Sonic 2010 Annual Report Download - page 4

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While an enthusiastic debate goes on about
whether the recession has really ended, there is
no question that economic pressures continue for
consumers. The two-year stretch we just ended
has been the worst in recent memory for most
restaurants, and disproportionately heavy for a
premium brand like Sonic. As a result, company
performance over this past year with respect to
same-store sales has been different – really
different – from what we have come to expect
from our company and brand.
In this light, fiscal 2010 could be viewed as a year
of transition and rebuilding for Sonic, especially
for our company-owned drive-in operations,
which have lagged franchise drive-ins significantly
for nearly three years. While this area has been
problematic, a turnaround in company-owned
drive-in operations also holds the most attractive
near-term potential of any area of our business
for driving stronger earnings growth.
Still, the Sonic brand is resilient – growing in
depth and breadth for nearly 60 years and
backed by legions of loyal customers. Its long-
term potential is as attractive as ever, providing
us with firm footing as we meet the challenging
times before us. The key attributes of our brand
– friendly Carhop service, a unique assortment of
great food, and the exceptional drive-in
experience that ties it all together – remain
the foundation for future success.
So how do we overcome the obstacles before us?
One thing is to ensure that we have effective
leadership throughout our organization. Another
is to focus on product quality and service levels
at the drive-in and the way we deliver our brand
message to consumers – with an intensity like
never before.
In early fiscal 2010, Omar Janjua joined Sonic to
head our company-owned drive-in operations,
bringing seasoned leadership – including senior-
level positions with major national QSR brands –
to this aspect of our business. Omar’s intensified
focus on the guest experience at Sonic has quickly
translated into improving operations.
We also continued to add talent to our leadership
team in 2010 to enhance our internal capabilities
and systems. One of these additions was Craig
Miller as senior vice president and chief
information officer. Previously, Craig has held
senior IT positions with Bank of America and
PepsiCo, among others, and is experienced in
data-center consolidation, multiple point-of-sale
systems, e-commerce, and corporate systems.
Danielle Vona also joined Sonic as chief marketing
officer. Formerly vice president of marketing at
PepsiCo, Danielle brings solid skills in brand
marketing, positioning and communications, as
well as extensive experience on the agency side.
Further improvements in product quality and
service excellence also were high on our agenda
in fiscal 2010. These efforts were highlighted by
the introduction of Real Ice Cream in May,
Footlong Quarter Pound Coneys in July, and the
roll-out of an assortment of loaded burgers,
packing a quarter pound of pure beef, in late
summer and early fall. We also moved this past
year to redefine value the Sonic way, introducing
new combo meals that deliver solid value to
consumers in these tougher economic times, instead
of pursuing a singular focus on price alone. On
the service side, you may have noticed our increased
emphasis on skating Carhops, a core component
of the Sonic experience and a key determinant of
overall satisfaction among our customers. There
now are more Carhops skating at Sonic than
ever before. And Fantrak, our key customer
feedback tool, continues to show sure and steady
improvement in customer satisfaction at all levels.
Lastly, we supported these product and service
initiatives with new messaging and an innovative
media allocation strategy that allows us to utilize
multiple platforms to target customers with
almost pinpoint accuracy. This strategy allows us
to optimize media impressions in every trade area
to drive frequency and reach potential consumers
in the most cost-effective manner.
We are pleased to note that during the second
half of fiscal 2010, these efforts to improve
Sonic's performance began to gain traction.
To Our Stockholders: