The SONIC Franchise Story
A rich brand heritage and tradition of innovation make for a top-rated fast food franchise opportunity
SONIC®, America’s drive-in, was built on a dream and a handshake.
Americans were filled with optimism when World War II ended. Small businesses began popping up across the country as veterans home from the war sought the chance to settle down and raise a family. Oklahoman Troy Smith was no exception. He wanted to make a good living for his wife and two children when his Army duty came to a close, and he jumped on the chance to buy a hamburger, hot dog and root beer stand called the Top Hat on the dusty outskirts of Shawnee, Oklahoma. His workday began at dawn on his bread truck delivery route, and then he would head to the drive-in and work all day and all night.
Troy’s humble hamburger stand took off during the era of post-war prosperity. He was soon looking for every chance he could to provide the best customer service and innovation — both of which remain SONIC core values to this day. He added parking spots, canopies and speakers so that customers could order their burgers and fries from the comfort of their cars. These state-of-the-art touches reflect the spirit of ingenuity still prevalent in the way SONIC operates today.
Americans had a love affair with their cars in the 1950s, and Troy saw the chance to create a unique business centered around the automobile’s sense of freedom, as well as people’s desires to celebrate everyday occasions with a made-to-order burger, hot fries and a cold milkshake. From first dates to birthdays, customers to this day still think of SONIC as a place to gather with family and friends to celebrate life’s occasions, both big and small.
Two Oklahomans share a dream for their drive-in
Troy struck up a friendship with a bold fellow Oklahoman who had a keen sense for business. Charlie Pappe, a local entrepreneur with an outgoing personality and a drive to make things happen, was inspired by the concept of the Top Hat Drive-In when he stopped by during a trip through town. The two businessmen instantly struck up a friendship and after a couple of hours of talking shop, Charlie asked Troy about opening a second location in Woodward. This first SONIC expansion deal was sealed with a handshake, formed on a friendship and based on a shared dream of bringing drive-in restaurants to communities. Two more Oklahoma locations soon opened in nearby Enid and Stillwater.
An excerpt from the book SONIC: The History of America’s Drive-In describes the duo: “Their personalities were complementary. While Troy was by nature a deal maker, able to construct a complex solution to any task, Charlie was a hand shaker who never met a stranger. Troy was cautious, careful to count every penny while giving change. Charlie was aggressive, willing to guess at the change while he moved on to the next task. Troy was fascinated by efficiency. Charlie was a fanatic for cleanliness, known to grab the mop bucket and clean the back entrance to a kitchen while dressed in a tailor-made suit. Troy drove a high-mileage, stick-shift-Chevy. Charlie drove a fully loaded Buick Wildcat. One thing they did share was a strong bond of friendship. Armed with friendship, complementary skills and ambition, Troy and Charlie were ready to build a chain of drive-in restaurants.”
The business partners and friends sought to copyright the Top Hat name, but when they realized it was already copyrighted, they went with SONIC. It was the Atomic Age, and Americans’ obsession with space inspired everything from tail fin designs on cars to the concept of fast food. SONIC went perfectly with their restaurant’s bold color scheme and catchy, modern slogan: “Service with the Speed of Sound.” Man had just learned to break the sound barrier, and jets flying out of Tinker Air Force base were breaking the sound barrier every afternoon in nearby Oklahoma City.
A franchise is born
SONIC as we know it today was born in 1959. The drive-in fast food franchise began to outgrow its humble beginnings in Oklahoma, and Troy and Charlie realized their fledgling franchise needed a legal framework. They hired a local attorney to draw up their first official franchise agreement. The first franchise royalty was two cents per hamburger, which came out to a penny profit per bag for Troy and Charlie. The first carhops delivering hot, fast, fresh food on roller skates were hired, and they give the SONIC brand personality and distinction to this day as an integral part of our fast and friendly service. Eating at SONIC became an experience that was not just about food, but also about getting together with friends and family.
When Charlie Pappe died of a heart attack at age 51 in 1967, Troy found himself at a crossroads. After Charlie’s passing, Troy depended on SONIC’s franchisees to move the brand forward. By the early 1970s there were nearly 100 SONIC Drive-Ins with $12 million in gross sales, and key franchisees had been named as officers of the company. The chain continued to grow, and Troy decided he needed a new corporate structure to support SONIC’s growth. SONIC Industries Inc. was formed and included Troy and a few of the most active SONIC franchisees.
Kansas was the first state SONIC expanded to, followed by Texas and Arkansas. These were SONIC’s core initial markets, along with its home state of Oklahoma. By 1978, SONIC had grown to 1,000 locations, opening its 1,000th location in its home state of Oklahoma in Midwest City. When the recession hit in the 1980s, Troy encouraged the SONIC family to get back to the basics of preparing hot food, hiring hard-working people and ensuring a team effort. SONIC continued to grow, and Troy retired from the day-to-day operations in 1983. He still insisted on attending grand opening celebrations for new restaurants.
SONIC went public in 1991; in 2003 SONIC turned 50, and annual sales topped the $3 billion mark. Today SONIC serves 3 million customers daily and hands out more than 511 million signature peppermints each year. SONIC ranks third in brand awareness with its decade-plus running Two Guys advertising campaign, which features two memorable improvisational comics and stands on its own as one of the most successful restaurant ad campaigns of all time. The Two Guys campaign instantly establishes new SONIC fast food franchises as the dominant player in local media share, and the brand recognition that is a result of the cult-like following of the Two Guys comedians has established SONIC as a national favorite.
Our current President Claudia San Pedro joined the company in 2006, quickly rising through the ranks. Today she is an accessible leader often seen, literally, out on the floor mingling with employees at SONIC headquarters. Prior to becoming President in early 2018, she helped guide the company in a variety of capacities, including serving as Vice President of Investor Relations and, most recently, Executive Vice President and Chief Financial Officer.
SONIC is an iconic brand built to last
SONIC is the largest chain of drive-in restaurants in America, offering menu heaven to young and old customers alike — whether they want a juicy burger, a milkshake made with real ice cream or a refreshing cherry limeade. No QSR can match the diversity of SONIC’s menu, which maximizes all five dayparts. SONIC’s Two Guys campaign launched in 2003 and has become one of the most popular QSR advertising campaigns in history. Our brand recognition is unprecedented; even in towns where the closest SONIC might be hundreds of miles away, SONIC is a familiar concept.
SONIC lost its beloved founder Troy Smith on October 26, 2009. A hard-working and humble man to the end, he still went into the office daily and never stopped thanking his SONIC family. His dream started with a humble root beer and hot dog stand and is today an iconic franchise that brings joy to millions.
Long-time employee and SONIC historian Becky Rickard, who holds the keys to the iconic brand’s archives, shares one of her most poignant memories of Troy that took place on opening day at the new corporate headquarters in downtown Oklahoma City. A longtime employee that he knew well was retiring, and Troy came to extend his best wishes. “Troy Smith was already losing his eyesight, and he walked in slowly on his grandson’s arm. As he walked into the room, everyone parted. It was like the Red Sea. And just spontaneously, we all started clapping.”
Troy is a hero at SONIC and a symbol of the American dream. His root beer and hot dog stand with the dusty, gravel parking lot has evolved into one of the largest and most successful QSRs in the United States. Never in their wildest dreams would Troy Smith and Charlie Pappe have fathomed that their humble drive-in concept would one day be in more than 3,600 locations across America and be a QSR rock star, instantly recognized as a top fast food franchise throughout the country thanks to the Two Guys ad campaign.
When franchisees, SONIC team members and leadership gather at the annual SONIC convention, it’s a tradition to show a video clip of the two friends musing about their dream to see SONIC become successful. When Troy tells Charlie matter-of-factly, “If we do this right we might have 50 of these,” it brings the house down with laughter and raucous applause every time.
SONIC is an experience shared by generations. Customers hit the red order button and magical things happen. Families celebrate birthdays at SONIC. First dates are held at SONIC. Memories are made at SONIC.