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SONIC Draws Praise from CNBC’s Jim Cramer

Our daypart strategy, nostalgic drive-in concept and promotions set us ahead of the QSR pack

SONICicecream
CNBC’s Jim Cramer, host of the hit show “Mad Money,” singled out SONIC for our highly differentiated QSR brand, noting SONIC has not wavered from quality or innovation while remaining close to our roots as the go-to spot customers head to when they’re looking to satisfy their sweet tooth or treat themselves to a maxed-out burger.

“While so many other players in the fast food business are getting pummeled…SONIC has been able to compete by offering customers quality food at affordable prices, the essence of value, and by having a drive-in concept that differentiates them from the rest of the industry and yes by being so tasty. This is a well-run company,” Jim said during his spring 2016 business spotlight on SONIC, where he voiced his optimism about the drive-in brand’s future.

SONIC continues to thrive and outshine the competition in a space crowded by “sameness” — the “Mad Money” host highlights three key areas where SONIC has a stronghold.

SONIC maximizes dayparts like no other QSR

With many U.S. consumers obsessing over calories and carbs, SONIC competitors in the QSR space have responded with menu additions that greatly differ from their brand DNA, straining credibility and price points. At SONIC we stay true to what we do best, offering the kinds of delectable foods customers desire when they want a special meal, with items like real ice cream, juicy burgers and savory onion rings. Jim adds that our menu appeals to value-conscious consumers who want to treat themselves.

Our unique five BLADE dayparts model, Breakfast, Lunch, Afternoon, Dinner and Evening, drives part of this consistency. SONIC maximizes dayparts like no other QSR in the industry, preventing a pigeonholed identity that is over-reliant on one particular menu stronghold. Instead, our full menu is offered all day long, so customers get what they’re seeking when they seek it, whether it’s a quick shake or piping hot Ched ‘R’ Peppers®. The competition has taken note.

While competitors’ new all-day breakfast menus have done well, SONIC was ahead of the trend years ago, and we’ve offered breakfast to hungry customers anytime, day or night, for many years.

Our drive-in concept offers a unique customer experience

SONIC’s unique drive-in restaurant concept sets us apart from the usual drive-thru and gives us “a real edge over every other burger joint,” according to Jim. From the minute customers arrive, they become part of an ordering process that is unique to SONIC. They pull into one of our drive-in stalls and then select their menu choices, pushing the big red button on our menu board.

That’s when the magic begins. The flashing red light builds anticipation until an engaged, courteous team member greets them a moment later. After placing their order, the excitement continues to build, driven by the excitement of other patrons, the energy of carhops, and even the colorful menus, which encourage return trips for dessert or even dinner. Then, our carhops deliver fresh and hot food to the customers, who haven’t left their cars.

Jim believes there is still tons of room for SONIC to expand nationwide. He lauds the effectiveness of the Two Guys advertising campaign, which generates significant demand across the country. “SONIC has gotten very good at building excitement for new stores,” Jim says.

Smart, long-term promotions drive sales

Jim also commended SONIC’s leadership for taking a measured, long-term approach to promotional strategies as opposed to quickie, short-term pops to drive traffic. He credits SONIC CEO Cliff Hudson for effectively predicting customer perceptions of value in the QSR space.

During a recent investor call Cliff said, “Even though we have done things that have really increased the cost of expense of products, such as going from ice milk to ice cream, we have seen consumers’ perception of value that we offer, in fact, improve over time.”

Once again, SONIC proves we have the winning strategy to differentiate ourselves, breaking away from the pack in terms of quality of products for consumers and return on investment for franchise owners.

Bring the SONIC franchise to your community today

There has never been a better time to open a SONIC Drive-In franchise in your community. We offer a QSR investment with remarkable momentum driven by three things: Leadership from our best-in-class franchise support team, a diverse menu that maximizes all five dayparts and unprecedented brand recognition generated by our popular Two Guys campaign. SONIC franchisees saw average gross sales by store increase from $1,072,000 in 2012 to $1,246,000 in 2015, with almost 25% of our stores exceeding $1.5 million in annual sales, according to our 2015 FDD.

SONIC is growing across the country, and we still have available territories throughout the United States. Earlier this year, we unveiled plans to open the first SONIC Drive-Ins in Hawaii and we announced 33 new franchise stores to be developed in California, where we continue to actively seek potential franchise operators. Company leadership believes that opportunity abounds for the right entrepreneur.

More franchises are coming on board, meaning no matter where our customers go, they’ll find a SONIC and feel at home. That’s just one of the many factors driving more than 3 million customers to our stores each and every day.

The franchise fee for a single unit is $45,000, with a total estimated investment for a traditional SONIC ranging from $1.02 million to $1.77 million (excluding land). The net worth of a partner can be used toward the total net worth/liquidity requirements, which helps to ease costs. The term of a traditional SONIC franchise is 20 years, plus a 10-year renewal.
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