| Type | Public (NASDAQ: SONC) |
|---|---|
| Industry | Restaurants |
| Founded | Shawnee, Oklahoma (1953) |
| Founder(s) | Troy Smith |
| Headquarters | Oklahoma City, Oklahoma, United States |
| Number of locations | 3,511 |
| Key people | J. Clifford Hudson, Chairman and CEO W. Scott McLain, president Sonic Industries (franchising subsidiary) Omar Janjua, president Sonic Restaurants, Inc. |
| Products | Fast food |
| Revenue | $550.9 million US$(2010)[1] |
| Operating income | US$70.8 million (2010)[1] |
| Net income | US$21.2 million (2010)[1] |
| Employees | 357 corporate employees |
| Website | SonicDriveIn.com |
Sonic Drive-In is an American drive-in fast-food restaurant chain based in Oklahoma City, Oklahoma, complete with carhops who sometimes wear rollerskates. As of August 31, 2010, there were 3,500 restaurants in 43 U.S. states.[2][3] Sonic serves approximately 3 million customers daily.
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Following World War II, Troy N. Smith Sr., Sonic's founder, returned to his hometown of Seminole, Oklahoma, where he became employed as a milkman. He decided to work delivering bread because bread was not as heavy as milk. Soon afterwards, Smith purchased the Cottage Cafe, a little diner in Shawnee, Oklahoma. Before long he sold it and opened a fast food restaurant, Troy's Pan Full of Chicken, on the edge of town. In 1953, Smith went in with a business partner to purchase a five acre parcel of land that had a log house and a walk-up root beer stand, already named the Top Hat. The two men continued with the operation of the root beer stand and converted the log house into a steak fast food restaurant.[4] After realizing that the stand was averaging US$700 a week in the sale of root beer, hamburgers and hot dogs, Smith decided to focus on the more-profitable root beer stand. He also bought out his business partner.
Originally, Top Hat customers would park their automobiles anywhere on the gravel parking lot and walk up to place their orders. However, on a trip to Louisiana, Smith saw a drive-in that used speakers for ordering. He realized that he could increase his sales if he could control the parking and have the customers order from speakers at their cars. Carhops would deliver food orders to customers. Smith borrowed several automobiles from a friend who owned a used-car lot to establish a layout for controlled parking. He also had some so-called "jukebox boys" come in and wire an intercom system in the parking lot. Sales tripled immediately and his little root beer stand was on its way to becoming a huge success.
Charles Woodrow Pappe, an entrepreneur, stopped — by chance — at the Shawnee drive-in and was very impressed. He got out of his car and began to take measurements of the stalls, trying to determine why they were not all the same size, assuming that it was an essential ingredient of the business plan. Smith came out and introduced himself and explained that the stalls were different sizes simply because different-sized automobiles had been used when he laid out everything. The two men hit it off and based on nothing more than a handshake in 1956, negotiated the first franchise location in Woodward, Oklahoma. By 1958, two more drive-ins were built, one each in Enid, Oklahoma and Stillwater, Oklahoma.
Upon learning that the Top Hat name was already trademarked, Smith and Pappe changed the name to Sonic in 1959. The new name worked with their existing slogan "Service with the Speed of Sound". After the name change, the first Sonic sign was installed at the former Top-Hat Drive-In located in Stillwater. Because the first Sonic sign was installed there, the Stillwater location has been considered to be the first Sonic Drive-In; the original sign can still be seen at that location.
Although Smith and Pappe were being asked to help open new franchise locations, there was, however, no royalty plan in place. The pair decided to have their paper company charge an extra penny for each Sonic-label hamburger bag it sold. The proceeds were to split fifty-fifty between Smith and Pappe. The first franchise contracts under this plan were drawn up by Smith's landlord, O.K. Winterringer, who was also his lawyer. At the time, there was no joint marketing plan or standardized menu and few operating requirements.
Sonic's founders formed Sonic Supply as a supply and distribution division in the 1960s. Under Smith, Marvin Jirous and Matt Kinslow (longtime franchise holders) were hired to run the division.
In 1973, Sonic Supply was restructured as a franchise company that was briefly named Sonic Systems of America which sold franchisees equipment, building plans and provided some basic operational instruction.[5]
As the company grew into a regionally known operation during the 1960s and 1970s, the drive-ins were located mainly in small towns in Oklahoma, Texas, Kansas, New Mexico, Missouri and Arkansas. In 1967, the year Pappe died, there were 41 drive-in locations.[5] The number continued to grow, and by 1972 there were 165 locations. By 1978 Sonic had opened 1,000 locations.
In 1977, the Sonic School for manager training was established under Winterringer's guidance. Most of the drive-ins were operated by franchisees who often made the store manager a business partner which is still often the case today.[6][7]
In 1983, Smith and Sonic's board of directors saw the need for change. C. Stephen Lynn was hired as president, and, in 1984, Lynn hired J. Clifford Hudson, an attorney, to head the legal department. Under Lynn, Sonic and its major franchisees began to encourage the development of local-advertising cooperatives, and developed a field structure to work with the franchisees.
New franchises began to expand the company into new areas and redevelop markets that had been unsuccessful in the past. These developments, combined with the advertising campaign featuring Frankie Avalon, the singer and actor, led to significant growth and a new image that would make Sonic a nationally recognized name.
In 1986, Lynn, with a group of investors, completed a $10-million leveraged buyout and took the company private. The next year, Sonic moved its offices to leased space at 120 Robert S. Kerr Avenue in downtown Oklahoma City and began to assume a higher profile in the community.
In 1991, Sonic became a publicly traded company again and, in 1994, the corporation finished renegotiating the franchise agreements with its franchisees.[8] That same year Sonic moved from its corporate headquarters in the old Globe Life building on Robert S. Kerr, in downtown Oklahoma City, to a bigger, more functional space at 101 Park Avenue, (the old Skirvin Tower building).
In 1995 Hudson[9] became president and chief executive officer, and Sonic Industries became Sonic Corp.
During the mid-1990s, Sonic opened 100-150 new restaurants a year. Beginning in 1998, Sonic began a retrofit program, called "Sonic 2000", to redesign and update all 1,750 stores in its chain with what was called a "retro-future" look.[7]
Hudson was named chairman of Sonic Corp. in January 2000.[9]
In April 2003,Sonic completed the rollout of breakfast as part of a sales driving initiative for the chain. The launch of breakfast also launched Sonic's "Full Menu All Day" initiative where not only was breakfast available all day, burgers and coneys and sides could be ordered during the morning hours. The initial breakfast menu was launched with the Breakfast Toaster(R) sandwich, breakfast burritos, Pancake on a Stick and fruit taquitos.
Celebrating its 50th birthday in 2003, Sonic invited customers to join the party by serving up a limited time offer Birthday Cake Shake.[10] The Peel-A-Present Game continued the celebration during the summer where customers won prizes by redeeming stickers found on drink cups. Prizes included a Ford mustang, Go Karts, MP3 players, free food and more.[11]
The company moved into its new headquarters building in the Bricktown district of Oklahoma City in the fall of 2003.
Menu enhancements continued in 2004, with the addition of entree salads to the Sonic menu including a Grilled Chicken Salad, Popcorn Chicken Salad and Santa Fe Grilled Chicken Salad. Additional menu enhancements during this decade included the installation of new fountain equipment that expanded the number of drink varieties available at Sonic, topping out at 168,894 drink combinations. To engage customers in the new varieties, Sonic launched a sweepstakes called "Luck of the Straw" where specially marked straws could be redeemed for free food or other prizes, including a grand prize of $168,894. The grand prize was won by a Broken Arrow, Okla. resident.
Development milestones celebrated in the 2000s include the opening of the 3000th Sonic Drive-In in Shawnee, Okla. and the 3,500th Sonic Drive-In in the Chicago market (Algonquin, Ill.).[12] In 2007, the company opened its first restaurants in the Northeastern U.S. in New Jersey.[13] Expansion into Pennsylvania, upstate New York, Michigan, and Massachusetts followed in 2009 with an October opening on Route 1 in Peabody and an April 2010 opening in Wilmington. This same year, Sonic celebrated 20 years of consecutive same-store sales growth.
In 2009, Sonic partnered with DonorsChoose.org to present Limeades for Learning, the chain's first systemwide cause marketing initiative. Public school teachers request needed supplies and materials and Sonic customers vote on how to allocate more than half a million dollars each fall. In the two years of the program, Sonic and its franchisees have donated more than $1.3 million and impacted learning for more than 70,000 students nationwide.
In September, 2009, Omar Janjua joined the company as president of its restaurant operating subsidiary, Sonic Restaurants, Inc. ("SRI")[14] and more recently was appointed as executive vice president of operations for Sonic Industries.
The decade of the 2000s saw the chain grow from a regional system of 2,200 drive-ins to a QSR brand reaching a national audience through advertising and locations in 43 states with more than 3,500 outlets.
Despite this growth into new markets outside the brand's traditional footprint, the brand was hit hard by the recession of 2008-2009. In 2009, the brand saw multiple quarters of declines in same-store sales for the first time in recent memory. Alaska has yet to have a Sonic location, but attempts to acquire one have been made in the past.[15]
In Oct. 2010, SONIC concluded its second year to support public school classrooms across the country through its Limeades for Learning program. Through the program affiliation with DonorsChoose.org, hundreds of classroom project needs were funded and at the end of the second year more than $1 million in materials and supplies had been donated over the two years. Limeades for Learning
SONIC reformulated its popular soft serve to meet FDA guidelines and introduced Real Ice Cream on May 17, 2010.[16] Another new menu item which was introduced in June, 2010 was the Footlong Quarter Pound Coney.[17] On Feb. 28, 2011 SONIC continued with the growth of hot dog popularity by add four new Premium All Beef Hot Dogs to the menu. Included were the Chicago Dog, New York Dog, All-American Dog and Chili/Cheese Coney Dog.[18]
Craig Miller was hired as chief information officer for SONIC in Jan. 2010. He came to Sonic from his position as Executive Vice President and Chief Information Officer at Movie Gallery/Hollywood Video. His extensive knowledge of the technology infrastructure necessary to effectively run a multi-unit retail business, along with his vast knowledge of corporate systems and practices, added to the depth of SONIC’s technology team.[19] In June, 2010, Danielle Vona was hired by SONIC as chief marketing officer. She came to SONIC from her position as a Vice President of Marketing at PepsiCo. Her extensive knowledge of branding, packaging and customer research has brought a new perspective to the company.[20]
In late 2010, SONIC announced it was ending its 17 year relationship with advertising agency Barkley. A group of specialized agencies were selected to represent the company and in early 2011, the San Francisco-based Goodby Silverstein & Partners was named as the new creative agency for the company.[21]
Sonic has more than 3,500 locations in 43 US States.
The Sonic menu includes items such as hand-made onion rings, as well as such drive-in staples as hamburgers, Quarter Pound footlong Coneys (hot dogs with chili and shredded cheese) and corn dogs. Other notable menu items include Ched 'R' Peppers (a form of jalapeño popper) and Tater Tots. The company features a mix-in frozen dessert, along with traditional milk shakes, called "Sonic Blasts", with the prefix being the item blended into the product. The drive-ins also offer add-ons like chili, cheese, and/or jalapeños, on guest's Tater Tots or French Fries as an option for a side with a combination meal. The signature item is the Super Sonic Cheese Burger.
In June 2011 Sonic significantly restructured and simplified their menu, dropping salads, limeade chillers, chicken dinners, Jr candy sundaes, and smoothies. The value menu, popcorn chicken, and chicken breast fritter are optional menu items left up to the individual drive-ins if they want to carry them or not.
In addition to traditional soft drinks, different flavors such as vanilla, chocolate, cherry, strawberry, cranberry, apple, etc. are available and can be added to the soft drink. Popular drinks include Ocean Water (the soft drink Sprite, with blue-colored coconut flavoring added) or limeades (Sprite with lime added.) Ades can also be made with flavor combinations. The company uses the slogan of "Your Ultimate Drink Stop" because of the 398,929 possible drink combinations. Its advertising also states that "You could have a new drink every day for the next 462 years". The true number of possible combinations is higher.[22]
In 1977, the company ran its first television advertisement.[23] In the 1980s, many of the company's drive-ins displayed signs with the slogan Happy Eating. Also, during the early 1980s, actor Tom Bosley was featured in the company's television advertisements.[24] One of the company's most memorable television advertising campaigns, which ran fom 1987 to 1993, featured Frankie Avalon.[25]
In May 1999, the company began a new advertising campaign featuring the character Katie the Carhop.[26]
The company is also involved with the event National Association for Stock Car Auto Racing (NASCAR). The company contracted with Richard Childress Racing in late 2000 to be an associate sponsor for Dale Earnhardt, Sr. during the 2001 NASCAR race season. Earnhardt was killed in the first race of the 2001 season, the Daytona 500 in Daytona Beach, Florida. The company continued its sponsorship for Kevin Harvick, Childress's new driver of Earnhardt's car, through the end of the 2003 season.
In 2004, the company became more widely known by advertising on TV nationally, in markets hundreds of miles from its nearest franchise. It has also used the slogan "Sonic's got it... others don't", as well as "It's not just good... it's Sonic good", implying a higher standard of quality than normal fast-food fare.
Celebrity socialites Paris Hilton and Nicole Ritchie had to work at a Sonics restaurant during the taping of their TV Series The Simple Life.
Improvisational actors T. J. Jagodowski and Peter Grosz are known to American television viewers from their series of "Two Guys" advertisements for the drive-ins. Similar series of commercials have also run featuring other duos of improvisational performers (Molly Erdman and Brian Huskey, Katie Rich and Sayjal Joshi, and Emily Wilson and Tim Baltz).
In the 2008 film Beethoven's Big Break, one of the characters is seen coming out of a Sonic, with the sign in plain sight.
In 2010, the company started national auditions for the new Sonic commercials. The company wanted a new face for the Sonic commercials, but still having "Two Guys". One of which is already airing featuring Lonna, a carhop from Wisconsin. Also Sonic recently changed their slogan to simply "It's Sonic Good". Sonic launched a commercial in late July to promote its new Coney hot dog that was filmed near Austin, Texas. Katie Ratkiewicz was cast to be the rollerskating carhop after serving several of the commercial producers at Hyde Park Bar & Grill in Austin who convinced her to audition.[4]
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