Good morning, everyone, and welcome to Alsea Fourth Quarter and Full-Year 2024 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, Federico Rodriguez, will be presenting the 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 in our earnings release and our most recent Bolsa Mexicana de Valores report.

The company is not obligated to update or revise any such forward-looking statements. Please note that unless specified otherwise, the earnings numbers referred to are based on our pre-IFRS 16 standards.

I will now hand it over to Armando for his initial remarks. Please go ahead, Armando.

Thank you. Thank you.

Good morning, everyone, and thank you, Gerardo, and welcome, welcome to Alsea's fourth quarter and full-year 2024 earnings video conference. I would first like to thank our team members for their continued dedications to Alsea, the hard work and commitment that had been key to our solid performance this quarter and through the year.

Today, I will provide an overview of the quarterly and full-year performance, covering our financial results, regional highlights, and key brand developments, and I will also highlight our progress on digital transformation, ESG initiatives, and expansion strategy. To begin with here, here are the key highlights for the 4Q of '24.

In the fourth quarter, we reported an 11.1% year-over-year increase in total sales, reaching MXN21.7 billion, or a 12% increase when excluding foreign exchange effects. Same-store sales grew 7.2%.

EBITDA increased by 13% in the fourth quarter, reaching MXN3.6 billion, with a margin of 16.4%. It is relevant to notice the strength of our brands in different regions, which is in conjunction with the optimization of the portfolio, with a sale of 54 units of Burger King in Spain, strategic pricing, and cost control measures that were effectively an offset that minimum wages increases.

We improved in both margin and financial strengths. We served almost 34 million digital orders in the quarter, amounting to MXN7.3 billion, which accounted for 33.5% of our total sales.

For the full-year, digital sales also reached 33.5% of our total sales, sliding up from 33.4% in 2023, evidencing the success of our digital strategy and growing consumer performance. Regarding our brand performance in the four quarters, I'll say Starbucks' Alsea same-store sales increased by 5.2%.

For Starbucks Mexico, same-store sales increased by 3.3%, mainly supported on the counter and delivery channels, with strong contributors from the morning day part. For Starbucks Europe, same-store sales declined 7.4% as we continue working toward recovering pre-COVID traffic.

Performance was also impacted by reduced consumer traffic in key tourist areas, particularly in Valencia, which was affected by the recently floating. And finally, in South America, same-store sales increased by 30.5%.

Regarding Domino's Pizza Alsea, we posted a 4.8% increase in same-store sales. In Mexico, Domino's same-store sales increased by 5.1%, driven by effective commercial and operations strategies.

In Spain, same-store sales increased 3.5%, reflecting successful commercial strategy, such as Croissantizzima, which has been well received by our customers. And in Colombia, Domino's performed well, achieving a 10.5% growth in same-store sales, driven by high in transactions volume.

Passing to Burger King Alsea, same-store sales, excluding Argentina, decreased by 1.1%. In Mexico, Burger King reported a same-store sales contraction of 1.1%.

However, the continued rollout of digital kiosks and other digital strategies is expected to support future growth. In Chile, same-store sales were flat.

Regarding the food service restaurant segment, we delivered a 3.9% growth in same-store sales. Vips Mexico, who recently turned 60 years anniversary, had a strong 3.8% year-over-year growth in same-store sales, fueled by strong operational performance and expansion on delivery channels and successful seasonal promotions.

In Mexico, Italianos was the best performer, with a high single-digit growth in same-store sales, while the rest of the portfolio was in mid-single-digit range. In Spain, Vips and Ginos reported solid same-store sales of 3.8% and 3.3% respectively, despite the impact of the flooding in Valencia.

Our global expansion strategy focuses on capitalizing on the most profitable opportunities across our key markets. During the fourth quarter, we opened 107 new stores, including 74 corporate units and 33 franchisees, especially targeting high-traffic areas.

Alongside our expansion in high-potential regions, we are also remodeling existing locations to enhance customer experience and drive growth. Despite macroeconomic challenges, we successfully opened 275 stores in 2024, 205 corporate units, and 70 franchisees stores.

Looking ahead to 2025, we remain focused on identifying high-potential areas to expand our footprint. Regarding our loyalty programs, our digital transformation continues to full growth.

By the end of the quarter, loyalty sales grew by 33.1%, reaching MXN5.1 billion, accounting for 25.1 million orders and contributing to 26% of total sales. Additionally, by the end of the fourth quarter, Club By in Spain has surpassed 2.8 million members, while Starbucks reached over 2.3 million active users across all Alsea regions.

ESG and people, we continue to advance in our ESG initiatives this year, demonstrating our commitment to sustainability and social responsibility. As we reflect on our 2024 achievements, I want to highlight the collaborative efforts across company to shape our sustainability strategy.

This work has been essential in establishing short, medium, and long-term goals focused on reducing emissions, enhancing packagings in circularity, ensuring responsible sourcing, and certifying suppliers on their sustainability criteria. Our commitment to the community and later development has been strengthened through these initiatives, ensuring that sustainability remains a core component of our operation and strategy.

By integrating sustainability into everything we do, we are not only shaping a better future, but also building a strong foundation for long-term success. Additionally, Fundacion Alsea has a record investment in more than MXN90 million and serving more than 1.5 million meals in Mexico through 34 soup kitchens.

And we continue to ensure food security for vulnerable communities and support human development through education and employability initiatives. Now I would like to hand it over to Federico Rodriguez.

Please, Federico.

Thank you, Armando. Good morning, everyone.

The sales increased by 11.1% in the fourth quarter and 6.3% for the full-year, driven by solid consumption, preference for the company's brands, and effective commercial strategies in Mexico and Spain. Excluding the FX, sales increased 12% for the quarter and 10.9% for the full-year.

For the fourth quarter, sales in Mexico were up 8.5% to MXN11.6 billion. In Europe, sales increased by 14.5% to MXN6.5 billion, while in Euro terms, sales increased by 0.8%.

Finally, South America sales increased by 14.1% to MXN3.5 billion. For comparable purposes and attending the accounting rules, the operation of the 54 units of Burger King in Spain, as well as the sale of these assets, has been included as a discontinued operation below EBITDA line.

The EBITDA increased by 13% in the fourth quarter and 8.5% for the full-year, driven by solid consumption and the preference for the company's brands. Excluding the FX, EBITDA increased 11.5% for the quarter and 11% for the full-year.

In Mexico, the adjusted EBITDA increased by a strong 14.7% to MXN2.8 billion for the quarter. This growth was driven by lower material costs, increased sales, successful commercial and promotional campaigns, and effective expense and labor management.

Additionally, the 3.8% growth in same-store sales continued to improve operating leverage. For the full-year 2024, adjusted EBITDA increased 18.5% to MXN10.5 billion, with a margin expansion of 180 basis points.

In Europe, the adjusted EBITDA decreased by 2.1% to MXN1 billion for the quarter and by 9.7% in euros, driven by a drop in same-store sales. This decline was primarily due to macroeconomic pressures and the previously mentioned brand boycott.

For the full-year, adjusted EBITDA decreased 4.4% to MXN3.3 billion, with a margin contraction of 150 basis points. In South America, adjusted EBITDA declined by 17% to MXN488 million, driven by a reduction in the operating leverage and an increase in the cost of food and other inputs.

For the full-year, adjusted EBITDA decreased 21.5% to MXN1.8 billion, with a margin contraction of 370 basis points. Net income for the fourth quarter decreased 45.3% year-over-year to MXN575 million.

This was mainly due to a negative non-cash effect from currency exchange translation, which increased the cost of our U.S. and Euro-denominated debt in Mexican pesos terms by the end of the quarter.

For the full-year 2024, EPS was MXN1.68, plus IFRS 16 EPS was MXN0.94. Going to the CapEx, for the full-year we amounted MXN6.5 billion, slightly exceeding the initial guidance.

This was mainly due to the start of constructions of the new distribution center in Guadalajara. This investment will strengthen our logistical capabilities and support future regional growth.

We allocated 27% to maintenance CapEx, 58% to start openings and remodelings, and 16% to other strategic projects. Throughout the year, we prioritized prudent and responsible investment, with a clear focus on profitability.

Our pre-IFRS 16 gross debt increased by MXN6.9 billion year-over-year, reaching MXN33 billion by the end of 2024. This rise was due to the debt incurred to finance the minority shareholder acquisition in Europe, as well as due to the impact of a weaker Mexican pesos on the foreign currency debt at quarter end.

At the end of 2024, 89% of the debt was long-term, with 65% denominated in Mexican pesos and 35% in euros. We remain committed to maintain a strong balance sheet and are confident in comfortably meeting all debt covenants and obligations thanks to our healthy capital structure.

At the end of the year, we posted a cash position of MXN6.5 billion. Turning to financial ratios, the total debt to pre-IFRS 16 EBITDA ratio closed the year at 2.8 times, while the net debt to EBITDA ratio stood at 2.3 times.

Before going to the Q&A session, I want to add some details to our other current liabilities line and cash flow. The other current liability line includes a pending MXN40 million payment to minority shareholders of the European entity we acquired in 2024.

This obligation was already paid a couple of days ago, therefore you won't see this effect going forward. Additionally, more than 60% of this account, the other current liability, is explained, as we have stated in previous communications, of derivative instruments for hedging, recurring and variable compensation of the management and store managers, etc., operating and supply provisions such as water, electricity, internet, etc., legal and labor reserves, among others.

I also want to highlight the company's strong cash flow generation. Several times we have explained the seasonality component of the business, the Christmas season being the relevant driver to generate a positive working capital in the last quarter, while we usually see the opposite during the first half of each year.

Despite some one-off impacts like the payment to abroad suppliers in Argentina and the change in payment conditions to perishable product suppliers in Europe in the first half of 2024, we delivered solid cash flow conversion before dividend payments. Before discussing the 2025 guidance, I want to highlight that excluding the FX, we successfully achieved our revenue and EBITDA growth guidance with a 10.9% and 11% growth in 2024, respectively.

Our 2025 guidance reflects the commitment to sustainable growth, operational efficiencies, and disciplined capital allocation. We expect a mid-single-digit same store sales growth, a top-line growth in the low teens, between 180 and 220 new store openings, around 60% to 70% of them will be corporate ones, CapEx of around MXN6 billion.

Regarding the EBITDA ratios, pre-IFRS 2016 expectations, an EBITDA growth of approximately mid-single-digit, a total debt-to-EBITDA ratio between 2.6 times to 2.8 times, and post-IFRS 2016 expectations, EBITDA growth of roughly mid-single-digit, a total debt-to-EBITDA ratio between 3 times and 3.2 times. These assumptions considered in the guidance are at 2.2 GDP average growth in all the regions, including Mexico, Argentina, the 12 countries where we participate, and an exchange rate of MXN20.8 per $1 and MXN22.8 per EUR1.

Despite external challenges, we remain confident in the ability of Alsea to execute the strategy, capitalize the high potential opportunities, and sustain strong results. I will now pass you over to the operator for the Q&A session.

Thank you very much.

Thank you, operator. Hola, Armando, Federico, Gerardo.

Thank you for the space for questions, and congratulations on the results. Two quick ones from my side in Europe.

Looking at same store sales in Starbucks, it seems that sequentially we're seeing a better performance. I wanted to see if you could walk us through the monthly results on the brand.

Was November better than October? December better than November?

How do you see that? Maybe to start the year, that would be the first one.

And the second one, very quickly on profitability also in Europe. Although, the EBITDA at a store level saw a margin contraction, when you see the EBITDA as Europe as a whole, we saw a margin expansion year-over-year.

I wanted to see, if you could walk us through what are some of the saving initiatives and efficiency programs that you're seeing in Europe as well? Thank you.

Hello, Alex. Thank you very much.

In France, we continue working towards recovering from the pre-boycott traffic. We have seen, of course, the situation improvement, as you can see in the report.

Of course, there is a comparable base, but the traffic is performing better. As we mentioned, the full recovery, I've been telling you guys, will take a little bit more than 18 months to 24 months.

But we expected a full-year to recover by the end of 2026. But we still continue implementing commercials, promotion campaigns, and there's some bundles and some digital things that we're doing.

We are, as I said, expected, and we are looking and seeing a gradual recovery in these first nine weeks of the year. The declining is only a low single digit now.

So I think by the end of the year, we will have better numbers in this region. They are very small, again, in our completed portfolio regarding EBITDA margins.

But our recovery is continuing and in a good way for the future.

Hello, Alex. Regarding the EBITDA expansion that you're mentioning, we are working in all the lines, not only in Europe, but in the rest of the company.

We're suffering pressures from a minimum wage, obviously the depreciation of the FX, as you have seen in the guidance. We're working across all these initiatives.

We have several plans. And as Armando said, in Europe, the same sales in France have started to improve sequentially in the previous quarter.

And additionally, the portfolio management that we did with the incorporation of the 54 units of Uber in Spain are helping us. So we are fully concentrated in the cash flow generation of the portfolio with Europe, South America, both bright and bright.

Alejandro, this is Gerardo. So if I may add some color on kind of the sequential improvement that we have seen in Europe, but I would say this is for the complete portfolio of our brands.

I would say, December was a pretty strong month, as we mentioned in our opening remarks. If you compare that December versus October, November was definitely higher.

So it was, again, sequential improving through the quarter. And so far, I would say in the first, let's say, couple of months that we already passed in 2025, top line and sales continue to be, I would say, robust.

Thank you very much, Armando, Federico, Gerardo.

Thank you.

Yes, good morning. Thank you very much for taking my question, Armando, Federico.

Congrats on a solid finish, let's call it this way. I have two questions as well, if I may.

So number one, looking at your growth outlook for next year, could you maybe give us a little more nuanced views as it relates to the same-store sales growth you're expecting with single-digit and obviously on a consolidated basis, but maybe just high-level what you think of Mexico versus South America versus Europe? That would be my first question.

And then the second, if we could just dig a little bit into the CapEx and the new store openings, it feels like, at the midpoint, it's about 30% less stores than what we had in 2024 on the opening site. But CapEx is kind of like seen only less than 10% lower than what it was last year.

So just wanted to understand, what's driving that higher inflation just given that the store openings are actually down more meaningful on a year-over-year basis. Is it that Guadalajara distribution center or what's behind it?

So maybe just a little bit details as well. Thank you.

Yes, sure, Ben. Thank you very much, Ben.

Regarding the growth that we are seeing in the top line for the next year, as you have seen in the guidance, we have a mid-single-digit increase in the different countries. I would say, it's pretty similar for the different regions.

Obviously, we have a sequential improvement in France. It is not going to be so relevant as we wish, but I would say, that for Mexico and the rest of the regions it should be in a mid-single to high-single-digit depending on the region, it's pretty similar.

Additionally, the 3% to 4% depending on the region of the new openings, obviously, we have considered all the different things. Additionally, you should consider the FX depreciation that we have into the top line because of the euros that we convert to pesos.

It's a really different, its an increase of around MXN2, MXN2.5 from an average perspective from 2024, that would be the guidance for the top line in 2025. Regarding the CapEx decreasing regarding new openings, we are not so interested in new openings especially because as we have said, obviously, we do not have at this point the 100% of the transactions that we had in France two years ago.

So we are delaying a little bit the pipeline for this region. We want to grow both on a profitable way.

Additionally, the CapEx is not having a relevant decrease because of the distribution center in Guadalajara, the new distribution center. The total CapEx for this facility is around MXN750 million.

We spent around MXN200 million last year and this year will be the difference to accomplish with this gap. Do you want to add some?

No, just, we've been very rationally side and just very prudent in the CapEx allocation and we're still doing it. The budget that we did last year, we only covered 90% or 89% by the end of the year.

We're going to still do the same this year, just seeing where we need to spend, how we need to spend, remodeling, opening, and as Federico says, we are just more cautious especially in Benelux, we have to open also in South America. So I think that is good news because the pipeline in the store is robust but full of very profitable stores.

And then just to mention, on the same store sales, the budget and the projections that we have is positive traffic in all regions. It's not leveraged by any chance just in the ticker average.

All the regions and all the brands like last year was the same, they are positive in traffic.

Regarding the top line, I have to add that we are focusing on defending traffic. That's a critical part of the same store sales.

Obviously, we have taking inflation. If this is zero, we are not interested to roll through ticket.

That's artificial. But we want to increase the traffic in each one of the store, each one of the region, each one of the brands.

I would say, that's a challenge and that's the reason we are not planning to trespass the inflation that we have in the raw materials.

Okay, perfect. Thank you very much.

Good morning, Armando, Federico, Gerardo. Thank you for taking my questions.

I would like to explore two points here. We already discussed a little bit the same store sales for the guidance, but maybe if we can get into a little bit more of detail into the store openings.

If I'm not mistaken, it was 180 to 220. Just wondering whatever new information you could give us on brands, geographies, just so we could understand the focus and opportunities on the store openings?

The second point I would like to address here is to hear a bit from you on the Dominos brand. We saw an overall pretty solid same store sales, right?

Mexico in the 5.1% and Colombia's extraordinary 10.5%. Just wondering how's the competition going?

How do you see it for the different geographies and again, whatever opportunities you see here? And yes, that's it from my side.

Thank you.

Yeah. Thank you, Tiago.

Good morning. Regarding the openings for the 2025, 80% of the openings will be based on a Starbucks and Domino's pizza and the main regions where we are allocating these new openings, Mexico and Europe with around 80% to 85% of the pipeline.

The remaining stores will be casual dining in Spain and Mexico and barely around five to seven new stores in South America.

Yes. Thanks for mentioning Domino's pizza.

I think it's super important that we did an extraordinarily well year, I would say, and just a great quarter. What was that in Spain?

We launched a new product innovation that is Croissantizzima. We had a record weeks all year, all the six weeks of the 13 weeks of the quarter, just making, it's a little bit hard to innovate in this business, but that one is just a great product that make the difference and that was a little bit of growth that we have in Spain.

Also, I would like to say the carry out and strategies that we've been focusing the last 18 months here competing with our competitors that had carry out promotions are also being very successful in all the regions. Another thing, of course, the digital transformation we invest in our own application now and the conversion rate on that application is being in double, high double digits, so that is transforming well.

We are also doing some the tender and the digital is the channel, some Domino's are also being very successful. I think it's not going to be the case this year.

We are doing well in that brand. Of course, that one in Mexico is affected a little bit by the exchange rate because our cost of goods is a little bit more aligned of the CAGR [ph] to cost, but I think that all overall the business unit had a very successful year and hopefully this year will be the same.

Fantastic. Thank you.

Hi, good morning. Thanks for taking my question.

Congrats on your results. Could you please elaborate a little bit more on the trend that you're seeing so far during the year now in Mexico?

I mean, thanks for the color on Europe, but any more color that you could provide on Mexico. And also wanted to know if part of your guidance is based on a better second half versus the first half given the different comps and also the calendar that are affecting the first half?

Thanks.

Well, Antonio, we saw some resiliency of the consumer in the last month of the year, as Gerardo and Armando said, it was a fantastic last quarter of the year. Not only because of the strong seasonality of December, but all the brands have a positive trend.

Talking around the same store sales but more important, around traffic. It was amazing with the exception of one brand.

The rest of the brands in Mexico had a positive behavior, not only in Mexico, but in the rest of the region, South America and Europe, too. And obviously, as said before, regarding the guidance for 2025, we are building guidance with 2% of GDP.

Obviously, the private consumption, it is not going to be easy. It is going to be positive, we hope.

But additionally, we think that we must have mid-single growth in all the different geographies. I would say that the behavior in the first half and the second half will be similar, talking around the guidance, so it is not going to be really different from our perspective.

Okay. Thanks Federico, have a great day.

Hi, everyone. Thank you so much for taking my question.

It is actually a follow-up about the quarter in Mexico. Can you give us a little bit of trends, what happened, especially Starbucks, which is a really, really important brand for you, in terms of pricing and traffic for the quarter?

Thank you so much.

Yes, Renata. In the last quarter, we had positive same store sales for the brand in Mexico around mid-single digit, especially as I said before, and really related with the message for 2025.

We're having a positive trend regarding traffic. We are not increasing because of the ticket inflation.

We think that with the current economic environment and the volatility, the worst thing that we can do in Alsea, not only in Mexico, but for the Starbucks -- for the rest of the portfolio, is have higher prices for the customer. So we are being really positive around the comparable store base and additionally the openings that we are having in Mexico.

And this message has been repeated more than once during the last year. We're having paybacks better than the stores that we opened 22 years ago when we set the first store in Paseo de la Reforma in Mexico.

So we are having returns on investment below two years. So we are pretty happy.

We will continue the footprint and increase the penetration for Starbucks in Mexico. But additionally I want to highlight what happened with the casual dining in Mexico and Spain during the whole year.

We have a figure from mid to high single digit regarding same store sales. More than 60% of this was built with traffic.

We want to highlight because a lot of time we receive several questions around Starbucks or Domino's, both casual dining portfolio [indiscernible] strategy of Alsea for the future. And we will continue increasing the footprint as we will do with Starbucks in Mexico and the rest of the geographies.

Thank you very much.

Thank you, Federico. That's a great call.

If you allow me just a very quick second question regarding coffee prices. Here, in Brazil, we are a great exporter.

We are talking a lot about that. The increasing prices.

If you can give a little bit of color what you are expecting for the year? And how is the contracts you have qualitatively in terms with Starbucks in terms of purchase of the coffee go into Mexico to help us to understand the main dynamics.

Okay. Regarding coffee, as we have established before, we saw the trends at the market regarding coffee, we have seen several increases of about 30% to 100% depending on the day.

We have acquired coffee from Starbucks the parent company, we never have a significant increase or a significant decrease. The main part of the FX that we are putting in place into the guidance is related with the FX that we are having from MXN17.5 per $q that we had as an average in 2024, we are going to a MXN20.8 as we said in the guidance of FX and that's the depreciation that we are reflecting into the guidance.

So I would say that even when we are aware of the increases in the coffee and we have a strategy for the pricing for the final customer, we are more worried around the FX because obviously MXN1 is around 30 basis points on the final composition mix of the EBITDA both for 2025 and with the futures that we are seeing at the market it's around 100 basis points.

And just Renata to be clear since this thing started I mean the higher of the prices and the futures of the prices of the coffee, we've seen talking of course with our partner in Seattle regarding what other options that we have in case there's any tariffs or whatever and there's a lot of options in the table as we know we use Mexican coffee most of what is roasted in the U.S. and come back to Mexico that is not a taxable product.

So we are steady there but we are looking other options in Asia and of course Colombia that we are sourcing a great coffee there with a good partner of Starbucks. So we are working there and that's something where we are on top so we can avoid any inflation and any increase of the price that is the strategy for this year in order to continue to build traffic in our brands.

Thank you so much for the call Armando and Federico.

Hi gentlemen I have three questions I'll go one-by-one. On the guidance on margins specifically, I was wondering if you could maybe give a regional breakout given all of your comments thus far in the call it seems like most of the pressure will be concentrated in Mexico given the FX dynamic but I was wondering if you can give a bit more color on and we do have easier comps right in Europe and LATAM so any color on sort of the regional breakout on the margin pressure specifically embedded in your guidance would be helpful?

Well, I would say that the pressure that is -- the major pressure that we are suffering for the 2025 is set in Mexico as established with Renata's questions are the precision of MXN1 impact the gross margin on approximately 30 basis points so this impact could be 100 basis points at the gross margin level. This obviously is without doing nothing so we are working on efficiencies strategies as Armando said with the different suppliers to have a stockpile of the different key products like the cheese or the coffee so we can mitigate part of this impact.

In Europe, we should see sequential improvement in the margins in the whole year and I would say, a pretty similar thing for South America. That was the first question.

Yeah, great. The first one.

The second one is on higher DNA also for you Federico. We saw materially higher depreciation.

I was wondering if you have a little bit more color on that.

Yes, sure. Regarding the variations and the peaks that you are seeing in the regional components of the DNA post IFRS 16 we have standardized the criteria of the different leasing contracts.

The IFRS 16 accounting law is really complex and obviously we signed different lease contracts for cash aligning and Starbucks and Nutrition on different ways. It is not the same in Mexico than the landlords that we have in Europe, etc.

So we are standardizing these criteria. This does not imply, and I want to highlight this Alvaro and for the rest of the investor community, this is not implying an increase in the rental expenses but in the way we account the leases from an IFRS 16 perspective.

Obviously, we manage the business and we have established several locations on IFRS 16 situation because that's the way we control the cash flow. We sign with a mandatory term of five years, none more.

So it is really easy to go out without paying any kind of penalty when we want to exit from some of the sites that we are exploiting right now.

Nice. So most of the impact was a shift in mix or more IFRS 16, I would say.

Yes, it's totally accounting rule and we commented this with the auditor obviously because it was going to make a lot of noise but the rental expense is the same when you see from a cash flow perspective. The conditions, the terms, we have 60% of the rental or the leases with a fixed component and the remaining 40%, especially shopping malls, airports, etc., on a variable basis.

And then my last question, and thanks so much for the space for the question. My last question is for Armando on Christian, on Christian Gurria on the new appointment of the CEO.

Armando, your mandate obviously was a post-pandemic mandate and sort of right-sized the ship and did a great job and it was great to be a part of this time, but what do you think Christian's mandate might look like? Is it going to be the same or do you expect a shift in his mandate or a change in mandate with him as CEO?

Thank you for the question. I think exactly, we are in an immersion program as I told you guys and I said to you guys in January when I had the privilege to see you, it's going to be an immersion program of four or five months.

I mean, he's been in the company for the last 20 something years, so he's a specialized, he knows all the brands, he's been in two regions out of the three, so he knows. I think our strategy that I've been giving to the market regarding the pillars strategy that we are doing now, how we are focusing in pillars, in economic units, I mean, that won't change.

I mean, the board is the one with him to set the strategy for the future that we just had the board yesterday and last week we got together and the strategies regarding our pillars are the same. You know, the talent of attraction in this company, retention talent, just be the best employer of the business will be the same.

You know, operational excellence, since I arrived, this company is about operating well, restaurants, great service, great product, great image, and that will create people to come back. Of course, this digital transformation since I arrived, I was very focused on changing all the POS of the company, the systems, the technology, and now we are doing some AI, so there's a lot of things right now in the digital transformation in Burger King with the kiosks that has to be continued and then I would say to get some return of investment on that one day.

I mean, the portfolio growth, you've been seeing that we're portfolio growth is just being very focused on the brands that are giving us the best results, a strong balance sheet. I mean, the same, we've been focused on the CapEx, we're trying to pay debt last year, we're getting some dividends, and then so I think that the balance sheet always, of course, innovating, being a great partner in sustainability with our community.

So I think, yes, I mean, the seniority and critical mass of this company to create more value will stay the same. So I think that the plan for Christian, myself, the board is very clear, we're going to attach to that plan.

Great. Thank you very much.

Hello. Thank you for taking my question.

I was wondering, after seeing the divestment of Burger King, and when you think about and you have said about focusing on the most profitable brands, is there anything left that can be sold in your portfolio? That's the first question.

And second, I would like to understand how is the stand-alone Starbucks strategy going in Mexico? You have been mentioning that going forward, a lot more of the new stores will be more stand-alone, probably, in highways, a little bit different from the footprint that we know here in Mexico.

I just want to understand where we're at in that Starbucks strategy?

Thank you, Froy. Regarding the first question with the disincorporation of Burger King in Spain, the first reason to disincorporate Burger King is because we were not able to work with this brand in Spain because there are some other players that hold the MFA rights, and they were not permitting Alsea to have more units because it was really a cash cow into that territory.

And that was the first reason to disincorporate Burger King. Additionally, we are on a daily basis looking for new opportunities to unlock value for the different investors.

So, yes, the answer is yes, we are analyzing maybe the portfolio management to disincorporate some of the business units. At this point, they are not relevant into the whole pie composition of Alsea, around revenues and EBITDA, and the message that we want to transfer, especially because we hear you, all the investor community, is that the business is too complex.

So, we want to simplify not only for you, but for the management, and we want to give the right voice to the major concepts like Starbucks, Domino's Pizza and the cash aligning strategy in Mexico and in Spain.

And regarding the openings out of the 180 to 220 that we gave in the guidance, of course, that's probably the half or only 100 stores that will be opened by our Starbucks pillar. Of those ones, 90% are corporate stores, the other one are sub-franchisees and licensees that are going to be in Europe.

And out of the 90 stores more or less that we're going to open, yes, in Mexico especially, where we have a little bit target of 50 to 70 stores, there is where we have some drive-thru stand-alones that are going to be open. That takes a little more time, but all those stores, as Federico says, the good news here is the stores that we open now and that we opened in the last 24 months, and the one that we have in the budget for next year, all of them, the value, the creation, the return of investment is still higher than the first store that we opened.

I know the unit economics, the way we are enforcing the rent negotiation with the landlords, probably sometimes they pay for the shell. And then the investment that we are putting with the green stores that we are executing and everything is giving us a good return, drive-thrus are working well, but the rest of the stores also are working well.

So I think the portfolio for this year regarding not only Starbucks, I would say, the casual dining division and all the Dominos stores, they are already in place. We already have practically the pipeline set and ready, someone in construction.

So I think there's going to be a good quality pipeline for good success in our store openings.

Very clear. Thank you so much for your answers.

Julia? We can see you, Julia.

Now we can see you. But not hear you.

Okay. Thank you.

I'm sorry.

We got it.

I think I lost the connection. Thank you for taking my question.

It's really quick. Can you give us a little bit more color on the non-store expenses, which I think was quite surprising that we saw some reductions compared to previous year, a very good level, if that is recurring on expectations for 2025?

Okay. I will do a follow-up later.

Thank you.

Sure. Thank you, Julia.

Regarding, I saw the paper regarding non-store expenses question. Obviously, when you see the operating income and the EBITDA, the adjusted EBITDA, which is EBITDA for all the store-level EBITDA that we have, you still are losing two components, the pre-opening expenses that are totally related with the new openings that we have.

In the last year, we have a completely different pipeline than in 2023. Maybe that's a reason that you are seeing a saving, an artificial saving.

But obviously, we still have some different efficiencies in the G&A part. And obviously, as you remember, we have into the other current liabilities, some of the provisions to pay the long-term incentive for the management.

There is part of the cancellation that we are performing like all the years that we are doing because we are not achieving the target set by our CEO. And that's the reason.

But I would say that the major deviation is related with the pre-opening expenses and the different pipeline that we had in the last quarter from 2023.

Okay. Can you give me the roof part, what was the pre-opening expenses on the last quarter?

Yes. For example, training expenses, all the rental expenses that you have previously to open on a formal way the store, some part of the construction of the building, all the electricity expenses to do a fine-tuning of the stores.

Those are the pre-opening expenses. And you have these into the different geographies.

There's a gap. It is not only related with SG&A between the EBITDA four wall and the operating income.

Okay?

Okay. Okay.

And a follow-up on Mexico, the margins. The margins were really impressive.

The resilience, especially even the context of wages and also the commodity price going up. I would like to understand, what is your view going forward if that '24 or high '23 rate is sustainable or if perhaps something has to do also with the mix, [indiscernible] a little bit of the outcome.

Thanks for that, because I think it was an impressive number. We saw it since the beginning in the last weeks of November.

And we just prepared the whole organization in staffing and operations in order to achieve that. Yes, the casual dining division was an impressive number, but also continue with Dominos, and yes, it was not the assumption.

Yes, we're going to see, we're going to observe some normalization in our growth rates.

I think I lost you.

You lost me?

Yeah. Sorry.

Can you repeat?

No, no. Yes, yes.

I can repeat. Of course, we had a great since November.

It's in the end of November. We saw the trends.

We were very prepared. Of course, we did a lot of things, not only to accompany the growth.

We doubled down in some strategies, commercial strategies, in order to fulfill better the restaurants. No.

So, yes, casual dining was strong. Domino's pizza was very strong.

And Starbucks was not the assumption. It was very strong.

We did grow well in traffic in the last four weeks or six weeks of the year. Yes, we will observe some normalization in our growth rate.

No, we'll see a little bit of a decompression in the market. But I think we've experienced this.

And we do have tools of digital in Starbucks reports. And we have other things that are coming.

Trying to get all the opportunities that we can in order to fulfill the account for better traffic in our stores and in all the regions. And also, we're not only seeing Mexico, I think.

I'm talking here globally. We just had a good conversation with all my 200 team members just one hour ago and seeing we have to capitalize every opportunity.

And in this business, all the time, there's opportunity in all the stores that you go of attending one more client or selling a little bit more to one. So, I think I feel confident of the guy.

And I feel confident that we're going to have a tough year. But this has always been a challenge.

And I think we will make it happen.

And Julia, in the long-term plan, obviously, 2025, there's an FX. It is not only in Australia, but in the rest of the industry.

We have to reframe what we want to do. And as I said before, and we have established, we want to have more traffic in each one of the stores.

Armando has outlined that. And obviously, we will return the margins that we had in the last quarter of 2024.

Of course, they are sustainable in the long-term. And this kind of volatility, if somebody could tell me what is going to be the exchange rate for the rest of the year that would be great.

But nobody knows. But, of course, we have a strategy.

And we cannot be only worried because of the short-term.

But for the '24, the really good margins of the fourth quarter, is there something that you can give us a little bit more color on how you are able to offset the pressures on wages or commodities? Maybe that's related with the mix.

I don't know how casual dining margins compared to the rest of the portfolio. Give something to understand.

These are the basics of the business. We have discussed regarding minimum wage increases.

We have offset this kind of impact during the last six years because it did not occur only in 2024. We have had a 20% increase during the last six years in this country.

What are the tools to offset these increases? The increase in productivity.

What does productivity mean? Transactions per labor hour.

We measure all these kinds of initiatives. The right mix of promotions.

Maybe we have sometimes 40 promos on delivery. Then we have 20 promotions.

Then implementation of bundles. Obviously, trying to understand our customers.

The EBITDA margins that we have in the casual dining business are pretty similar to those we have in the Starbucks or Domino's business. In fact, in some of the stores are better because a lot of these brands are corporate ones.

We are not paying royalty to the franchisors. As I said, we have two major components.

The cost of food. You know the tactics.

You know what is happening in 2025 because I have just explained. The productivity.

That is under the control of Alsea. For example, in France, we know how to open a store with two baristas at 8 o'clock in the morning.

Here, we have a different composition, different transactions. We have six.

We have a huge gap between what is happening in Mexico or South America to what is happening in Europe and some other geographies where the productivity has to be controlled in a different manner. So I think, we have the tools and that is the reason that we achieved those margins in the last quarter.

There is nothing extraordinary or any provision cancellation to the peers that we had in the last quarter to be really concrete with your question. We had a terrific cash flow generation.

We can do a follow-up.

Thank you.

Thank you very much, Julia.

Congrats.

Hello, gentlemen. Thanks for taking my question.

I've just got one quick question. Given the current implied valuation, how has your perspective or opinion changed regarding share repurchases and intensifying what is already currently being done?

Thank you.

What was he saying?

Share buyback. Right, Enrique?

Exactly.

Okay. Sorry.

I think we've been somewhat active, as you have seen in the past, I would say, a couple of months. Now, with the price where it is, the valuation, we follow, I would say, the EBIT-to-EBITDA multiples very closely.

So, I would say at these levels, we will continue to be active, Enrique. As you know, the plan for the company is to cancel these shares in the coming, let's say, months in the next shareholders meeting.

So, that is also something positive to the investment thesis for Alsea that we're expecting, I would say, dividends, as in the past, plus some of these cancellation of shares. So, I would say, the return to shareholders would be a little bit higher.

So, you should expect us to continue to be active on the share buyback, Enrique, again, as we continue to see value, let's say, trapped in the stock price.

Great. Thank you.

Thank you.

Well, so, thank you very much for joining our quarterly video conference. And, like always, if you have any further questions, please contact our investor relations team.

And, thanks. Have a great day.

Thank you very much.

Thank you very much.

Thank you.