Sonic Corp. announced preliminary sales results for the fourth quarter and fiscal year, ended Aug. 31.
The nation's largest chain of drive-in restaurants' 4Q same-store sales declined an estimated 6.4 percent. Company-owned drive-in sales dropped 6.1 percent. Both figures are in line with the company's previously announced predictions.
The company also reported that drive-in openings totaled 25 for the quarter, with 24 of those opened by franchisees. For the fiscal year, there were 80 franchise openings, compared with 130 in 2009.
Sonic cited a challenging sales environment and difficult economic conditions for the slowed pace. Still, Clifford Hudson, chairman and CEO of Sonic Corp., remains optimistic for many reasons. For example, the third fiscal quarter improved to within three-tenths of a percent of franchisees' same-store sales performance, and, during 4Q, company-owned drive-ins outperformed the system for the first time in almost three years.
"In the context of turning our business toward more profitable performance and enhancing stockholder value, our fourth fiscal quarter provided direction to just such a turn," Hudson said. "The first indicator is the performance of our company-owned drive-ins; their sales and margin performance have the potential for the largest impact on earnings and stockholder value in the near term."
Hudson added another reason for optimism is that, throughout fiscal 2010, Sonic implemented new initiatives, including new messaging and media strategies, service differentiation and product quality improvements.
"We expect these strategic initiatives will gain traction and improve system-wide comparable sales performance in fiscal 2011 and beyond," he said.
Fiscal 2011 Outlook
Sonic's outlook for fiscal 2011 currently anticipates the following elements:
- The opening of a total of 40 to 50 new franchise drive-ins;
- Sequentially improving same-store sales throughout the fiscal year, building on initiatives from fiscal 2010;
- A slight improvement in restaurant-level margins as a result of labor efficiencies;
- Capital expenditures in the range of $20 to $25 million.
"While we think it is prudent to take a conservative approach to our sales outlook for fiscal 2011, because of the uniquely challenging environment, we do expect improvement in same-store sales as our sales-building initiatives improve traffic," Hudson added.
