Sonic 2009 Annual Report Download - page 4

Fiscal year 2009 was a difficult year for just
about everyone, and this included Sonic. After 22
years of positive same-store sales, we experienced a
system-wide same-store sales decline.
We had achieved our industry-leading record of
positive same-stores sales growth by distinguishing
ourselves as one of the most differentiated quick-
service restaurant concepts, driven primarily by
unique products and distinctive service. Our focus
on unique items like our Tater Tots, Cherry Limeades
and Extra-Long Chili Cheese Coneys, highlighting
our made-when-you-order food and our one-of-a-
kind Carhop service, successfully separated us from
our competition.
In addition, a variety of initiatives helped drive
sales over a sustained period of time. These include
such things as our customer-friendly PAYS (Pay At
Your Stall) credit card terminals, building retrofits, a
shift to national media, Frozen Favorites®treats and
Fountain Favorites®drinks, the addition of breakfast,
and numerous other initiatives.
However, the breathtaking shift in the economy
in late 2008 and throughout 2009 had a profound
impact on consumer discretionary spending, the
likes of which most of us have never seen before.
Consumers are eating out less often, and when they
do eat out, they spend less money. Combined, these
shifts delivered a one-two punch to both the
restaurant industry generally, and to us specifically.
This is a challenge for the entire industry, but it has
hit us disproportionately hard because of the
effective work we’ve done over the years to build all
day parts; the after dinner portion of the industry
business, which is a greater proportion of our
business, has seen the greatest decline recently and,
as a result, the impact has hit Sonic more than most
other concepts.
With the general decline in mind, we pursued a
number of strategies to adapt to this shift in
consumer behavior and an increased demand for
value. Our belief is that improved same-store sales
will come from an increase in traffic, loyalty and
check. We call it TLC, and our first priority was to
focus on driving traffic, getting more people to visit
Sonic more often. We implemented our Happy Hour
promotion in the prior fiscal year. Our objective in
doing this was to build traffic and loyalty among our
drink consumers, particularly in the afternoon,
further emphasizing our trademark as Your Ultimate
Drink Stop®. In fact, Happy Hour has driven sales
positively and traffic enormously.
As the economy started to decline, 70% of our
own customers said they would come back to Sonic
more often if we offered increased value beyond
Happy Hour. So we further expanded our value
offerings in December 2008 by creating our
Everyday Value Menu. Combined with Happy Hour,
this helped drive traffic for most of the year,
resulting in relatively flat traffic at a time when the
industry generally saw a decline.
Our Limeades for Learning®initiative aimed to
solidify consumer loyalty this past year. We were
able to demonstrate our commitment to education,
local communities and our consumers, while at the
same time providing great customized drinks. “
You
Sip, Kids Learn
®” was the offer of Limeades for
Learning®, and thanks to our loyal Sonic customers
who cast nearly 850,000 votes, we donated more
than $600,000 to local public school classrooms in
40 states!
While fiscal 2009 was the year we laid the
foundation to drive traffic and loyalty among our
consumers, 2010 will be focused on emphasizing
the attributes that make Sonic a truly unique brand,
featuring high-quality, distinctive products with
unique and personalized Carhop service. Consumers
likely will continue to be careful about how they
spend their money, but we will work to provide
consumers more compelling reasons to spend their
hard-earned dollars with us.
Clifford Hudson
C h a i r m a n a n d C h i e f E x e c u t i v e O f f i c e r
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