Arcos Dorados Holdings Inc. (NYSE: ARCO), the largest McDonald's franchisee in Latin America, saw its stock price plunge 10.05% in pre-market trading on Wednesday following the release of its disappointing first-quarter 2025 financial results. The significant drop reflects investor concerns about the company's performance and future outlook.

The fast-food chain operator reported quarterly earnings of $0.07 per share, missing analyst consensus estimates of $0.13 by 46.15%. This represents a substantial 50% decrease from earnings of $0.14 per share in the same period last year. While the company's quarterly sales of $1.08 billion slightly beat the analyst consensus estimate of $1.05 billion by 2.14%, it still marked a 0.41% decrease compared to the same quarter in the previous year.

Despite reporting an 11.1% increase in systemwide comparable sales, Arcos Dorados' financial performance appears to have fallen short of investor expectations. The company's adjusted EBITDA for Q1 2025 came in at $91.3 million, with an adjusted EBITDA margin of 8.5%. Net income for the quarter stood at $13.9 million. The market's negative reaction suggests that investors were looking for stronger growth and profitability metrics, especially given the challenging economic environment in Latin America.