Sonic Corp.'s drive-in restaurants continued to be impacted by the challenging economic environment and decreased consumer spending in the fourth quarter ended Aug. 31, but the company anticipates improvments in the next fiscal year.
In its projected earnings release, the company reported fourth quarter same-store sales were down an estimated 4.5 percent for the system and 5.4 percent for partner drive-ins (those in which the company owns a majority interest). The company said the comp declines are improvements from its sales performance for the third quarter, which saw comps decline 5.4 percent systemwide and 7.7 percent at partner drive-ins.
Sonic credits the positive impact of its sales-driving initiatives, resulting in relatively flat traffic for the quarter vs. the prior year, a notable achievement given recent trends in the quick-service restaurant industry.
"Although we have faced significant challenges this past year related to the consumer, we are confronting these hurdles and believe that our brand is well-positioned for long-term growth," said Clifford Hudson, chairman and CEO. "During the past year, we have worked hard and have been pleased with the implementation of a slate of initiatives, which includes a new strategic pricing model, increased focus on customer service and the introduction of the Everyday Value Menu.
Fiscal 2010 outlook
For fiscal 2010, Sonic is projecting its income will increase 10 percent to 12 percent over last year based on the expectations of improved margins due to lower commodity costs. The company also anticipates flat comps and will continue its refranchising program.
The company expects to open 115 to 125 new drive-ins, including 100 to 110 by franchisees.
Q4 release, conference call
Sonic expects to report its fourth quarter and fiscal year end results at the market close Oct. 20. The company will provide an online Web simulcast of its earnings release conference call that afternoon beginning at 5 p.m. Eastern time. During that call, management will comment on Sonic's financial and operational results for the fourth quarter and fiscal year ended Aug. 31. An online replay of the conference call will be available approximately two hours after the conclusion of the live broadcast and will continue through Nov. 20, 2009. A link to these events will be available at the investor section of the company's Web site.
