Recession slows McDonald's Latin America sales

McDonald's Corp.'s sales growth in Latin America will slow this year as the recession curbs diners' appetites for Big Macs and Happy Meals, the region's largest franchise owner said.

Woods Staton, chief executive officer of Arcos Dorados SA, was optimistic for a sales increase of 5 percent this year amid mounting job losses and the financial crisis. Closely held, Buenos Aires-based Arcos is the owner and operator of all McDonald's 1,750 restaurants in 19 countries in Latin America from Mexico to Argentina.

The chain's sales in the region increased 26 percent last year to a record of more than $3.5 billion, Staton said today at a press conference in Buenos Aires. The company, the largest franchisee of McDonald's restaurants in the world, will open about 150 new restaurants this year in Argentina, Brazil, Colombia and Venezuela, Staton said.

"If we grow by 5 percent, that will be good," Staton said in an interview after the company released its results. "It's a recessive year."

Arcos Dorados, the biggest restaurant operator in Latin America, opened 75 McDonald's restaurants, 45 McCafe coffee shops and 125 dessert centers last year, Staton said. The company will trim administrative costs and curb expansion as the recession continues, he said.

Brazil's economy, Latin America's largest, shrank 3.6 percent in the fourth quarter from the third quarter, the biggest drop since at least 1996. About half of Arcos Dorados sales are in Brazil.

The company's sales in Mexico, which account for about 10 percent of revenue, began falling this year, Staton said. McDonald's in Mexico will resume sales growth once the U.S. economy recovers, he said.

Time for Mexico

"Mexico will be the first in Latin America to take advantage of" a U.S. recovery, Staton said. "In this sense, now is the time to invest in Mexico."

McDonald's, the world's largest restaurant company, agreed in April 2007 to sell almost 1,600 Latin American and Caribbean restaurants to Arcos Dorados and partners, raising $700 million for dividends and stock buybacks.

Staton was president of McDonald's South Latin America division before buying the region's restaurants. He opened his first McDonald's store in Argentina 20 years ago.

McDonald's, of Oak Brook, reported March 9 that global sales rose 1.4 percent in February as diners sought cheaper food in the recession. The company didn't break out Latin American sales.

McDonald's rose $1.45, or 2.7 percent, to $55.01 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 12 percent this year.