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Cover: Sonic gives customers choice
March 29, 2006
Nobody has to tell Sonic Drive-In that evolution is key to survival. America's largest drive-in chain is constantly changing its menu and adding new technology, such as Pay-at-Your-Stall (PAYS), a satellite-based credit card terminal. The latest Sonic development is a new store look, which is the second redesign in 10 years. And based solely on sales numbers, consumers are accepting Sonic's changes.
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Sonic Industries president Scott McLain |
For the second quarter, which ended Feb. 28, Sonic's net income increased 14 percent and system-wide same-store sales jumped 5.5 percent, which was above the company's target range for growth. When Sonic released its first-quarter results in January, the company credited marketing strategy and its franchisees for such growth. Another reason for the company's growth has been Sonic Industries president Scott McLain, who oversees franchise development, field services, purchasing and distribution, operations services and information technology.
He recently spoke with QSRweb.com about Sonic's future. Here's what he had to say:
What was the idea behind a burger-centered chain offering a Tuscan Chicken Sandwich?
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Sonic Drive-In said the Tuscan Chicken Sandwich has been well-received by customers. |
A: For the last 53 years, we have really been about choice. And I think the Tuscan Chicken Sandwich was just an evolution of providing our customers with choice. That was a product we tested in our stores, and it had very good consumer acceptance. So we ran it as a monthly promotion in October.
If a customer orders a Tuscan Chicken Sandwich alongside a Hickory Burger, does the upscaled menu item slow down speed of service?
A: The Tuscan Chicken Sandwich is on ciabatta bread opposed to the conventional bun. Since the grilled chicken is a big part of what we sell, the operations other than the substitution of the bread are not markedly different from other products. From a speed-of-service standpoint, the sandwich didn't prove to be challenging for our operators.
What are some other menu items you are excited about?
A: Almost every month you'll see something new at Sonic. Recently we've had several new menu items that have been big hits with our consumers. Smoothies, which debuted in January, have been very strong sellers and fit very well in our consumers' lifestyles. And it sells at all times of the day, including the morning.
We also had the Sweetheart Brownie Blast in February, and in March we the sold Junior Banana Split, which always seems to resonate well with our consumers.
Do ice-cream products only sell well in certain regions?
A: The great thing about ice cream is it has great universal appeal. In fact, drinks and ice cream represent about a third of our product mix.
How well has PAYs worked?
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PAYs will be system-wide by the end of the calendar year. |
A: With our Pay-at-Your-Stall program, we have seen the credit-card transactions increase from under 10 percent of sales to more than 25 percent of sales. The average check for a credit-card transaction is $7 versus $5. Our operators also find PAYs quite helpful because it helps them increase speed of service.
When PAYs first came out, did you receive resistance from operators?
A: As with anything in our system, we thoroughly test before we roll out the product to the entire system. In this particular case, we installed the PAYs program in a significant number of company stores. And once we were able to demonstrate a good return for our operators, they were willing to get on board.
System-wide, what percentage of Sonic Drive-In stalls utilize PAYs?
A: Roughly 70 percent of our system has PAYs, and we expect 100 percent by the end of the calendar year.
It's been noted that Sonic plans to redesign its look after implementing a redesign in 1997. What was the inspiration behind the latest update?
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Sonic is testing a new design. (Bryan Terry) |
A: We believe the physical plant is a big part of the consumer experience. It's one of the reasons we believe so firmly in the drive-in concept. We routinely look at our physical plant to see if there are upgrades that we need to do in order to maintain and reinforce consumer perception of quality and that one-of-a-kind experience. The testing we're doing is just a look on the new building concept.
Region-wise, what part of the country produces the highest volume?
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Sonic will always be a drive-in concept, Scott McClain said. (Bryan Terry) |
A: As you know, we have 3,000 stores in 30 states. We have not found any place yet where the Sonic brand does not work. We have very high-volume stores in every state we operate.
In Oklahoma City, there's a dine-in Sonic unit. Will there be more across America?
A: We do have some non-traditional locations, which helps achieve penetration in areas where drive-in would not work, such as our Bricktown (Oklahoma City) location. However, we are a drive-in concept and we intend to remain a drive-in concept. We will continue to look at circumstances where non-traditional stores will make some sense, like malls and airports, but we expect to keep the integrity of our concept as it is.
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