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

Good morning, everyone, and welcome to Alsea's Second Quarter 2026 Earnings Video Conference. My name is Gerardo Losoya, and I'm Head of Investor Relations and Corporate Affairs. Today, you will hear from our Chief Executive Officer, Christian [indiscernible] and Federico Rodriguez, our Chief Financial Officer. Before we continue, our friendly reminder that some of our comments today will contain forward-looking statements based on our current business view and that future results may differ materially from these statements. Today's call should be considered in conjunction with disclaimers in our earnings release and most recent [ Bolsa Mexicana de Valores ] report. The company is not obliged to update or revise any such forward-looking statements. Please note that unless specified otherwise, the earnings numbers referred to are based on pre-IFRS 16 standards. I will now hand it over to Christian for his initial remarks. Please go ahead, Chris.

Thank you, Gerardo. Good morning, and thank you all for joining us in Alsea's Second Quarter 2026 Earnings Video Conference. I will begin with an overview of our performance during the quarter, highlighting key operating trends across regions and brands as well as our progress in digital expansion and ESG initiatives. Federico, our CFO, will then walk you through our financial results in more detail. Before going into quarterly figures, I would like to briefly step back and provide some context on how the quarter evolved. As anticipated at the start of the year, consumer demand remained uneven across our markets and became more challenging during the second quarter particularly in Mexico. April was the softest month, reflecting weaker discretionary spending and lower traffic across much of the industry. Conditions improved slightly in May and further in June, but the overall environment remained more cautious than we had initially expected. The FIFA World Cup generated additional customer traffic during June, particularly across Chili's and Domino's Pizza. While the impact was relatively in line with our expectations, it helped partially offset the weakness observed in April and represented a positive contribution in the quarter. While the operating environment was challenging during the quarter, we maintained disciplined execution, supported by the strength of our brands and our continued focus on profitability, customer experience and cash flow generation. With that context, let me provide an overview of our quarterly performance, including our financial results, regional highlights and key brand developments, along with updates on our digital advancements, ESG initiatives and expansion strategy. In the second quarter, we reported a 0.9% year-over-year decrease in total sales, reaching MXN 21 billion or a 3.5% increase. Excluding foreign exchange effects, same-store sales grew by 2.6%. EBITDA decreased 6.2% in the second quarter, reaching MXN 2.8 billion with a margin of 13.5%, decreasing by 70 basis points year-over-year. Regarding brand performance in the second quarter, Starbucks Alsea same-store sales increased by 0.6% versus the same period a year ago. For Starbucks Mexico, same-store sales decreased by 2%, reflecting a challenging environment, combined with a deliberate reduction in promotional activity as we prioritize profitability and an enhanced customer experience across our stores and to comparison base in April of last year due to the peanuts campaign. For Starbucks Europe, same-store sales increased by 2.2% with solid performance in Spain and the rest of the markets, while France continued to lag, but with trends improving towards the end of the quarter and double-digit growth in the Netherlands and Belgium. Finally, in South America, same-store sales rose 10.5%, driven primarily by Argentina. Excluding Argentina, same-store sales increased 3%, supported by a strong performance in Colombia. Domino's Pizza Sa posted a 2.7% increase in same-store sales. In Mexico, Domino's same-store sales increased 3%, reflecting a gradual improvement over the course of the quarter, partially in June, supported by FIFA World Cup. In Spain, same-store sales increased by 1.6%, supported by continued solid commercial execution. In Colombia, Domino's same-store sales increased 6.9%, sustaining the strong momentum seen in recent quarters. Burger King Alsea same-store sales, excluding Argentina, decreased 2.5%, showing a slight improvement over the course of the quarter. In Chile, same-store sales decreased 5.7% due to an economic slowdown across the country. The Foodservice restaurant segment delivered a 3.6% same-store sales growth, remaining one of the most consistent performance -- performers during the quarter. Full-service restaurants in Mexico increased by 5.4%, led by outstanding performance at Chili's with a particularly strong June growing double digit, driven by the FIFA World Cup, while also Bips also delivered solid growth, maintaining its consistent execution and its attractive value and innovating offerings. Same-store sales for full-service restaurants in Spain grew 1.3%, reflecting growth broad-based across most of the portfolio. During the second quarter, we opened 30 new stores, 20 corporate units and 10 franchises, continuing to expand our presence across our key markets while maintaining a disciplined approach to capital allocation. Although the operating environment has become more challenging, our expansion strategy remains unchanged as paybacks and returns of the new openings remain healthy. We continue to prioritize opportunities that meet our return thresholds, balancing new unit growth with investments in our existing store base. Store remodels remain an important part of the strategy as they continue to renovate attractive returns while enhancing and elevating customer experience. We also continue advancing our portfolio optimization efforts. During the quarter, we completed the divestment of Arches in Colombia, allowing us to further concentrate our resources on the brands and markets where we see the greatest growth opportunities. At the same time, we continue evaluating the potential divestment of other brands within Alsea's portfolio in order to improve profitability and simplify our business model. In addition, last week, we successfully opened our first Chipotle restaurant in Monterrey. While still early, we are encouraged by the initial customer response and remain excited about the opportunity to continue developing the brand in Mexico. Our digital platforms continue to be key drivers of growth. By the end of the quarter, loyalty sales increased 8%, reaching MXN 5.5 billion, representing 24.3 million orders and contributing 27.9% of total sales. We also surpassed 8.4 million users -- active users across our loyalty programs, confirming the strength of our digital engagement. Additionally, we served 34.7 million digital orders in the quarter, totaling MXN 8 billion, which represents 40.7% of our total sales. Turning to our ESG initiatives. During the quarter, we published our 25th integrated annual report, reaffirming our commitment to creating long-term sustainable value through our sustainability model. As always, the report is available on our website for those interested in a more detailed review of our ESG initiatives and performance. We also completed a global climate risk assessment covering more than 3,600 sites across Mexico, South America and Europe, representing approximately 73% of our portfolio. This strengthens our ability to identify and manage climate-related risks across our operations and supply chain. Finally, through Fundacion Alsea, we continue to expand our social impact. As of the end of the quarter, we have donated more than MXN 53 million and delivered over 490,000 meals, benefiting more than 16,000 people through our initiatives focused on food safety, food security, education and employability. In Europe, our 5 brands also participated in the [ Producto Concorzon, ] so product with a Heart campaign raising more than EUR 100,000 to support nutrition and well-being projects through [ Fundacion Aa ] in Spain. Let me now turn it over to Federico, our CFO, who will provide further insight on the financial performance.

Thank you, Christian, and good morning, everyone. The sales decreased by 0.9% in the second quarter, mainly due to weaker consumption in Mexico and a negative foreign exchange effect. Excluding the foreign exchange effect, sales increased 3.8%. In the second quarter, sales in Mexico were up 4.2% to MXN 12.2 billion, mainly driven by the full service restaurant segment. In Europe, sales decreased by 7.4% to MXN 5.9 billion, while in euro terms, sales increased by 4%, mainly driven by the consistent performance in Spain. Finally, South America sales fell 6.9% to MXN 2.9 billion. EBITDA decreased by 6.2% with a margin contraction of 70 basis points, mainly due to a weaker consumption environment in Mexico and South America, a stronger peso that represents MXN 65 million of conversion and a one-off in the second quarter of last year related with the selling of 10 stores of Domino's Pizza to one of the franchisees. In Mexico, adjusted EBITDA increased 1.3% year-over-year with a margin contraction of 70 basis points, mainly due to reduced operating leverage resulting from a slower same-store sales growth, partially offset by a positive impact of some dollarized input costs given the appreciation of the Mexican peso. In Europe, the adjusted EBITDA decreased by 10.5% year-over-year, driven by the foreign exchange effect. Excluding this effect, adjusted EBITDA grew 8%, reflecting lower cost of certain raw materials and efficient control in operating expenses. In South America, adjusted EBITDA decreased by 15.1%, mainly driven by the foreign exchange effect as well as pressure on certain input costs. Net income for the second quarter decreased 48.4% year-over-year, reaching MXN 528 million, reflecting a less favorable foreign exchange impact on the financing results as this quarter recorded a foreign exchange loss of MXN 81 million compared to the noncash FX gain of MXN 608 million recognized in the same period last year due to the dollar bond held in the balance sheet. The CapEx for the first 6 months of the year totaled MXN 1.8 billion. Out of this total, 78% was allocated to store development initiatives, including the opening of 20 new corporate units, the renovation and remodeling of existing locations and equipment replacement across the brands. The remaining 22% was directed at digitalization projects. By the end of the second quarter, the pre-IFRS 16 total debt increased by MXN 2.1 billion year-over-year reaching MXN 35 billion. The company's net debt, not accounting the impact of IFRS 16 was MXN 2.5 billion, which is MXN 501 million less than it was at the same time last year. This increase reflects the discipline in free cash flow through a more efficient CapEx, a reduction on the cost of financing aligned with the refinancing of the different facilities and a more predictable working capital. Consolidated net debt reached MXN 44.9 billion, including leases. At the end of the quarter, 99% of the debt was long term with 71% denominated in Mexican pesos and 29% in euros. We remain focused on maintaining a healthy capital structure supported by proven financial management. By the end of the quarter, the cash position [Audio Gap] closed the quarter at 2.8x, while the net debt-to-EBITDA ratio stood at 2.5x. Since establishing the 2026 guidance, the consumer environment in Mexico has been more challenging than we initially anticipated, particularly during the early part of the second quarter. April was the softest month of the year from a consumer demand and traffic perspective and weighted meaningfully on our performance during the period. Encouragingly, trends improved progressively as the quarter advanced, with May performing better than April and June improving further. This sequential recovery was supported by the strength and relevance of the brands targeted commercial initiatives and the continued focus on delivering compelling value and customer experiences across the portfolio. While this improving trends reinforces the confidence in the resilience of the business, we believe it is prudent to reflect the current demand environment in the outlook. As a result, we have revised the 2026 guidance to a low single-digit growth for same-store sales, revenue and EBITDA. Importantly, the capital allocation framework remains unchanged we continue to expect approximately MXN 5.5 billion in CapEx between 180 and 220 store openings and leverage within the previously communicated range. This reflects the continued confidence in the long-term attractiveness of the growth opportunities and the returns generated by the investment pipeline. More importantly, the guidance provision should not be interpreted as a change in the long-term thesis. We continue to see a strong brand relevance, healthy consumer engagement and significant growth opportunities across the markets. These adjustments reflect a more cautious view of near-term demand, not a deterioration in the long-term fundamentals of the business. Looking ahead, the focus remains on the variables within our control, protecting profitable traffic maintaining pricing discipline and strengthening the value proposition of the brands, leveraging our digital and loyalty capabilities and accelerating productivity and efficiency initiatives across the organization. We are not relying on a sharp recovery in the consumer demand rather where expectations are supported by disciplined execution, continued cost management efforts and the gradual improvement in trends we observed throughout the quarter. Free cash flow generation remains one of the highest priorities, combined with disciplined capital allocation and a stronger balance sheet following the refinancing initiatives, we remain confident in the ability to generate solid free cash flow while continuing to invest behind the brands and long-term growth agenda. Ultimately, we believe the combination of improving sequential trends, a portfolio of category-leading brands disciplined operational execution, a strong focus on cash generation and an unchanged long-term investment frameworks positions Alsea well to navigate the current environment and continue creating sustainable value for all the shareholders. I will now pass you over to the operator for the Q&A session. Please, operator. If

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

Just 2 very quick ones. So obviously, the quarter had a couple of softer spots. So as we look particularly at the performance in Mexico, and I was wondering if you could maybe elaborate a little bit more on like what might have been weaker versus your initial expectations? I mean, given the World Cup that came some of the touristic traffic that should have come into the different cities. . Kind of like surprising to see a little bit more softness here in some of the categories. So maybe just a reconciliation of like what were expectations versus what was reality and where mismatch. That would be my first question. And then second, could you elaborate a little bit more on France and the performance there most recently? I mean, obviously, Spain has continued to do very well, holding up the European markets, but just wondering about like the sequential trends in France where we sit right now. Those were my 2 quick ones.

Thank you, Ben. And thank you for your questions. So let me answer the second 1 first about France. As you are aware, since last year, we launched a recovery plan for the market in order to shift the trends that we were seeing. This year, we have clearly seen an improvement on the trend in terms of traffic with the last 3 months showing positive traffic versus last year. Basically, the planning is based on -- it's a very 360 plan. One, the biggest portion is focused on brand equity. And the second 1 is focus on the conditions of our stores, elevating the conditions of our stores. And the third one is on a commercial platform where we are bringing the brand closer to different events around music, around entertainment, around experience. So we believe that has been why we have seen this shift in terms of performance. Talking about France, you didn't ask the question also about regarding the Netherlands and Belgium, we are seeing double-digit growth since the beginning of the year in terms of sales. So that is also encouraging for us as we are seeing the strategy moving forward. Regarding traffic in Q2 and expectations. It's true that what we expected was that Chili's and Domino's Pizza had a very strong and very well benefit by the World Cup. And for the rest of the brands, I'm talking specifically about Mexico, we're performing pretty -- the FSR brands were performing pretty in line with what we expected. Nevertheless, we clearly saw a reduction of traffic that impacted brands like Starbucks, particularly in airports and these types of locations. Regarding the cities like Monterrey, Guadalajara and Mexico part of the impact that we have is the reduction of movement. There was an promotion, I would say, of home office particularly during the important games, obviously, the 13 games that we saw in Mexico plus the important gates across the World Cup. I would say those are the effects that we saw. Fortunately, we have seen also that as we move into the month of July, we've seen with the besides last weekend with A2, the final game and the third and fourth place games, we clearly saw a shift on the trend in general in all of our brands.

Our next question is from Mr. Alejandro Fuchs from Itau BBA. Please go ahead.

Christian, Frederico, Gerardo. I have 2 quick ones, if I may. The first one in Mexico. I was wondering, Christian, or Federico, if you could give us a little more context on what is the company doing in terms of maybe SG&A contention given that semester sales are coming a little bit, let's say, your expectations in the second quarter, even though improving. Is there a strategy maybe to contain a little bit of the expense front, that will be #1. And then number 2 in terms of the guidance maybe for Federico. The guidance implies a stable margin, right, EBITDA pre-IFRS because low single-digit top line growth, low single-digit EBITDA growth. But the first half of the year, we saw EBITDA margin contraction already. So you would be expecting EBITDA margin expansion for the second half but you also said you don't expect demand to hugely increase going forward. So how can we put in balance those 2 things?

Alejandro. I will take both of the questions. I will start regarding the guidance. We are not assuming a sharp margin recovery in the second half regarding demand. Rather, we expect gradual stabilization supported by several factors. This was what happened during the quarter. First, we are seeing a sequential improvement in demand trends as the quarter progressed, particularly after April. Second, we continue to benefit from lower dollar than nominated input costs, which support gross margin during the year. Third, we are executing a number of productivity and efficiency initiatives across the business, including labor optimization. This means an increase in productivity, procurement savings and tighter G&A management. Importantly, the margin outlook does not depend on a significant acceleration in consumer demand. This is not going to change from one day to the other. The focus remains on improving traffic quality, maintaining pricing discipline and translating operational efficiencies into profitability. I think we are on the way. And as a result, we believe margins should gradually stabilize in the sonar by execution. Initiatives in productivity and cost discipline, margin stabilization is not going to come from a consumer demand change on the short term. That's the thesis that we have for the second part of this year. Regarding the SG&A, I know that you guys used to do some kind of arithmetics to analyze how is the SG&A. It is important to note that part of the year-over-year comparison that you are calculating is affecting by a more favorable base in the prior year. In the second half of '25, we benefited from a one-off gain related to the sale of 10 stores to 1 of our franchisees in Domino's Pizza. This was a positive impact into the operating expenses. In addition, the preopening expenses last year were unusually low as year ago due to timing difference in the store opening schedule and developing pipeline. This does not mean that we are being more unproductive in terms of the SG&A. It's just a delay of the opening plus a one-off in the second part of the -- in the second quarter of '25.

Our next question is from Mr. Luis Tesaro from Citi.

My first one is regarding the performance of Starbucks Mexico. So I wanted to have a better color on the outcome that you expect with the actions that you have been taking in the format such as the store modeling is in the store refurbishment program -- what should we expect from the performance of the stores after you fully deploy them? Is there any sales uplift or marginal flip the target that you can share with us? And when should we expect to start seeing these benefits in the company's results? And my second 1 is regarding the new stores portfolio outside same-store sales. So if you could just give a little bit of a comment how did it contribute to the quarterly performance as well as if you can talk a little bit about the mature portfolio, the performance of the quarter.

Regarding the new source pipeline, Luis, as said before, we're not changing the thesis a quarter this year. The long-term thesis is pretty much the same. That's the reason that we are not changing the framework not only for 2025, both for the 2036 story, both for the next 5 years. As you know, this year, we will be opening 220 stores in the different geographies in Mexico, 70% of that growth and Spain, 30% of that. And regarding the brands pretty much as saying 60% is Starbucks, 20% Domino's Pizza and 20% full service restaurant brands. The paybacks that we are seeing nowadays even with the deal reduction on the same-store sales, not only in the Starbucks but in the whole portfolio from the first quarter to the second quarter in Mexico, does not change distance the paybacks that we're seeing, especially in Starbucks. When we are opening, we have paybacks from 2 to 3 years. Those are really good. And in the cash on lining is pretty much the same. Some of the questions will arise if we are going to change the breakdown from Starbucks to full service. That is not going to change like that. We delayed to open a new store from Starbucks or from Domino's or the food service restaurant brands around 18 to 24 months. It is not easy to find this 1 of the sites and especially with the returns that we are seeing on a cash basis, we do not have a reason to change the long-term strategy of Alsea.

Luis and regarding Starbucks, we are focused on rebuilding traffic through both brand and operational initiatives. Yesterday, for example, we launched our [ Huntemonosmass ] campaign, so let's get together campaign, which is our new brand platform that reinforces the Starbucks role as the third place, a space that brings together people beyond home and work. At the same time, we are rolling out a new POS platform that will improve speed of service, operational efficiency and customer experience. Plus 1 as you mentioned about the remodelings we have committed to 85 remodelings and 60 plus -- more than 60 openings in Mexico this year. By the end, we expect to finish the remodeling by the end of September, beginning of October. So we don't impact the higher sales period. And in the case of openings, we should be delivering the 60-plus openings by the end of December. The effect, we will start looking at the effect of the remodelings as we go through the years. As I have mentioned before, in Starbucks, the impact of remodeling in terms of sales goes from 3.5% to 7% on same-store sales, depending on the extent of the remodeling if we are able to add a teras or a mezzanine or improve the distribution of the store, depending on how the customer uses the stores, which we already know -- that -- those are the improvements in traffic that you could see. So we will see this across the year on the stores -- as we remodel and this is an ongoing process as we are going to continue with the same strategy following 2026 where we're going to continue allocating an important part of the CapEx on the brand to remodel in remodeling and uplifting stores to elevate the customer experience.

Our next question is from Ms. Isabella Lamas from UBS. Please go ahead.

Christian, Frederico, Gerardo. If I could ask you from our side here, starting by the same-store sales trends by month, you've mentioned that there was a gradual progress with June, much better to May better than April. But I was kind of wondering if you could give a bit more color on how are things progressing since June. So how do you see July up to the point across geographies, especially in Mexico, if you could give a bit more detail on that. And overall, if you think you could expect some recovery in progress across the third quarter. That's my first point. And the second one, if I could ask about Starbucks, specifically in Mexico. If you could provide a bit more detail in, what do you think could be the reasons for the softness we saw in the quarter? And if you expect a recovery path, maybe could we see some positive levels going to the next quarter. And that will be it.

Thank you, Isabella. I will take both questions. Regarding Starbucks in Mexico, how we view the second quarter is a combination of different factors. The first one is a softer demand due to the macroeconomic environment we are seeing. As I mentioned before, lower airport which represent an important number of our stores. Movement restrictions during the World Cup, particularly in Mexico City, Guadalajara and Monterrey. And during this period, the promotion of home office in these particular cities, which are our largest cities. Nevertheless, we continue with our middle long-term strategy of the brand, as I mentioned just before, prioritizing remodelings, store uplifts and new store openings in order to make sure we continue elevating the customer experience, but at the same time, how do we bring the brand closer to more customers. So having said that, this is what we've seen during the quarter. We have also seen a gradual recovery as the month of July started and when we see the gains spread out more, and we've seen clearly activity going back to normal, and we have seen clearly this in a positive way, particularly to your question about Starbucks. How do we see -- and I believe that the question is going to be a little bit repetitive to what I just said about what are we going to do with Starbucks moving forward. This Huntemonous mass campaign, which was launched yesterday, is really a focus on the third place and Starbucks values and what makes Starbucks what it is. At the same time, this rolling of the new POS platform in Mexico, which was something that we were working for several months to begin the launch has started already. We did a pilot in some of our stores, and we have clearly seen the benefit when you -- with a better performing platform, which help us with speed of service when you put all together, in a transaction. At the same time, we continue working on innovation, being a Starbucks innovation in beverage, 1 of the key factors that we see continues moving the needle. We have some think some new beverages coming as we move on during this quarter. And then by the end of the quarter with the return of the classic drinks like Pumpkin spiced latte, and in Christmas campaign with the classics like Toffeenut Latte. Some innovation around merge and food -- so we believe that we should be -- we are already seeing in July a recovery, and we are confident by the end of the quarter, we should be much better than what we delivering Starbucks in the month of -- in the Q -- in the second quarter.

Complementing the first question regarding the same-store sales evolution Isabella. The key point is that April was clearly the lowest point of the quarter. We have seen sequential improvement in May and June, both for Alsea and all of the brands. And we continue to see that positive trend in July. In fact, the current same-store sales trends, I am watching that right now are tracking closer to what we have seen in the first quarter than to the levels we experienced in April. We also expect that the end of the workout period will provide a more normalized backdrop for the demand. But as I said before, the haircut on the guidance is not taking into account a huge recovery in the demand.

And Isabella, if I may add a couple of things for Starbucks Mexico, we faced in the second quarter a tough comp in the initial remarks from Christian. We mentioned the Pinots campaign that we didn't have, let's say, these 2026. So that was something that affected the quarter, particularly again in April, which was the softest month. And as Fed and Christian was saying, we were trending positive in May and June. We also had the cherry blossom campaign last year, which again, didn't have this week. And we've been keeping saying to the market that we were trying to get let's say, or not related too much into the merged campaigns, which brings yet traffic, but usually our kind of lower margin initiatives. So that's something that we've been, again, doing on purpose trying to benefit our profitability.

If you allow me, could I do a quick follow-up? How do you see the market share trends for Starbucks in Mexico? See the market growing? If you could comment about that quickly.

Yes. As I mentioned before, we continue with our strategy. I mean, this is a long-term strategy. Not 1 quarter. And as mentioned by Gerardo, Frederico and myself, there were some particular factors compare versus last year. Some of the FX -- negative effects in the brand coming from the World Cup. So this is -- this doesn't change the strategy. We continue on our path to deliver the 60-plus openings that we planned for this year. We continue penetrating the brand. There is still white space to continue developing the brand in the country. with existing formats like drive-through, core stores and different formats. So we are confident that we -- with that strategy and with the returns every time we open a new store that are being delivered. So no, we don't have any particular concern on that regard.

Our next question is from Mr. Thiago Bortoluci from Goldman Sachs. Please go ahead.

Christian Federico, Gerardo. I have the previous conversations -- to begin this again on Starbucks Mexico, right? I understand that most of the manner to macro World Cup things that are outside what the company can control, but it's also that more recently announced a few management changes and those are like 2 months after your Investor Day, right? So the first question is, what are the kind of capabilities that you identified that you need today in Starbucks that weren't there like 2 months ago when we discussed the strategic plan. This is the first question.

Yes, I think we lost Thiago, let's see if we can bring him back.

Our next question is from Ms. Melissa Byun from Bank of America.

I wanted first to ask if you could comment on the impact of the World Cup in Spain and the trajectory of sales along the quarter and expectations going into the second half? And then on South America, I wanted to better understand the drivers of the gross margin contraction whether higher fuel prices are having an impact either on your cost of goods or on other distribution expenses? And when you expect to see some of the savings from consolidating the back office with Mexico?

Melisa, regarding Spain and the World Cup, the brand that clearly was positively impacted by the World Cup was Domino's Pizza. In the -- regarding the other brands, due to the time of the games and the times that the games were scheduled, we really didn't see either a positive or negative impact our full-service brands or in the case of Starbucks. Actually, Starbucks continue with a solid performance as well as our other brands like Foster, Fosters Hollywood and IPs continue performing solid. So really the branded was positively impacted was Domino's, but not -- besides that, there was no important or positive impact or negative or positive impact pretty much the market remains stable.

Okay. And the trend in sales along the month -- I'm sorry, by month along the quarter and going into the second half?

So far, we are back as we ended Q1 with similar trends. Summer started pretty strong in Europe, which is also encouraging. Regarding South America loss of margin, Melissa. The primary driver was a loss of operating leverage resulting from weaker reported sales against what we were expecting, particularly in Argentina and Chile, Colombia had a great trading, especially with Domino's during the second quarter. And while underlying demand trends were mixed, these markets, Argentina reported sales in Mexico and pesos negatively affected by the currency translation. This is not only presence in South America, both in Europe too, if you look at the figures of Europe in local currency, it's an improving in all the different lines from top line to EBITDA to profitability, but well, it was a currency translation. And regarding the consolidation of the synergies, not only for the back office both increase in productivity. A lot of them will be set in place during the second half of this year or for the fourth quarter and the remaining part for the first half of 2027.

Thank you very much for your question. We will now return to Mr. Thiago Bortoluci from Goldman Sachs. Please go ahead.

Can you hear me now? .

Yes, we can.

Could I go back to the first question. Very much for having me. I'd like to follow up in 2 themes that we already discussed here. The first one being Starbucks Mexico, right? And I think this one is for accretion. You mentioned, Christian, and we all understand well, that most of the sources of pressure in the quarter were related to the World Cup traffic work from home all the stuff. But it's also true that within the company and the controllables, you have publicly announced a few high-level changes in our management team. and this is coming like 2 months after your Investor Day, right? So I'm wondering what are the kind of capabilities that you think the banner needs now that weren't that clear or we weren't necessarily there when we work together in New York in March. And then I might have another one.