Sonic 2004 Annual Report Download - page 8

For Carlos, Elena, Miguel and
Anna, family time often starts
around the televison, and channel-
surfing has become a favorite pastime.
"We discovered Sonic while surfing the cable
networks. Many U.S. companies still think in
English, so it's really nice to see Sonic's message
in our native language," says Elena.
Someone once said, "change is constant," and being in a consumer-driven business, we couldn't agree more. Our
customers are changing. Baby and Echo Boomers continue to lead age demographic trends, and celebrating our nation's
diversity has never been more important, with the Hispanic population representing one of the fastest growing consumer
segments. Two-income and single-parent families keep pressure on leisure time and make convenience factors ever more
important in meal choices. And parents are reasserting their role in decision-making when it comes to what their children eat.
Advertising mediums are changing as well. Cable viewership continues to rise, now exceeding the share commanded by
broadcast networks, and the Internet relentlessly pushes the boundaries of communication forward.
To capitalize on this evolving landscape, we and our franchisees have continued to expand our reach with customers, increasing media expenditures
to approximately $110 million in 2004, up from $100 million in 2003. Importantly, with this growing spending power, we also have been able to direct an
increasing amount toward cable advertising and, as a result, have become a major sponsor of professional and college sports on ESPN, TNT and TBS, as
well as a significant advertiser on many other cable networks like Discovery, MTV, TLC and USA.
This shift to cable advertising, which will nearly double in dollars next year to half of the $120 million in total planned media spending,
accomplishes several things. First, in concert with our traditional monthly promotions and local market advertising, it allows us to provide a matrix
of products and messages to specific consumer segments in a myriad of ways. Second, cable advertising has proven to be especially effective
and efficient in reaching customers in developing markets; our strong same-store sales growth in these markets during 2004 highlights this view.
With these increasing resources, Sonic also has embraced the Internet to connect with customers of all ages. Sonic Cruiserssm is an entire
section on our web site where tech-savvy moms, teens and surfers of all ages can go for e-mail newsletters, coupons and menu news. The
site also includes unreleased TV commercials, an interactive menu, screensavers, e-cards and more. It's fun and informative, and since it
provides two-way communication, we get a lesson in consumer tastes and preferences at the same time.
To be successful in the restaurant business, it's essential that a company deliver on its brand promises and maintain top-of-mind
awareness. Stated differently, you have to build and strengthen relationships. With the strongest customer loyalty in the quick-service
sector, as measured by return visits, and with 2004 achieving the highest rate of growth in same-store sales in five years, we're quite
pleased with the prospects for continuing to build meaningful relationships with our customers.
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