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Sonic (SONC) to Launch Value Menu at End of December; Sees Q1 Comps Down 2-3%

December 15, 2008 8:35 AM EST
Sonic Corp. (NASDAQ: SONC) today announced that it will launch a system-wide value menu at the end of December, in line with the company's previous announcement that it was taking a more strategic approach to pricing. Sonic's new value-oriented offerings reflect the added pressure that the challenging economic environment has placed on consumers and, in turn, the growing frequency of consumers trading to lower-priced choices.

Sees Q1 same store sales below expectations and down 2-3%. However, November same-store sales were slightly positive, reflecting a strengthening of sales with a more aggressive, price-sensitive promotion versus September and October. Sales for partner drive-ins (drive-ins in which the company owns a majority interest) have continued to lag franchisee sales by approximately four percentage points. This negative performance had a disproportionately adverse impact on operating margins and net income for the quarter.

Additionally, the company announced that it refranchised partner drive-ins in one smaller market during the first quarter. Sonic continues to have ongoing refranchising discussions with both existing and new franchisees. The company believes it remains on track to achieve its objective of reducing the overall percentage of partner drive-ins to the 12%-14% range over the next few years.

Sonic Corp. operates and franchises a chain of quick-service drive-in restaurants in the United States.

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