Industry News | January 5, 2012

To Kickstart Growth, Sonic Will Highlight Daypart Opportunities

Sonic will highlight its five daypart opportunities, like its dessert offerings.
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Clifford Hudson, CEO of Sonic, said during the firm's investor meeting on January 4 that the company will roll out a new marketing campaign in the spring highlighting the concept’s five daypart opportunities.

Hudson said the company is improving its creative strategy "to create a better alignment, as we would have historically … in a prerecession environment, for a multiple daypart strategy."

The company hopes the new strategy will kickstart growth for the drive-in concept, which has struggled to regain its footing since the recession. System-wide same-store sales for the first fiscal quarter of 2012 increased only .01 percent.

"More encouragingly, system same-store sales have been positive three of the last four months," Hudson said, adding that October proved a challenge for Sonic and that the company is growing slower than expected.

During the meeting, Sonic's president, Scott McLain, said the company anticipates opening 30–40 new stores in this fiscal year. The total number of stores currently stands at 3,555, he said. The company closed eight stores during the quarter, versus 23 compared to the same quarter the previous year.

Stephen Vaughan, Sonic's CFO, told investors that commodity inflation will continue to put pressure on margins into the second quarter, and that the company had locked in a beef contract through 2012. "We now have certainty for virtually all of our food and packaging costs, with the exception of cheese and ice cream mix," Vaughan said.

Hudson wrapped up the earnings report by saying the company is in a better position today than it was three years ago, and the firm's same-store sales growth remains the primary engine driving the business.

"For the remainder of fiscal year 2012, we expect to see sales volatility, and that will persist, given the economic challenges we confront,” he said. “We're confident that improvements that we have put into place will drive results in our business during the current year and longer term as well."

By Jan Fletcher

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.