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Sonic's systemwide sales during Q2 were up 1.4 percent, including 1.5 percent at franchised locations and 1.3 percent at company drive-ins. These increases were driven by a variety of initiatives, including a bigger marketing push and a focus on differentiation and customer experience.
Marketing and products
In January 2013, Sonic began to shift its media weight from local markets to national cable, and used its Two Guys campaign to highlight promotions. The shift and the increase in media spend has led to a significant increase in brand awareness, CEO Cliff Hudson said during the company's earnings call Monday.
"Two Guys has led to more reach with the media, more frequency and more recognition with consumers," he said. "It gave us a real spike in share of voice amongst our (QSR sandwich) competition."
Two Guys were able to highlight a variety of new product news throughout the year, a strategy that remains a large part of Sonic's DNA, and drives sales across all five dayparts, Hudson said.
This momentum will continue through the spring and summer months. Sonic will bring back its Summer of Shakes promotion, for example, introducing 25 new shake flavors. Debuting this year will be chocolate jalapeno.
There will also be a Summer of Slush promotion with 25 new slush flavors.
"The path we're on does leverage the core nature of the business – whether we're focusing on Real Ice Cream, dessert or premium chicken products – it's our view that we're going to really set our brand apart from a lot of competition.
POPS technology and ICE
Another differentiator the brand is betting on is the Point of Personalized Service initiative. POPS is going to enhance the customer experience, drive sales and system profitability at the store level, Hudson said.
POPS includes an interactive screen situated in the drive-in lot.
"It's a beautiful thing and it's attracting traffic and growing checks," Hudson said.
The initial phase of the rollout focuses on suggestive sell and promotion across multiple dayparts. Because it's software driven, Sonic will continue to evolve the technology and increase the dynamic nature of it over time, Hudson said.
"We are seeing customer service scores drive up nicely at the stores where we've implemented this. Our view is, with this POPS combined with the physical drive-in format, is going to allow us to engage the customer using mobile technology and social media, engage in on-lot and off-lot and heighten the distinctive and differentiated nature of our concept versus our competition," he said.
POPS is part of a broader Integrated Customer Engagement (ICE) focus for Sonic. All of it ties into the company's new POS software. The total package is about $135,000 (POPS is about $80,000 and the POS is $30,000).
"The total cost is reasonable, given the ROI we're expecting from an increase in sales and profits. Most franchisees expected to obtain financial through local or regional partners," Hudson said.
Thus far, the POS system has been implemented in about 250 company stores. The company expects it to be in all company stores by early summer and will begin a large scale franchise rollout in the fall.
"Each of these (initiatives) will have an increasing level of individualized marketing," Hudson said. "Over time, it will become more sophisticated."
Sonic has a commitment to sign commitments for 120 new drive-ins this year. Most of these are in newer markets, including California, Pacific Northwest and Northeast.
"With the strong national cable spending we're doing, we're positioned to service those areas in a way that had not been positioned previously," Hudson said.
Also, a mobile app is in test that ties into ICE, and the company hopes to broaden the test this summer and to have a national rollout by the latter part of 2015.
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