Sonic Corp. announced results for its fourth fiscal quarter and year ended August 31.
Key highlights of the company’s fourth quarter of fiscal year 2016 included:
System same-store sales decreased 2 percent, consisting of a 1.8 percent same-store sales decrease at franchise drive-ins and a decrease of 3 percent at company drive-ins.
Eighteen new franchise drive-ins opened.
The company commenced its refranchising initiative to move toward an approximately 95 percent-franchised system by the end of fiscal year 2017.
Key highlights of the company’s fiscal year 2016 included:
System same-store sales increased 2.6 percent, consisting of a 2.7 percent same-store sales increase at franchise drive-ins and an increase of 1.7 percent at company drive-ins.
Thirty-one net new drive-ins opened.
“We delivered good overall performance in fiscal 2016, including 2.6 percent system-wide same-store sales growth. Slowing consumer trends that began in April, however, persisted through the fourth quarter, resulting in lower-than-expected sales and profits in the fourth fiscal quarter,” says Cliff Hudson, Sonic Corp. CEO. “At the same time, we are pleased to see approximately 1 percent net unit growth for fiscal 2016 with 31 net new units, sound progress towards our net unit growth goal of 2 percent to 3 percent by the end of the decade.
“While our unit growth, capital structure and refranchising initiatives are performing well, low commodity costs, resulting in an aggressive promotional and pricing environment, are expected to continue to pressure sales and earnings in fiscal year 2017, particularly in the first half of the year. We believe our current initiatives to deliver one of the most differentiated customer experiences will improve sales late in the fiscal year. This, combined with a more-highly franchised system, better company drive-in margins, penetration of digital POPS units in 80 percent of our system, a strong development pipeline, and a significantly lower number of shares outstanding, provides a solid foundation for good sales and earnings growth over the next few years.”
For the fourth quarter ended August 31, system same-store sales decreased 2 percent, which was comprised of a 1.8 percent same-store sales decline at franchise drive-ins and a decline of 3 percent at company drive-ins.