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Sonic sees strong per-share growth

Sonic Corp. has more than 3,500 drive-ins in 45 states that serve more than 3 million people per day, but the company says it still has room to grow.

The Oklahoma City-based drive-in franchiser saw earnings per share grow 21.5 percent from 2015 to 2016.

Sonic is one of the only major quick-service restaurant concepts with significant room to grow in many major markets, said Claudia San Pedro, chief financial officer for Sonic.

"Sonic has high penetration in the South Central and Plains regions of the U.S., but also has small-town and multiunit growth opportunities from coast to coast with new and current franchisees," San Pedro said.

An aggressive expansion is underway in California, as well as in the northeastern United States. Sonic expansion in the Northeast includes Pennsylvania, Rhode Island, New York and New Jersey.

"Our goal is to have a Sonic conveniently located for every guest in the country," San Pedro said.

In 2016, Sonic announced an expansion of two existing franchise agreements and the addition of two new franchise agreements for a total of 33 new drive-ins to the state of California over the next seven years. The new California drive-ins will be located in the regions of Los Angeles, Palm Springs, Central Valley and Northern California including Sacramento and the Bay Area.

Sonic also recently announced it has plans to expand to Hawaii, expanding its footprint beyond the Continental United States.

Sonic prides is constantly trying to keep its menu boards fresh by constantly introducing new products, flavors and limited-time offers. The company's test kitchen at its Oklahoma City headquarters in Bricktown plays an important role in coming up with new menu items.

"Our culinary innovation team consistently analyzes food trends and consumer taste preference to develop a strong pipeline of new and innovative menu items, particularly with our chicken menu items and real ice cream desserts," San Pedro said.

While Sonic's per-share growth as been strong over the past year, its one-year total returns, including dividends, declined by 4.7 percent, as calculated by the company S&P Global Market Intelligence.

The quick service restaurant industry as a whole has seen declines in same-store sales in recent months, San Pedro said.

"A number of factors have contributed to the recent decline, the most notable of which is deflationary grocery store pricing," she said.

Grocery and convenience stores are competing more frequently with the restaurants, emerging as a new and growing competitor in the industry. Sonic also faces increased competition from other fast food restaurants, which are offering more traffic-driving discounts on items.

The company estimated that systemwide same-store sales declined by about 2 percent during the fourth quarter of the year.

"The shortfall was largely driven by lower-than-expected traffic, reflecting lower consumer spending in restaurants and continued aggressive competitive activity," Cliff Hudson, Sonic Corp. CEO said in a statement. "As we look ahead to fiscal 2017, we remain focused on delivering one of the most differentiated customer experiences in the quick service industry with innovative products, targeted value propositions and outstanding customer service."

Overall Sonic still saw 2.6 percent systemwide same-store sales growth for its 2016 fiscal year, which ended Aug. 31.

Sonic has also made donating to education a top priority.

Since 2009, together with its franchisees, Sonic has donated more than $6 million to funding public school teacher projects across the nation through the Limeades for Learning program in partnership with DonorsChoose.org.

"Each town with a Sonic Drive-In has at least one school and we recognize the critical importance schools and teachers play in our communities," San Pedro said.

The funding has supported more than 11,500 classrooms, helping more than 350,000 students in nearly 1,000 cities across the United States. Through October, Sonic has contributed more than $7 million to the initiative.

The company has committed to investing $15 million into the Limeades for Learning program over the next five years.

Brianna Bailey

Brianna Bailey joined The Oklahoman in January 2013 as a business writer. During her time at The Oklahoman, she has walked across Oklahoma City twice, once north-to-south down Western Avenue, and once east-to-west, tracing the old U.S. Route 66.... Read more ›

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