Sonic 2009 Annual Report Download - page 19

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Management's Discussion and Analysis of Financial Condition and Results of Operations
Revenues Percent
Year Ended August 31, Increase/ Increase/
($ in thousands)
2008 2007 (Decrease) (Decrease)
Revenues:
Partner Drive-In sales $ 671,151 $ 646,915 $ 24,236 3.8%
Franchise revenues:
Franchise royalties 121,944 111,052 10,892 9.8
Franchise fees 5,167 4,574 593 13.0
Gain on sale of Partner Drive-Ins 3,044 732 2,312 315.8
Other 3,407 7,196 (3,789) (52.7)
Total revenues $ 804,713 $ 770,469 $ 34,244 4.4
The following table reflects the changes in Partner Drive-In sales and comparable drive-in sales. It also presents information about
average unit volumes and the number of Partner Drive-Ins, which is useful in analyzing the growth of Partner Drive-In sales.
Partner Drive-In Sales
Year ended August 31,
($ in thousands)
2009 2008 2007
Partner Drive-In sales $ 567,436 $ 671,151 $ 646,915
Percentage change (15.5%) 3.8% 10.4%
Partner Drive-Ins in operation
(1)
:
Total at beginning of period 684 654 623
Opened 11 29 29
Acquired from (sold to) franchisees, net (205) 65
Closed (15) (5) (3)
Total at end of period 475 684 654
Average sales per Partner Drive-In $ 954 $ 1,007 $ 1,017
Percentage change (5.3%) (1.0%) 3.8%
Change in same-store sales
(2)
(6.4%) (1.6%) 2.5%
(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)
Represents percentage change for drive-ins open for a minimum of 15 months.
For fiscal year 2009, the decrease in Partner Drive-In revenues was largely driven by the decline in same-store sales for existing drive-
ins and the refranchising of 205 Partner Drive-Ins. As a result of the refranchising, Partner Drive-Ins now comprise 13% of the entire system
compared to 20% in fiscal 2008.
During fiscal year 2009, same-store sales at Partner Drive-Ins declined 6.4%, as compared to the 4.3% decrease for the system.
To counteract this decline, the company implemented initiatives designed to provide a unique and high quality customer service experience
with the goal of improving same-store sales.These initiatives include restructuring the Partner Drive-In organization, simplifying incentive
compensation plans for store-level management, implementing a customer service satisfaction measurement tool, and implementing a
more effective pricing tool at the drive-in level.These efforts are expected to have a positive impact on Partner Drive-In sales going forward.
During fiscal year 2008, Partner Drive-In sales increased 3.8%. The increase was comprised of sales from newly constructed drive-
ins and acquired drive-ins, offset by the decrease in sales from lower same-store sales.
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