Alsea, S.A.B. de C.V. (ALSEA) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Alsea's Fourth Quarter and Full Year 2023 Earnings Video Conference. My name is Gerardo Lozoya, Head of Investor Relations and Corporate Affairs. And today, our Chief Executive Officer, Armando Torrado; and our Chief Financial Officer, Rafael Contreras, will be presenting our results. Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements based on our current view of our business, and that future results may differ materially from these statements. Today's call should be considered in conjunction with disclaimers contained in our earnings release and in our most recent Bolsa Mexicana de Valores report. The company does not have any obligation to update or revise any such forward-looking statements. It's important to note that earnings numbers referred to are based on pre-IFRS 16 standards, unless specified otherwise. I would now like to hand it over to Armando for his initial remarks. Please go ahead, Armando.

Thank you, Gerardo, and good morning, everyone. In this conference, I will be sharing insights into our financial results, regional dynamics, brand performance and highlights from this year. I would first like to take the opportunity to recognize and thank our more than 77,000 team members and other stakeholders for their dedication to Alsea. Your commitment has made this quarter and the year a great success. Before going into the numbers and highlights for the quarter and the full year, as you will have seen earlier today, Rafael Contreras is stepping down as our CFO. And this is not a goodbye for Rafa, this is -- he will remain as part of our senior management, supporting me and the Board of Directors in some other projects. Federico Rodriguez here to my left, will be stepping down to the global CFO role after his many years as the CFO of Alsea Europe. I wish them both the best on this new role. Now on Slide #4, we concluded the year achieving strong results. In the fourth quarter of 2023, we reported at 7.8% year-over-year increase in total sales, reaching a MXN 19.9 billion or a 13.8% increase when excluding foreign exchange effects. Same-store sales grew by 12.1% year-over-year, reflecting continuing favorable consumer trends during this year, this excluding Argentina same-store sales that grew only 8.9%. EBITDA grew by 25.8%, totaling at MXN 3 billion for the quarter with a 16% of margin. We served over 13 million delivery orders in the quarter, amounting to MXN 3.5 billion, which accounted for 17.7% of our total sales. Turning to the Slide #5. Overall, we delivered strong results across all the company regions this year. It's clear that our commercial, digital and operational strategies, along with favorable consumer demands for our brands have a positive impact. For the full year, we reported an increase in total sales of 10.7%, reaching more than MXN 74 billion, a MXN 7.2 billion increase in comparisons of 2022. Same-store sales for the full year increased by 14.7% compared to 2022. Excluding Argentina same-store sales, the increase was 12.6%. EBITDA was above -- above MXN 10 billion for the full year, up a significant 22.3% compared to 2022, resulting in an EBITDA margin of 14.2%. Post IFRS 16, EBITDA grew by still a solid MXN 13.6 million to MXN 16 billion for the year with a margin of 20.9%. Sales through the delivery segment in 2023 were resilient, growing by 4.2%, reaching nearly MXN 12,800 million with over 48.8 million orders. This represents a 17.1% in share of Alsea consolidated sales. Excluding Domino's Pizza, the delivery segment grew in 2023, 11.3%. Lastly, operating cash flow was healthy, MXN 12.9 billion in 2023, allowing us to deleverage alongside a continuing expansion and maintenance plans. Regarding our brands, all regions reported a solid performance. Starbucks achieved a strong year-over-year same-store sales that grew 17% for the fourth quarter and 23% for the full year. In the fourth quarter, Starbucks Mexico same-store increased by 21.1%, while Europe increased by 3.5% affected by brand issues in France. In South America, we grew an 18.6%. For the full year 2023, Starbucks same-store sales in Mexico, Europe and South America increased by 26%, 13.9% and 23.3%, respectively, compared to 2022. This strong performance is mainly driven by drive-through formats, product innovation and implementation of the loyalty programs, Starbucks Rewards in Europe. Regarding Domino's Pizza, we posted a solid fourth quarter sales in Mexico with an increase of 9.8%. For the full year, sales increased by 6.5% and 4.4% in Spain. This performance was mainly driven by affordable consumer trends, commercial strategies such as Domino's [ mania ] in Mexico and attractive promotions at the counter in both countries and a product innovation strategy. Regarding Burger King, our full year results were mostly positive with sales increase in Mexico, Spain and Chile of 8.6%, 1.8 and 4.3%, respectively. In Mexico and South America, we continue to focus on expanding the rollout of digital kiosks, which have led to double-digit growth in our average ticket. Regarding the casual dining division, also we reported a solid fourth quarter and full year with same-store sales up 7% and 10.5%, respectively. This performance was helped by product innovation and improving our customer experience, which contributed to increases in our traffic and orders. Regarding our Vips builts in Mexico, we reported a 7.5% growth in the same-store sales for the fourth quarter. This growth was mainly driven by 7.1% increase in orders. And for the full year, same-store sales increased by 9.8%. We remain very focused on offering on a high-quality service product innovation and continue to our plan of remodel our restaurants to further improving the store experience for our customers. With a tough comparable year ahead of us, we expected sales growth going forward to normalize. Moving to Slide #7 regarding we have continued our organic expansion strategy. And in the fourth quarter, we opened 96 corporate units and 25 franchisees, as always, focusing on the most profitable and high-growth locations. Additionally, we remain committed to expanding the drive-through format in Starbucks Mexico, which was -- increased sales by more than 30% with approximately 200 drive-through units in our country. Our total openings for the year amounted to 257, of which 184 were corporate units and 73 were franchisees. Our expansion strategy was in line with our guidance given during last year in our Alsea Day. Regarding digital, in line with our digital transformation strategy, at the end of fourth quarter of '23, our loyalty sales grew 25.1% versus last year reaching MXN 3.8 billion. This represent a 21.3% share of the total sales. At the end of the year, our loyalty sales grew 29.1% versus last year, reaching MXN 14 billion. This represents 21% of share of the total sales. The development of the Starbucks Reward programs continue to be a key factor for the sales growth in this quarter. We reached more than 1.8 million users globally, reaching almost 400,000 users in Europe since the launch of the loyalty program in the second quarter of 2023. Regarding ESG, in 2023, we took our sustainable strategy to the next level by adopting double materiality, enabling us to the target and measure of our initiatives more effectively. Alsea achieved a global milestone bank concluding the year with 85 Starbucks greener stores in Latin America, the highest number of stores in the system for a licensee. Our Va por Mi Cuenta campaign, an initiative supported by Fundación Alsea, raised MXN 45 million to support daily meals for over 6,000 people in 22 child dining rooms. Our efforts have extended to helping over 2 million individuals with sustainable financial and full donations. In the wake of Hurricane Otis, Va por Mi Cuenta, together with World Vision Mexico, donate MXN 4.3 million to support more than 24,000 people providing significant support to the affected communities of Guerrero. I am very pleased with our fourth quarter and full year results. They underscore the success of our operational strategy and enduring [ appeal ] of our brand amongst consumers. I look forward to another strong year in 2024 and we extended our current market-leading position in our key geographies and our brands. Now I will hand over to Rafael, so he can go over our financial information in further detail.

Thank you, Armando. We are delighted with Alsea's fourth quarter '23 performance as quarterly sales and full year increased 7.8% and 10.7%, respectively, driven by positive trends in all regions. Excluding foreign exchange effects, sales increased 13.8% for the quarter and 19.7% for all regions for the full year. In Mexico, sales were up 13.9% to MXN 10.7 billion for the quarter. Sales in Europe grew by 2.7% to MXN 6.1 billion or by 9% in euro terms. Finally, South America posted a slight 0.5% decrease in sales for the quarter to MXN 3.1 billion due to the devaluation impact in Argentina. In Mexico, adjusted EBITDA increased 12.7% to MXN 2.4 billion for the quarter. This improvement was driven by ongoing favorable consumption trends and effective cost management. Also, the 13.5% growth in same-store sales boosted operating leverage and the appreciation of the Mexican peso helped cut costs by 160 basis points as a percentage of sales. For the full year 2023, adjusted EBITDA increased 18.9% to MXN 9 billion with margin expansion of 30 basis points. In Europe, adjusted EBITDA increased by 14.5% to MXN 1.1 billion for the quarter and 22% in euros driven by lower energy costs. For the full year, adjusted EBITDA increased by 9.3% to MXN 3.5 billion with margin expansion of 60 basis points. In South America, adjusted EBITDA increased by 7.3% to reach MXN 68 million driven by lower food costs. For the full year, adjusted EBITDA increased 10.4% to MXN 2.2 billion, with margin expansion of 120 basis points. Our net income for the fourth quarter increased 36.5% to MXN 1.1 billion year-over-year, driven by the improvement in sales and EBITDA. Overall, for 2023, net income rose by 49.7% to MXN 2.6 billion. This increase was due to higher operating profit driven by the sales growth, commercial strategies, product innovation, digital application development and improving cost control. For the full year 2023, earnings per share was MXN 3.15. Post IFRS 16 earnings per share rose to MXN 3.53, an increase to 79.9% year-over-year. In terms of our investments, our full year CapEx amounted to MXN 4.7 billion. We allocated 28% of the amount to maintenance, 54% to store openings and remodels and 18% for other strategic projects. We made solid responsible investment through the year, focusing on profitability. Regarding our debt profile, as of December 31, 2023, we made amortization payments of MXN 324 million. Our gross debt decreased by MXN 1.3 billion year-over-year, closing at MXN 26.5 billion. This reduction in debt corresponds mainly to the devaluation of the euro against the Mexican peso and debt amortization during the year. Looking to our total debt-to-EBITDA ratio, we closed the year at 2.45x and our net debt-to-EBITDA ratio at 1.89x. Our EBITDA to interest paid closed the year at 4.2x. The debt structure at the end of the year was 93% long-term, with 62% in Mexican pesos and 38% in euros. We expect to continue with our strong balance sheet going forward and meet all of our debt covenants, thanks to our healthy ongoing cash generation. At the end of the year, we posted a strong cash position of MXN 6.4 billion. Regarding the recent acquisition in Europe, the transaction includes the purchase option that the company was held with Bain company, Capital Credit, and other minority partners for 23% of Food Service Project, S.A, that is Alsea Europe. We will finance this transaction with cash and bank loans, and the company maintains a strong balance sheet to address [ deepness ] and prioritize organic growth in the immediate future. This transaction reflects Alsea's commitment to the region and the growth potential for the company in the future. Now I would like to hand over to Gerardo.

Thank you, Rafa. Before moving to the Q&A, I would like to extend the formal invitation to our Alsea Day that will be held on March 13 at the Mexican Stock Exchange in Mexico City from 9 a.m. to noon local time. Regarding the program, you can see on this slide, this is the agenda for the day. We will go and cover key financial results, performance analysis for our brands, our growth strategies, guidance for 2024, along with a Q&A session. This will be followed by a networking cocktail with our top management in P.F. Chang's and a guided visit to our operations center, the COA, with transportation provided to us. You can attend in person or virtually. Please register in our website, alsea.net. I will now hand the call over to the operator to open the Q&A session. Please go ahead, operator.

[Operator Instructions] The first question is from Mr. Ben Theurer from Barclays.

First of all, Rafael, all the best in the future and it was nice working with you. So looking forward to then work with Federico as time goes on. Now I have 2 quick questions actually for you. So one, as you look into the outlook for 2024 and if you consider, obviously, the consumer strength you've highlighted you've seen in 2023 and we've seen this, obviously in some of your core categories with same-store sales being really strong across many verticals, so if you think about the onset for this year, what are like the puts and takes? How do you feel about the consumer strength and the ability to maintain the strong growth you had from top to bottom? That would be my first question, and I have a very quick follow-up, just technically.

Okay. Thank you. Well, regarding the same-store sales about your question, we are not growing for the future at a double digit in the rest of our brands. We are seeing strength in the customers and the different regions where we operate, especially with Starbucks, it's amazing what we are achieving. And honestly, we cannot promise a double digit after '22, '23, et cetera. But in the Alsea Day on March 13, we will give you the guidance for '24 and it would be very aligned in terms of openings. But you can expect a high single-digit increase in terms of like-for-like for the next year.

Okay. Perfect. And then just my quick follow-up question was regards to the put option on the remaining stake that you've not yet owned in Spain. Can you remind us when this is due and when this will hit your cash flow? Just a technical question.

Well, the put option exists since the entry of Vips into our portfolio, that was December 27, 2018. And we had the opportunity, it was not due the option. We could expect 2 years mark, but with the cash positions that we have and honestly the leverage ratio that we have, it was the opportunity to have the 100% of the stake of Food Service project, the entity of Europe.

If I may add, Ben, in terms of the cash position that we are expecting or kind of the cash that we're paying for them, this will be on the course of 2024. So we will be paying some at the end of the of, I would say, Q4 of 2024. And the rest, and the final output of the cash will be in the first quarter of 2025.

EUR 200 million will be paid by the end of 2024 and EUR 40 million in the first quarter of '25.

Our next question is from Ms. Renata Cabral from Citi.

My first one is regarding the Starbucks performance in Mexico. We saw an impressive year in 2023. I just would like to understand how is the outlook for 2024? I know that you have just mentioned that in the Alsea's Day, you probably will give more color in terms of numbers. But just to understand if you have additional innovations in terms of products that you delivered this year that showed an incredible growth? And what is your perspective also in terms of traffic for 2024 since I believe that, 2023, it was a year more in terms of normalization after the COVID. So what we can expect for 2024?

Gracias, Renata, thank you very much. I mean, we still have a lot of things to do in Starbucks. And that game is not over about growth, I will say. We already completed our first session with Starbucks International regarding what is going to be the plan for marketing this year. There is an amazing product innovation. It comes with beverage that I will assure it will make a difference in traffic count. Only in innovation, also in food, there is some new strategies, new products that it will come to help us leverage again the traffic that it was done in last year. Regarding emerge, we are probably now one of the highest emerged countries of selling in percentage of base of what is done. So all that 4 strategies that we have in the 4 wall of our stores will work a lot better. Good news, the stores that we've been open last year that are not 40-something, 30 -- 43, I think, stores that we opened, all of them and the stores that we're projecting to open in this business for this year, all of them are well above the average weekly unit sales that we have, the average stores. So all the stores is very rarely to see in a system, in a concept when you had 820 stores that are opening now, they have better average of sales with better margins because we've been controlling our costs exactly in occupancy better. So that will come. And also, digital is a plain transformation that we will say a little bit more details in the Alsea Day, how we're working with CRM regarding processing better all the database that we have in order to increase the frequency in our stores and give them a better, I will say, promotion to each of one regarding the time, the date that the products they take. So we will give you more alignments in Alsea Day. And as I mentioned, we have now over 200x amount of drive-throughs. One -- most of them, the one that we're going to open are in the pipeline and that drive-throughs are generating quite more far return of investment, 1.3x probably more -- better investments -- 40% more return on investment than the regular stores that we opened. So I think there is still good news and a good momentum for our brand, not only in Mexico. We sell in other regions, too.

Great. That's super clear. If you allow me the second question, it is about Europe. So we saw the performance positive even considering the appreciation of the peso. So the question is regarding 2024, what do you expect in terms of consumption and possibly growth for the region?

Okay. Renata, that's for me. Since the last quarter of '23, we have seen a slowdown in Europe in the different segments that we run. However, at this point, there are no fundamentals for such things as long as the labor market in France, Spain, Portugal, et cetera, are super strong. So we are not worried for the future. Obviously, there's a topic in France. As you know, there has been tensions in the Middle East. So we're having a lot of closures, a lot of reductions in the same-store sales in this geography. But the results of '23 have been spectacular for Starbucks in France. We are not worried for the future. Obviously, it is not the best way to start the year. But well, the future looks bright for Starbucks in France and in the rest of geographies, not only in Europe, but the rest of Alsea. Additionally, we think that for the Easter period, there will be a warm-up in terms of the traffic coming to the store. So that would be the answer for your question.

Our next question is from Mr. Hector Maya from Scotiabank.

Just wanted to understand what's your vision for how much structural contributions to sales and margins we could expect from the up-selling effects of menu and digital innovation, particularly from digital screens in restaurants and on how -- what are your plans to continue leveraging in 2024 the critical mass that you have achieved on the loyalty customer base.

That answer will be given to you on the Alsea Day. I think you will see all the contribution from the digital strategy of Starbucks, the CRM for our casual dining, local heroes in Europe and in Mexico. In the Alsea Day, honestly, there's a lot of different items to cover with that question so I prefer to wait till that day.

Yes. Just in the loyalty part regarding the screens, we do have all the Starbucks. As you may know, all of our Starbucks in Alsea are digital menu already driven by. We don't have any other way to -- I mean, that's to cover that. So it's all 100% deployed already. So we're going to still that. That's a main, main advantage that we have, especially when we talk about price differentiation, structure on architectural, price strategy and promotion that has been helping us. Not only we have a third party involved in the companies 19 months ago really deeply and focusing our structured price, and this is how we've been dealing in the past 24 months to let any opportunity go away of our hands.

I would say, Hector, also on the innovation and digital, we are working on the kiosks on Burger King. As you know, the rollout will be completed this year. So we're going to be almost, I would say, ready probably at midyear of 2024 with all the stores of Burger King in Mexico having digital kiosks. And that has been resulted in positive ticket sales ticket increase. So that is also something positive to highlight for digital.

Yes. For example, with that example of Burger King, Hector, we have in Europe when we implemented a 17% increment in ticket. But as I said before, the digital menus, the kiosks, the loyalty programs, all of them have different answers to your question.

Perfect. And also quickly, if you could share your thoughts on the dynamics for 2024 in Mexico on potential effects that we could see in margins related to changes in working hours from the labor reform that is in the works. And also, very quickly, if you could update us on your ambitions for M&A. I just wanted to understand if you feel comfortable enough now to potentially see some activity there. or if something like this should happen until the company achieves a much lower leverage down the road?

Okay. In terms of the margins, we will deliver the guidance for '24 on Alsea Day on March 13. Nevertheless, there is no reason, as of today, to think there will be a contraction in the EBITDA margins. And the second question, I did not understand it. Can you repeat it?

Yes. Just if you could update us on your ambitions for M&A. Just wanted to understand if you feel the company should be ready now to start doing that again or you need more leverage?

No, no. Let's see. We are not seeing any targets and should be aligned with the brands that we are operating. But there is nothing at this point for M&A. We are -- we have a lot of white space in the different brands and regions to work with it. And especially, we have tremendous results with the things we are doing. So non-M&A at this point.

Our next question is from [ Ms. Sara Maldonado ] from Santander.

Can you please comment about cost trends, what are your expectations for raw material prices for 2022 -- 2024, sorry?

This is -- thank you, Sara. This is something that we've been always we check every month -- every single month and we do projections for 6 months. There's very good news for us in that matter, not only in the [Foreign Language] that we call of cost, also energy prices in Europe that have been effecting in 2022 are very steady right now at the prices probably before the pandemia came. So I will think there is no other exchange rate for us in Mexico regarding, as you know, we import cheese, we import coffee. That's our 2 main -- 2 of the 5 main products of -- that our business demands. So they are all covered. We feel very comfortable, very steady about the situation of price, that will, of course, make a result of not increasing prices, so we can really get traffic -- get a traffic momentum like other years are being done. We still have a place to grow in the traffic in orders in our 4 segments. So we are pleased that we have controlled the prices and the costs in our raw materials.

Our next question is from Mr. Thiago Bortoluci from Goldman Sachs.

Welcome Federico and thanks, Rafa, for the work. My questions are actually 2 follow-ups, right? There was one point regarding labor, and I understand Federico that you mentioned you will see space for margins you'll be flattish. I would just like to understand qualitatively in this front, right, what are you guys planning to do eventually to mitigate this effect. Over the earnings season, we have been discussing across the broad consumption space a lot, especially in regards of a higher minimum wage, but also potentially lower working hours, right? And my feeling is that this is a specific concern that might impact your operations. So I would like to understand more details how we are planning to offset this? This is the first question. And the second one, if I may, is related to capital allocation, right? Your margins are back on track, actually better and recovering faster than what we would imagine. You are resuming organic growth and leverage is at very healthy levels, right? Going forward, how should we think about the balance between eventually reducing your cost of debt, improving organic openings are eventually starting to pay back through dividends or buybacks. These are the questions.

Gracias, Thiago. Thank you for the comments. And yes, regarding the update of the labor. We are concerned about labor, of course. I mean that's something that it will be sooner or later. As you know and I told you in the one-on-one that we have, we have in all our concepts this restriction of hours, in Chile, 42 hours; in Europe, 40 hours. So we're already operating this company with that restriction in other geographies. Of course, our biggest geography is Mexico, that we have 48 hours and we know sooner or later that there can be a law change regard it. We expect, because we've been talking to the [Foreign Language], to the [Foreign Language] and with our partners that, that law will come gradually. It won't go from 48 to 40 strictly, it will go gradually like in other ways. But we are already implementing our systems, our scheduling for our stores regarding that issue. And I think in the Burger concept, we are making [ cinco por dos ] that has been very successful. So I am not very worried about that decision. The 20% increase of labor sueldo minimo that has been going on in the last 5 years, probably we will see in June what happen. We will probably maintain. We will see some in the next 4 or 3 months whatever will be the proposal for the candidate in this country, and I'm sure that's going to be something that will be appointed in there to see what was going on with the salario minimo. Not all of our brands have -- depends on the salario minimo. Especially Starbucks does not -- depends nothing about salario minimo. So I think we can leverage that amount. But we will be strictly -- we are focused to mitigate that impact. And then I will turn over to Federico so we can tell you the capital allocation.

Yes. And complementing Armando's answer, we have different tools to increase the productivity in the different stores. Obviously, the margins in the different brands and regions are not the same. So we do not expect, even with the reduction of the [ journey ] or increasing the minimum wage to have a contraction and effect on the margin of labor. Passing to the second question about CapEx allocation. As usual, we allocate CapEx in the most profitable and resilient concepts and we will keep a very similar pace in '24 in terms of openings with a concentration of around 60% for Starbucks Coffee in the different regions. Obviously, Mexico and France concentrate a huge part of these openings. Nevertheless, as I said before, all our concepts will keep growing with new openings wherein in '24, the local heroes, Chili's, Cheesecake Factory, et cetera. We believe in all our brands. So that would be the answer to your second question. And regarding the balance sheet, we have a lot of white space. We [ pretend ] to keep the pace, as I said before, to increase the openings, obviously profitable openings, remodeling the portfolio. The payback for the remodeling is amazing, Thiago. So we are not doing pains of debt with our anticipation. And sorry, regarding buyback, we are not preparing any kind of buybacks for this year.

Our next question is from Mr. Álvaro García from BTG Pactual.

A couple of questions. One, just a quick follow-up on the put in Europe. I'm just curious if you'll use shares at all to pay for that or if it's going to be strictly cash? And then my second question for Armando. I know you're obsessed with sort of maintenance CapEx and the capacity that has to drive same-store sales. I was wondering what opportunities you see into '24 and '25 with a much healthier balance sheet to sort of put some energy back into your brands? I was wondering if you could sort of -- what's on your mind in terms of opportunities in your portfolio?

Alvaro, well, regarding the acquisition of the entity of Europe, we are using cash [indiscernible]. So that would be the answer. And the second question?

Gracias, Alvaro. I mean, as you remember and we talked that when we had opportunity to each other, we are about MXN 1 billion less in the CapEx that we said in Alsea Day, Rafa, last year.

Yes. We mentioned MXN 5.5 billion, we need MXN 4.7 billion.

Yes, MXN 4.7 billion. So that's a little bit of the strength that I told you in the Alsea Day that day that we will be very, very, very in detail about where to put [ all its ] allocation. And it's my -- we are fine. We conclude the openings that we say in the Alsea Day. We did with a target of that. And we put less CapEx in the maintenance. Nevertheless, don't -- not doing a compromise of affecting the operation. So we're going to still with that methodology this year. In Alsea Day, we will tell you what is the CapEx that we're going to implement. But we were probably 25% to 30% short over the CapEx that we told you in that. And that is going to be especially where we're going to focus on. As I mean to tell you we will like to put all the CapEx in new openings. But as just Federico said, the remodelations have been a great success, giving us sometimes better return of investment than in other projects. Good to say that Vips, that is the one that is taking more CapEx allocation in remodels. We only have like 45 restaurants more to go. So we will conclude in the mid of next year all the remodels from Vips. And from that, things will fall a little bit better for the other concepts. That is the concept that needs a little bit more -- the restaurant sector that needs more CapEx expenditure in the remodelation.

That's super helpful. And then maybe just one last one. You mentioned your Europe trends year-to-date weren't as great. Maybe if you could talk about your other markets, what you're seeing year-to-date. Already we're ready at this end of...

In Europe, that is the only effecting that we have and the effect is more in France. -- in the other concepts, actually, we still -- we've seen growth. I mean as just -- as Federico says, 1-digit growth, not the growth that we had it. We start January a little bit low, but then February has been recovered. So I think we are willing to report again another strong report result for the first quarter. Yes, I mean, we reported -- I mean just to tell you, Domino's Pizza has been -- it's really just starting a terrific 8 weeks, the past 8 weeks with a very, very great numbers for that concept. So we have this balance and that's great to see.

Our next question is from Ms. Camila Azevedo from UBS.

My question -- my first question is a follow-up to Renata's question. So please, could you elaborate on the commercial initiatives implemented at Starbucks in Mexico? And also could you break down the performance of Domino's Pizza and Burger King in Mexico? That would be my first question.

Yes. I mean, I don't know what was missing on the question regarding what are we doing in Starbucks. But I will again, this is about the digital transformation, the product transformation that we've been having in beverage, the drive-through leverage that has been helping us having a better average of sales. The openings that are probably 15% to 20% above the average stores that we've been opening, that has been helping us to get to better margins. The tiers of prices that we have in the concept, we're not operating in one tier price. We have 6 or 7 tiers regarding the opportunity that we have in any stores. Also travel channel. We opened quite good stores -- or amount of stores last year in airports that has better sales and a better margin. That's a Starbucks. Regarding Burger King, I mean, we've been really coming back to the margins that we had 4 years ago in 2019. So the stores are performing long way better than in 2018, 2019. We have double higher-digit in EBITDA margin per store. We also put in a plan of remodeling the Burger King concept with a kiosk that he said. We had a very great communication with RBI. As you know, they are the master license for the country with all the different franchises that are in the country regarding how we're going to attack the opportunity. There's a big opportunity in the Burger King system and in the hamburger sector in this country still to grow. In this year, we're going to open 5 stores -- 5 to 7 stores in Mexico, so we can give you more information to see where we're going to go with that pillar for Burger King. Regarding Domino's, we had one of the best years in Mexico. Also, I will tell you in Spain, a strong momentum for this brand in the beginning of this year. Also, with our transformation in digital. Still we have our own native application that has been working exactly the one that the U.S. allows. We are implementing GPS in most of the stores. We have Flex, SDS. There are 5 or 6 concept that the U.S. and other countries have we are already ready to implement, some stores are already working. We did pilot test. They are working fine. So we are really still working. As you know, 5 years ago, we started with aggregators in this concept. The U.S. went behind 3 years later, but we do -- are working with aggregators with real success. And last year, nevertheless, I will say we did a promotion for carryout that we see a lot of opportunity to carry out 149 with Pizza Sarten that is giving us a great momentum. 40% right now are above [ cans ] for a carryout segment. We will steer longly and we will persist with that promotion in order to gain more market share in the carryout sector that there's a big opportunity still there.

And the increase in sales for Domino's Pizza and Burger King is around 10% for Domino's and around 9% for Burger King in the last quarter in terms of sales, Camila.

Perfect. Super clear. And my second question would be regarding corporate actions. So what are your latest thoughts regarding a potential IPO in Europe for the Starbucks brand? Is this something that is within your priorities for the short term?

No. We look for all the opportunities. Five years ago, we saw about the IPO in Europe, but it was not something for the company. It did not make sense. So we look at all the opportunities presented to us, but nothing at this time to comment.

Our next question is from Mr. Fernando Herrera from Compass Group.

Can you hear me?

Yes.

Yes.

Perfect. And here, I have 2 questions. The first one is related to pricing. I mean you still see space to keep increasing prices, especially in Starbucks Mexico or you have seen some sensibility in that front?

As I told you, we have a third-party company that has been working for us the last 2 years here. And there's always space. There is always space when you do things right and the customer goes with a great smile and their experience is great. So there has to be a space. Yes, something that we would like to focus in ticket average. I think we are a company that also likes -- always are focused in the transactions, in our traffic and that's where we're going to still focus in Mexico. And not only in Mexico, we said in all other geographies. We are seeing an opportunity there and we're going to still looking for that opportunity regarding traffic. We don't have the pressure more or less, even less right now over costs. So there is nothing that will really pressure us to put -- to increase prices. This company, at the end, we don't have a menu that is already settled down. We can move on back and forward any other week. In Argentina, we are flexible. Every 15 days, we move price. So we are -- we know how to deal with that. But nevertheless, in this time, we are very steady regarding the movements of price. We took the last incremental prices in some brands the first week of December. And since then on, we've been not moving anything.

Okay. Amazing. My second question is related to the Argentina operations. I mean, what are your expectations there?

Well, we are still growing. We could convert the money with the different options the government launched a couple of months ago. Fortunately, we have the money in dollars at this point. But for the future, we need to operate. There's a lot of white space for Burger King and Starbucks in Argentina. The figures are terrific, especially in Burger King. It's a country with the best transactions per store on a daily basis. So we have a lot of confidence in Argentina, and we are still growing in the future, Fernando.

I think we're going one more or we're going to closing remarks? I think -- okay. So first of all, thank you. Thank you very much. Thank you very much for attending our quarterly and full year video conference. If you have any further questions regarding the Alsea Day, of our results, please feel free to get in touch with our Investor Relations team and wish you a good week, and have a great day. Thank you very much.

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