Sonic Drive-In is officially part of Inspire Brands’ burgeoning restaurant empire. The company announced December 7 that it completed its $2.3 billion acquisition of the 3,600-unit-plus brand, first announced in September.
With the deal, Inspire’s portfolio now covers more than 8,300 restaurants and annual systemwide sales in excess of $12 billion. In addition to Sonic, Inspire operates Buffalo Wild Wings, Arby’s, and fast casual Rusty Taco, making it the fifth-largest restaurant company in the U.S.
“We are thrilled to officially welcome Sonic to the Inspire family,” said Paul Brown, chief executive officer of Inspire Brands, in a statement. “Sonic and its franchisees have created one of the most successful and distinctive brands in the restaurant industry. We look forward to helping further drive innovation and long-term growth at Sonic and across our growing family of brands.”
Also previously announced, Sonic’s move under Inspire’s umbrella includes a leadership shift. Cliff Hudson, former chairman and chief executive, who spent 34 years with Sonic, joining as assistant general counsel in 1984, is stepping aside. He will serve as senior adviser to the company until March to help ensure a smooth transition as Claudia San Pedro leads the brand as president. San Pedro was named Sonic president in January and held a variety of leadership roles in her 12 years with the chain. She joined 2006 as treasurer and was promoted to VP of investor relations. In 2015, San Pedro was appointed CFO, where she led all financial strategies for Sonic.
It signals the end of an era for Hudson and the brand. He took over as CEO in 1995 and led Sonic’s growth from nearly 1,500 units in 27 states with systemwide sales of $905 million to 3,600 locations in 45 states with systemwide sales of $4.5 billion. Only Sonic’s founder, Troy Smith Sr., directed the company for longer (1953–1983).
“This is an important and exciting milestone for Sonic,” San Pedro added in a statement. “Inspire’s commitment to strategic investments and culture of collaboration will significantly benefit our guests, team members, and franchisees. As part of the Inspire family of brands, Sonic is positioned for growth and to continue our 65-year track record of success.”
Inspire, backed by Roark Capital, a firm that has investments in 66 franchise/multi-unit brands through its affiliates, accounting for $37 billion in annual system revenues from 36,000 locations in 50 states and 81 countries, was formed February following the closing of Arby’s Restaurant Group’s $2.9 billion purchase of 1,200-plus unit full-service chain Buffalo Wild Wings.
In September, Brown said of the latest addition, “Sonic is a highly differentiated brand and is an ideal fit for the Inspire family. We have tremendous respect for Sonic’s exceptional team of employees and franchise owners, who have built one of the industry’s most distinctive restaurant brands.”
Inspire said Sonic would operate as a separate business unit within Inspire and be based in Oklahoma City.
The agreement, which was previously approved by Sonic’s board of directors, represents a premium of about 19 percent per share to Sonic’s closing stock price on September 24 at $43.50, and a premium of about 21 percent to its 30-day volume-weighted average price. The deal was approaved December 6 after being announced September 25.