Sonic 2014 Annual Report Download - page 4

If you have followed Sonic’s story, you know that
the momentum in our business is strong. In spite
of a challenging environment for consumers and
competitive forces new and old, we continue to
accelerate the pace of our progress. Our multi-layered
growth strategy is driving the results we have achieved
so far and gives us confidence that we will continue to
optimize shareholder value in the future. Our focus on
product innovation, improved service, industry-leading
creative and media efficiency have all contributed to our
increased sales and profits. This foundation, combined
with our franchisees’ commitment and investment
in our brand, underpins our strategy to strengthen
consumer engagement and drive the business forward.
More importantly, our progress during fiscal 2014 is a
positive indicator of future success as we continue to
build our brand.
Highlights of fiscal 2014 include:
• A system-wide same-store sales increase of 3.5%;
• A 90-basis-point improvement in company drive-in
level margins;
• An ongoing increase in our drive-in development
pipeline;
• A 17% increase in earnings per share, on an
adjusted basis; and
• The initiation of a cash dividend program that
augments our other strategies to increase
shareholder value.
Most conversations about Sonic begin on the topic
of food: not only about the number of unique menu
choices, but also our relentless pursuit of high-
quality products.
Distinctive, premium products have always been a
hallmark of Sonic. From our hand-battered onion rings
and always popular Tater Tots, customers know that
Sonic is different, and different is better. Over the last
year, we introduced unique limited-time offer products
such as the Island Fire cheeseburger and chicken
sandwich along with our cheesy bread six-inch beef hot
dog. Over the summer, we complemented our 25 flavors
of Real Ice Cream Shakes with an array of 25 flavors of
Slush, some featuring Nerds® candy! Our customers
have come to count on and respond to Sonic offering
leading-edge menu items that are not only flavorful,
but fun. Our menu items, together with our Carhop
service model, increasingly put us on par with fast casual
competitors in terms of quality and service.
We are prepared to take menu innovation to new heights
with the recent opening of Sonic’s Culinary Innovation
Center. Investments like this in product innovation
and new equipment represent a redoubled effort to
bring distinctive and uniquely Sonic menu items to our
customers. With this new center, our team of culinary
professionals will bring even greater discipline to our
product development efforts for the future as we work
to surprise and delight current and new customers with
new flavors and products.
Our “Two Guys” campaign was recently ranked the most
effective in our category by a leading advertising testing
firm. Most people love them, and everyone remembers
them. This differentiated campaign separates us from
the competition and provides a powerful platform for
delivering our promotional messages.
To Our Shareholders
2
The increase in earnings per share
for scal 2014, on an adjusted basis.
17%
The number of new Sonic Drive-Ins opened
during scal 2014, reecting a nearly 50%
increase in drive-in openings versus scal
2013 and early progress on plans for 1,000
new locations over the next 10 years.
40
The amount of common
stock repurchased during
scal 2014, which represents
approximately 7% of the
total shares outstanding at
the beginning of the year.
$80M