Alsea SAB de CV’s Earnings Call: Growth Amid Challenges

Alsea SAB de CV ((MX:ALSEA)) has held its Q1 earnings call. Read on for the main highlights of the call.

Alsea SAB de CV’s recent earnings call conveyed a blend of optimism and caution. The company highlighted positive developments such as strategic partnerships, digital growth, and expansion efforts. However, these were tempered by challenges like a decline in EBITDA and regional performance issues. While Alsea is pursuing promising long-term strategies, it faces short-term financial pressures that present significant challenges.

Strategic Agreement with Chipotle

Alsea announced a strategic agreement with Chipotle Mexican Grill to introduce the brand in Mexico, with the first locations set to open in early 2026. This partnership is a significant addition to Alsea’s portfolio and aligns with its long-term growth strategy, potentially enhancing its market position in the region.

Positive Same-Store Sales Growth in South America

The company reported an 18.6% increase in same-store sales in South America, excluding Argentina. This indicates robust regional performance despite some challenges, showcasing Alsea’s ability to leverage growth opportunities in the South American market.

Digital Orders and Loyalty Program Success

Alsea’s digital transformation efforts are paying off, with nearly 34 million digital orders accounting for MXN 7.4 billion or 38.7% of total sales. Additionally, loyalty sales grew by 21.6%, contributing to 27.4% of total sales, reflecting strong customer engagement and retention.

Global Expansion Strategy

In the first quarter, Alsea opened 34 new stores, including 27 corporate units and seven franchisees, focusing on high-traffic areas. The company is also planning to expand into flagship locations and remodel existing ones, indicating a robust expansion strategy aimed at increasing its market footprint.

ESG and Social Responsibility Initiatives

Alsea invested over MXN 13 million in social programs, benefiting more than 80,000 people. This investment underscores the company’s commitment to sustainable value creation and social impact, aligning with global ESG trends.

EBITDA Decline

The company experienced a 9.1% decline in EBITDA in the first quarter, with a margin contraction of 280 basis points. This was attributed to macroeconomic pressures and negative calendar effects, highlighting the financial challenges Alsea faces in the current economic climate.

Challenges in Mexico and Chile

Alsea faced significant challenges in Mexico and Chile, with Burger King same-store sales contracting by 7.8% in Mexico and labor disruptions in Chile affecting performance. These issues reflect the operational hurdles the company must overcome to stabilize its regional operations.

Net Income Decrease

Net income for the first quarter decreased by 23.9% year-over-year to MXN 335 million. This decline reflects a lower financial impact compared to the previous year, indicating areas where Alsea needs to focus on improving profitability.

Forward-Looking Guidance

Looking ahead, Alsea reported a 12.8% year-over-year increase in total sales for the first quarter of 2025, reaching MXN 20 billion. Same-store sales grew by 5.1%, while digital orders accounted for 38.7% of total sales. Despite the decline in EBITDA, the company continues to focus on digital growth and expansion, with plans to open more stores and invest in social programs.

In summary, Alsea SAB de CV’s earnings call highlighted a mix of strategic growth initiatives and financial challenges. While the company is making strides in digital transformation and expansion, it must navigate short-term economic pressures and regional performance issues. The strategic partnership with Chipotle and strong same-store sales growth in South America are promising, but Alsea must address its financial challenges to sustain long-term growth.