Sonic 2008 Annual Report Download - page 50

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Managemen' Discuio  Anali  nancia Condo  Resu  Operaon
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Sonic Corp. 2008 Annual Report
The following table provides information regarding the number of Partner Drive-Ins and Franchise Drive-
Ins in operation as of the end of the periods indicated as well as the system-wide growth in sales and average
unit volume. System-wide information includes both Partner Drive-In and Franchise Drive-In information, which
we believe is useful in analyzing the growth of the brand as well as the company’s revenues since franchisees
pay royalties based on a percentage of sales.
System-Wide Performance
Year Ended August 31,
2008 2007 2006
($ in thousands)
Percentage increase in sales 5.6% 8.6% 10.7%
System-wide drive-ins in operation
(1)
:
Total at beginning of period 3,343 3,188 3,039
Opened 169 175 173
Closed (net of re-openings) (37) (20) (24)
Total at end of period 3,475 3,343 3,188
Core markets
(2)
2,602 2,500 2,435
Developing markets
(2)
873 843 753
All markets 3,475 3,343 3,188
Average sales per drive-in:
Core markets $ 1,175 $ 1,145 $ 1,105
Developing markets 973 998 954
All markets 1,125 1,109 1,070
Change in same-store sales
(3)
:
Core markets 2.4% 3.6% 5.3%
Developing markets (5.2) 1.2 1.5
All markets 0.9 3.1 4.5
(1)
Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not
considered closed unless the company determines that they are unlikely to reopen within a reasonable time.
(2)
Markets are identified based on television viewing areas and further classified as core or developing markets
based upon number of drive-ins in a market and the level of advertising support. Market classifications are
updated periodically.
(3)
Represents percentage change for drive-ins open for a minimum of 15 months.
System-wide same-store sales increased 0.9% during fiscal year 2008 as a result of slight increases in traffic
(number of transactions per drive-in) and average check. The increase in traffic was aided by the system-wide
implementation of Happy Hour in November 2007, which features half-price drinks from 2:00 pm to 4:00 pm
every day.
The company continues to pursue specific sales-driving initiatives including, but not limited to:
• The ongoing physical retrofit of drive-ins with a new look;
• The relocation and rebuilding of existing drive-ins which often result in significant sales increases;
• The ongoing installation of electronic messaging signs;
• Increasing our share of sales in non-traditional day parts including the morning, afternoon, and evening
day parts;
• Providing an exceptional customer service experience;
• Using technology to reach customers and improve the customer experience;
• Promoting new products on a monthly basis focused on quality and expanded choice for our customers;
and
• Growing brand awareness through increased media spending and greater use of network cable
advertising.