela delivering the best results. The digitalization of Arcos Dorados was also evident in SLAD, with digital channel sales growth between 25% and 50% in markets such as Chile, Colombia, Ecuador, and Uruguay. The division's digital sales grew more than 30% versus the prior year, excluding Argentina. Guest volumes in Argentina outperformed the broader economy and improved slightly against the first quarter of 2024. The country's macroeconomic indicators in the first half of 2024 exceeded our low expectations, but the operating environment remains very challenging. Against this backdrop, we are capitalizing on the competitive advantages we built over the years in Argentina to gain market share and strengthen brand preference. We believe this will position us well to return to growth once economic and consumption conditions stabilize. SLAD's marketing activities included attractive Happy Meal offerings across the division, chicken-focused promotions in Chile, and innovations in the dessert category in Colombia. In addition, we dropped sales by focusing on the sports passion point during the Copa America tournament, with activations related to local football federation sponsorships. According to our proprietary research, the McDonald's brand gained nearly 3 points of market share during the first half of 2024, maintaining a 2 to 1 advantage against its nearest competitor on average. We measured especially strong gains in Brazil, Chile, Colombia, Costa Rica, and Panama, to name a few. Visit share also improved almost 1 point versus the prior year, building on top of the sustained volume growth we generated over the last several years. We will talk more about delivery when I come back to tell you about the Three D's, but it is fair to say that this sales channel continues to exceed expectations. We are the clear leaders among all QSR brands. And during the first half of 2024, we added additional market share by continuing to deliver the best customer experience in this important segment. According to our research, the biggest market share gains in the first half of the year came in Brazil, Costa Rica, Ecuador, Panama, and Puerto Rico. Mariano, over to you.

Thanks, Luis. Good morning, everyone. Second quarter adjusted EBITDA grew about in line with revenue, with a relatively flat margin versus the prior year. To be fair, this year's results included a $16 million reduction of labor contingencies due to a favorable judgment in Brazil. Excluding this positive impact, adjusted EBITDA was still the second highest US dollar result for a second quarter in Arcos Dorados' history. This, despite the significant negative impact on results from the Argentina business, a weaker currency in Brazil, and the less robust consumer environment across the region. In other words, to Marcelo's point earlier, Arcos Dorados results are better able to absorb these external pressures, given our geographic and cash flow diversity compared with years past. Food and paper, payroll, and G&A offset higher occupancy and other operating expenses as a percentage of revenue to keep the consolidated margin relatively flat versus the prior year. Without the contingency reduction in Brazil, the payroll line was about flat versus last year. Most of the margin pressure in the quarter came from a number of factors within occupancy and other operating expenses. These increases were mostly related to delivery fees, utilities, and information technology. As Luis mentioned, delivery sales continued to exceed expectations, as growth outpaced all other sales channels. As a result, fee payments to our delivery partners increased as a percentage of revenue. Additionally, we have been investing in promotional activity that is successfully increasing the penetration of home delivery in the region. Over time, we will shift the strategy to better monetize this segment of the delivery business. In terms of utilities, we have seen unit cost increases that outpaced revenue growth in the quarter. In response, all markets are currently working to identify ways to reduce energy consumption in restaurants and offices. Finally, IT expenses are higher at the market level, largely because we're running far more systems and digital tools in restaurants than ever before. In order to help restaurant teams offer the best guest experience and run their businesses more efficiently, over the last few years, we have rolled out everything from the self-order kiosks in EOTF restaurants to employee scheduling and other restaurant level tools. The operations team is working with each market to ensure these new tools are being leveraged in each and every restaurant to generate long-term efficiencies. Food and paper was lower as a percentage of revenue in Brazil and relatively flat in both NOLAD and SLAD. Payroll was better than last year in Brazil, even excluding the contingency reduction, and flattish in SLAD, despite the challenging environment in Argentina. NOLAD had slightly higher payroll expenses, mainly due to unit cost increases in Mexico. Occupancy and other operating expenses were higher in each division for the reasons I already explained. Our goal is to support long-term growth with sustainable cash flow generation while managing through challenging macroeconomic conditions and consumption trends in the short term. As of the end of June 2024, trailing 12-month US dollar EBITDA was the highest ever, and we expect to generate the best full year US dollar EBITDA in Arcos Dorados' history this year.

Earlier, I told you about the continued digitalization of Arcos Dorados. Let's take a closer look. Digital sales grew 24% in US dollars versus the prior year quarter, accounting for 57% of systemwide sales. With each new download and a growing number of active users, we are increasing identified sales penetration, which rose to 24% of sales in the period. Brazil is leading the digitalization of Arcos Dorados with digital sales penetration rising to 67% in the quarter, including 28% identified sales. Sales in the off-premise channels of delivery and drive-thru grew a combined 11% in US dollars versus last year and accounted for 45% of system-wide sales in the quarter. Delivery sales in particular were very strong in the quarter, growing in the high-20%s to mid-40%s in markets such as Brazil, Colombia, Costa Rica, Mexico, and Uruguay. In Brazil specifically, delivery sales were about 4.3 times compared with the nearest competitor. We have deployed the loyalty program in Brazil, Costa Rica, and Uruguay, registering more than 11 million members as of July 31, 2024. We remain on track to deploy loyalty in all markets by year-end 2025. Over time, loyalty will evolve as we bring innovations and incentives to convert non-digital and digital customers alike to active loyalty members. While we are still in the early days, 90-day active customer levels are very healthy, and loyalty member visit frequency is 1.5 to 2 times that of non-loyalty guests.

Let's take a look at our capital structure and investments in growth. Trailing 12-month EBITDA is the highest it has ever been, and net debt is relatively stable, keeping net leverage at a very healthy 1.2 times at the end of the second quarter. Notably, cash flow from operations in the second quarter normalized compared with the first quarter of this year, and we expect it to be relatively normal for the balance of the year. Typically, the second half of the year brings seasonally better cash flow from operations, with stronger EBITDA and working capital generation. While this has been a more challenging year than we expected from a macroeconomic standpoint, we believe cash flow conversion will remain close to historical levels for the full year. In the second quarter of 2024, we opened 15 restaurants. All openings were freestanding units, with 10 in Brazil. Capital expenditures in the quarter totaled $88 million with investments in the restaurant portfolio and to support our digital and IT structures. Marcelo, back to you.

Okay. Let's talk about the MFA renewal process. First, let me remind you of the terms of the current master franchise agreement with respect to the renewal. McDonald's had until August 3, 2024, to provide us with a renewal notice to extend the MFA for an additional 10 years, beginning on August 3, 2027. Over the last 17 years, Arcos Dorados has been a successful operator in Latin America and in the McDonald's system. A laser focus on leveraging structural competitive advantages through the disciplined execution of the Three D strategy generated unprecedented brand strength and market share, as well as consistent growth in US dollar profitability. Given this track record of success, we received a renewal notice from McDonald's offering to replace the existing agreement with a new 20-year MFA beginning January 1, 2025. Both companies are aligned in the belief that there is significant growth potential for the McDonald's brand in Latin America and the Caribbean. And we are optimistic that we will reach an agreement to continue generating value for Arcos Dorados and all its shareholders. We expect to keep the market informed of developments in this process, as appropriate, and in accordance with the requirements of the SEC. Before we open the call for Q&A, I would like to leave you with some final thoughts. The Three D strategy has delivered consistent, resilient, sustainable, and long-term results. We have consistently delivered the best guest experience in the industry by focusing on execution and leveraging the convenience of our freestanding restaurant portfolio and digital platform. Our consistent value proposition has built brand trust with our guests, who know what to expect in terms of price, quality, service, and cleanliness from their experience. Arcos Dorados' business model has evolved over the years to a point where we delivered the second-best EBITDA in US dollars for the second quarter, despite macroeconomic and currency headwinds in some of our most important markets. We believe we are positioned to generate sustainable US dollar cash flow growth by leveraging our structural competitive advantages. And sustainability is about more than just financial results. It is about making a positive impact on the communities we serve through our Recipe for the Future ESG platform, because it is the right thing to do, and it is good for business. Finally, it is worth reminding you that we operate in a highly underpenetrated region for both the quick service restaurant industry, as well as for the McDonald's brand. We see tremendous growth potential ahead, and we'll work to capture this potential as strategically and profitably as possible. Dan, over to you to start the Q&A session.

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. We have several questions here from the analyst community and a few overlaps as well. So, what I'm going to try to do is consolidate the topics. And the first topic that came up from Alejandro Fuchs from Itau, Thiago Bortoluci from Goldman Sachs, Eric Huang from Santander, and Bob Ford from Bank of America relate to the master franchise agreement. Alejandro, 'Hello, Marcelo, Mariano, Luis. Thank you for the space for questions. Congratulations on the results.' He asks, 'On the MFA, can we have somewhat more color on timing? When do you expect to release the new terms?' Thiago asks, 'What do we have so far with respect to the MFA? Has it been renewed or not? And is there a date for us to know more details of things like royalties and growth commitment?' Eric asks, 'Regarding MFA, is there an expected timeline in terms of the announcement?' And Bob asks, 'How should we think about the significance of outstanding issues in your MFA renewal and the time to resolve those?' And so, putting all those together, and one just came in also from Credicorp asking about more details of the MFA, and we'll start with that one with you, Marcelo.

Okay. Thank you. And thanks all for the questions and for joining us today. We have disclosed that the renewal notice provided by McDonald's to Arcos Dorados, which was received on August 1, 2024, provides for a 20-year term for a new MFA commencing on January 1, 2025 under certain terms and conditions. The renewal notice itself is a confidential document provided by McDonald's to Arcos Dorados as part of the renewal procedures laid out in the current master franchise agreement between the parties. As you know, the MFA is a complex document that includes a specific timeline for renewal and the process is being conducted within the limits of that timeline. We will communicate additional information in accordance with the applicable legal and regulatory requirements, as appropriate.

Great. Thank you, Marcelo. Alejandro's other question relates to margin. 'So, excluding the positive one-off in Brazil, we saw EBITDA margin contraction year-over-year despite solid top-line and gross margin dynamics. Can you help us understand where the expense pressure is coming from?' And that one I guess is for you, Mariano.

Thank you, Dan, and thank you everybody for joining the call and Alejandro for the specific question. The main pressure we are seeing in our margins is coming from the line of occupancy and other operating expenses where we see a decrease of 100 bps. That's mainly explained by delivery in the first place that, as we mentioned, is growing more than other channels. That means that delivery, which is a segment with lower-margin profitability than the rest of the segments, but highly accretive to the business in terms of US dollars. So, when delivery grows faster than the other segments, it's normal to see that decrease in that line. On top of that, we're doing investments in our own delivery platform that will bring benefits in the future. And we are confident that this pressure that we are seeing now will be overturned in the coming quarters. Then, in the same line, we are seeing some pressures in utilities, all across the board. But we are looking in each market for efficiencies to offset these increases in costs. And lastly, we are seeing in the same line an increase in the IT expenses, but these investments, looking forward, we are seeing that will allow and will bring productivity gains as they will help us to drive more digital sales and also to be more productive at the restaurant level, for example, with new scheduling systems for payroll that we are implementing in many markets.

Great. Thanks, Mariano. We are now going to move over to Thiago Bortoluci from Goldman Sachs, who, in addition to the MFA question, has a few other inquiries. One is about global demand. We are observing a challenging momentum for quick-service restaurant operators as companies increasingly focus on their value platforms. How does demand elasticity in Latin America compare to the rest of the world, and what are the reasons for any differences? Additionally, could we provide more details on Brazil regarding traffic, ticket size, and gross margin? Let's begin with these two questions from Marcelo, and Marcelo, perhaps you can start with the quick-service restaurant topic before we dive into Brazil specifically.

Yeah, perfect. Yeah, I think that we are facing a more discerning consumer in the region like it is the case in most of the other markets around the world. But that implies, obviously, that the industry and we as the leaders are the first one to do. We are focusing offering great value all across our menu board. In our case, we have very strong value platforms and other promotional activity across the markets. We are focused on offering a great and a compelling value proposition through competitive pricing, at the same time, offering an unmatched restaurant experience for our guests and, through those two main levers, drive volume growth and leverage fixed costs. And as we saw in the second quarter, which is not different from what we have been seeing in previous quarters, we were able, in this more challenging environment, to grow sales well above inflation in most of our markets. In this year, in particular, we have a more favorable cost environment and the great job done by our supply chain team is helping us to keep gross margins in a very healthy position and to offer a very, very good offers and very good pricing points to our customers all across the region. So, doing all of this, we were able to gain significant market share and outpace most of our peers across the region. In the second part, and talking specifically about Brazil, in the second quarter, results in terms of sales and volumes were great. And volumes contributed almost half, and the other half came from average check to the systemwide comparable sales of the second quarter, which were well above inflation. Keep in mind that, specifically talking about average check, the improvement came not only from pricing, but on top of that, came from a better mix and the number of items per order. Importantly, according to CREST, in Brazil, we gained both visit or volume share and sales share over the trailing 12 months, with some of the smaller players in the industry losing share. If you take a look at the midterm, in the last two years, Brazil second quarter comparable sales are up cumulatively or accumulated by 21% when you compare second quarter 2024 with second quarter 2022, with nearly even contributions coming from volume and average check growth. So, a very healthy way to grow the business and improve the results in Brazil and in the whole company.

And I guess related to that is the gross margin question also with Brazil and we'll turn it over to you, Mariano.

Perfect. Yes, in terms of food and paper, we are happy to observe gain in the food and paper line in Brazil, a leverage of almost 1 percentage point that is coming mainly, as Marcelo mentioned in his answer, from better negotiations with suppliers than by our supply chain team and also by better mix and all the improvements we are doing in respect of pricing and revenue management. So, we are very pleased with the results we are seeing in the food and paper cost line in Brazil.

Great. Thanks, Mariano. And the last two questions from Thiago, I think, are going to be for you, Luis. The first one, same store sales. 'Do you think it's possible to keep same-store sales growing at x times inflation over the next several years?' Number one. And then, Thiago asked a question on Mexico. 'We know there was a negative calendar effect this quarter. Can you comment on how underlying demand is trending there?'

Thank you very much, Thiago. I'm doing well, and I appreciate your question. Regarding comparable sales, we believe we can keep them above blended inflation, which is one of our main objectives. We see several drivers of sales growth, including opportunities within our Three D strategy that leverages delivery, drive-thru, and digital channels. Our investments, particularly in technology, will also positively influence our comparable sales. We have two key growth areas in product categories such as chicken and coffee. Although we are performing well in some operational metrics across the region, there is still room for improvement, and we will focus on the necessary operational enhancements to support sales. Now, addressing your question about underlying demand in Mexico, it's important to note that NOLAD, which is closely linked to Mexico, has outperformed with increases of 3.2 times blended inflation in the first quarter and 2.5 times in the second quarter. Therefore, we believe that the underlying demand in Mexico remains robust and is expected to stay strong in the near future, with no anticipated changes.

Thanks, Luis. Let's transition to discussing the top-line performance in Mexico and NOLAD. There were several questions regarding margins in these areas from Julia Rizzo at Morgan Stanley, Eric Huang at Santander, and Bob Ford from Bank of America. Julia asked about margin pressure in Mexico and requested insights on your expectations for the region, how you plan to address this challenge, the timeline for these adjustments, and the impact of delivery channel growth on margins. We'll revisit that shortly. Eric inquired about opportunities for operating leverage across different regions and mentioned rising payroll expenses in NOLAD. Bob Ford asked about the factors contributing to the margin contraction in Mexico. With that, Mariano, I'll hand it over to you, and then I have a couple more questions to follow up.

Thank you for the questions. I will address the concern regarding NOLAD and Mexico specifically. As Luis mentioned, we need to look at the first half of the year rather than just the quarter due to the seasonal impact of the Easter holiday, which was in the second quarter last year and in the first quarter this year. Analyzing the first six months of the year, we see that NOLAD's margin has decreased by 70 basis points, with 50 basis points attributed to payroll in Mexico. In Mexico, we have been experiencing minimum wage increases that are significantly higher than inflation over the past few years, which has affected our payroll expenses. However, historically, these salary increases tend to benefit us in the medium term by increasing disposable income, which boosts consumption. This contributes to our performance in Mexico when it comes to EBITDA. Looking at the first semester, while the margin decreased by 70 basis points, EBITDA in US dollar terms increased by 5%. We are encouraged by the trends we are seeing in Mexico, particularly in NOLAD, and do not anticipate any major concerns in this area moving forward.

Great.

That's specifically about questions about Mexico and NOLAD.

Okay. So, Julia's other question has to do with delivery. 'Can you comment on the delivery channel growth and impacts on margin? How much of the pressure on margins maybe in the quarter came from delivery, and what should we expect in this regard?'

Yes. As I mentioned in response to Alejandro's first question, we are experiencing an increase in delivery compared to other channels, which is happening faster than the other channels. This may put pressure on occupancy and other expense percentages. However, we are analyzing the growing delivery and are very pleased with the results. It significantly contributes to our business in dollar terms, with a substantial part of our EBITDA growth over the past years coming from this segment. This is crucial. Additionally, the growth in delivery helps dilute fixed costs at the restaurant level, particularly since delivery tends to be stronger at night when on-premise sales are typically higher during lunchtime. Therefore, we are very satisfied with the market share gains and the positive impact of delivery on our EBITDA.

Great. Thanks, Mariano. And a quick one, also on margin. So back to you. And this one came from Eric Huang from Santander. 'Additionally, in Brazil, how did payroll expenses evolve excluding the positive impact from the labor contingency reductions?'

Yes. Excluding the effect that, of course, is almost entirely reflected on the payroll line, we are seeing gains in the payroll line in Brazil. So, in that respect, as opposed to what we are seeing in NOLAD, we are seeing leverage in Brazil, given that sales are increasing above inflation, and we are seeing leverage on the payroll line, even excluding the one-off.

Great. Thanks. And Eric had another one that has to do with the digitalization opportunities, and what benefits those might bring. So, I'll turn it over to you, Luis.

Thank you, Eric. Regarding digital growth, we are very pleased with our results so far and are confident in our ability to sustain this growth trend. Digital sales growth will continue to be driven by three main factors. First, the implementation of new features in our app, such as mobile order and pay. Second, we have seen a significant increase in the number of downloads, surpassing 130 million, which is a record for us. Additionally, we have achieved a record of 21 million monthly active users. A key contributor to our digital sales moving forward is our loyalty program, which helps us access customer data and identify sales opportunities, enabling us to provide a more personalized experience. We have already reached over 11 million registered members across three markets—Brazil, Uruguay, and Costa Rica. Currently, we are piloting in Puerto Rico, with plans to fully implement the program in all markets by the end of 2025. One performance indicator is the number of members. Another is the average check, which is 20% higher for loyalty customers compared to non-loyalty customers. Lastly, we know that the frequency of 90-day active customers is strong; they engage 1.5 to 2 times more than non-loyalty customers. We will continue to invest in expanding our digital platform, as it enhances value and convenience while driving guest frequency and optimizing customer lifetime value. Dan?

Thanks, Luis. I'm going to come back to Bob Ford. He had a sort of a little follow-up within his original question on margins, and that had to do with recent operating trends in July and August. And I don't know, Marcelo, if you want to give us a little color there.

Yeah. Bob, let me start with how are we doing and what we saw so far in the third quarter in terms of sales. As I mentioned before, we are facing a more discerning consumer, but through remaining focused on delivering great value to our guests with different intensity depending on the market, we expect that comparable sales growth should remain at or above inflation for the full year 2024 in most of our markets. And the beauty of the Arcos Dorados business today is that it is very diversified. So, this help us to mitigate the pressures we are managing in some of our markets, for example, Argentina, where the consumption environment is more challenging, but we are more than offsetting those challenges with great excellent results and excellent sales growth in markets like Mexico, for example, that was mentioned a couple of minutes ago. So, good start to the third quarter in terms of sales. And again, the outlook for the year continued to be that we will be able to grow our sales above inflation in most of our markets and on a consolidated basis. Maybe we should talk a little bit more about any market when we report Q3 results.

Great. And thanks, Marcelo. And another one for you actually, and this comes from Rodrigo. I assume he is a shareholder of the company. 'What about the work that we're doing in remodeling in Mexico, and will this continue?'

Yes. Thanks for the question. And, yes, for sure. We are, I would say, in the early stages in terms of modernization of our restaurants in Mexico. At the end of June this year, we have about one-third of the restaurants converted to EOTF in Mexico. So, still a lot of job to do and a lot of results to get from those investments because we continue to see a significant sales lift in those restaurants that are transformed to EOTF. And we firmly believe that digitalization of our operation in Mexico and in the company in general will be the next big step in our growth story. So in fact, for example, in the case of Mexico, in 2023, our mobile app, the McDonald's mobile app in Mexico became the most popular in the market. And that's based on active users reported by third party. So, we think we are on the right track, in the right direction. And we still have a lot of work to do in Mexico, but with excellent results so far.

Thanks, Marcelo. Now one for you Mariano from Froylan Mendez at JPMorgan. Thanks for the question. He asks, 'Will the lower labor contingency burden in Brazil imply higher margins for Brazil on a consistent basis moving forward?'

Okay. No. Actually, the lower level contribution is no longer applicable. So, future contributions will be made at the higher level. So, we're not expecting any changes there.

Okay. By the way, we received a couple of follow-up questions on more details of the MFA, so I think Marcelo has already addressed that. But if you have a specific question still pending, please feel free to reach out to me via email, and I'm happy to get back to you on that one. Bob Ford has sent a follow-up. 'How should we think about your own delivery solution in terms of its initial expense pressure as well as the longer-term implications for lower cost and better service?' And I'll turn that over to you, Luis.

All right. Thank you, Bob. Hello. How are you? Home delivery for us is strategic for those points. It has a lower cost and it allows us to deliver a better service. Just to give you a little bit of context, we have the service in 1,500 restaurants in nine countries. Still it's very small. 12% of our total delivery sales come from this channel, is growing quarter by quarter. But we are still working on finding a scalable logistical model that has to meet our guest expectations. For sure, and we're seeing that today, the solution is going to be different from market to market. And we expect to benefit from an increase in these sales over time. Like you said, it has slightly better economics, but the impact will be gradual and it is still too early to quantify the potential gains.

Thanks, Luis. Alejandro Fuchs at Itau wants to know about Argentina. He asks how July’s volume has been and if there are any improving trends from other consumer companies with exposure to Argentina. Marcelo, could you address that?

Okay. Thank you, Alejandro. Yes, we saw an improvement in the trends of the business in Argentina. We continue to face a challenging consumption environment there. But I would say since the beginning of the year, we've been doing better than most of our peers in the market. If you take a look at the first half of the year, consumption in general in Argentina declined around 25% and Arcos Dorados volumes remain resilient and declining at just about half of that rate. I think that our local team has been doing a very good job remaining very close to the customers and offering the best value proposition in the quick service restaurant industry in Argentina. As a result, we have gained significant market share this year and further strengthened our brand attributes, which have been already very high in Argentina for many years. I think that this work that we are doing in Argentina should position us in a very strong position for when the Argentine economy begins its expected recovery. Fortunately, inflation in the country has been declining since its December 2023 peak, but it is still too soon to know how all the macroeconomic factors will impact results for the full year 2024. But we are cautiously optimistic that the second half will be much better than the first half in Argentina based on the trends we already saw in July and August.

Great. Thanks, Marcelo. We have a question from Gian Pierre Aguilar from Credicorp. And he asks, 'If we have any plans to refinance the international 2027 notes?' And that was for you, Mariano.

Okay. Thanks, Gian Pierre, for the question. We are three years ahead of maturity, so we don't have any plans to announce yet.

Great. That was the last question we received. Before we wrap up, I want to acknowledge that some of you may have experienced audio issues. I apologize for that. The audio for this call will be available for replay on our website later today, and we will also provide the transcript as soon as possible for anyone who might have missed part of the call. Thank you for your interest in Arcos and for joining today's webcast. We look forward to speaking with you again in mid-November during our third quarter earnings call. Until then, please stay safe and have a great day.