Sonic 2014 Annual Report Download - page 5

We’ve all come to understand that millennials
(customarily defined as customers between the ages
of 18-34) march to the beat of a decidedly different
drummer, in terms of how, when and where they access
information. Our Integrated Customer Engagement
(ICE) initiative, which will be implemented over the
next few years, will engage consumers in new and
modern ways, meeting our customers where they
are. This includes leveraging different digital and
social media platforms, a customer loyalty program
and a new mobile app in calendar 2015. Combine
these elements with Sonic’s drive-in format and the
new Point of Personalized Service (POPS) digital
menu boards we are implementing, and the customer
experience will be unlike any other in our segment.
Currently implemented at all company drive-ins, POPS
is now deploying to franchise drive-ins. This “on-
lot” technology will soon be fully integrated with our
mobile and digital efforts. Together these initiatives will
revolutionize our drive-in operations and improve our
brand experience in new and exciting ways.
By all measures, our efforts are paying dividends, and
people are taking notice. Recently, Sonic was named
the QSR Digital Brand of the Year at the Food Service
Technology Conference & Showcase. More than 10,000
brands were evaluated, and finalists included brands
across the restaurant space. Winning the top award for
QSR is a validation of the strategy, speed and dedication
with which we have embraced social media and online
engagement with our customers, as we seek to create
and deepen connections with our guests in ways that
are convenient and compelling.
Technology not only is expected to drive sales, but profits,
too. We have implemented our new Point-of-Sale (POS)
system, designed to boost profitability through improved
food cost and labor management, at all company
drive-ins and are rolling it out to franchise drive-ins
concurrently with our POPS implementation.
All of this is good news for our shareholders. In
fiscal 2015, we expect to realize the full impact of our
multi-layered growth strategy, as we benefit from the
remaining elements of our strategy – our ascending
royalty rate and increased drive-in development.
Effective September 1st, more than 25% of our system
converted to a higher royalty rate. Further, new drive-in
development is anticipated to continue to increase this
fiscal year.
Our franchise business model continues to generate
ongoing strong cash flows, and we remain committed
to enhancing shareholder value through regular and
sizable share repurchases. In fact, over the past three
years, we have repurchased approximately 6.7 million
shares, or roughly18% of our outstanding shares. Also
worth noting, our Board of Directors just authorized a
new $105 million share repurchase authorization for
fiscal 2015. To further enhance our efforts to increase
shareholder value, our Board recently initiated a cash
dividend program, slated at $0.09 per share per quarter.
We paid our first-ever cash dividend to our shareholders
in the first fiscal quarter of 2015.
So what does the future hold for our Company?
Sonic is poised for continued success, heightening the
customers’ experience and further differentiating our
brand via initiatives that will drive sales and profits,
which in turn fuel new drive-in development. The
journey should be exciting and, with you along,
we can’t wait to explore the road ahead.
Sincerely,
Clifford Hudson
Chairman, Chief Executive Officer and President
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