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Sonic 2Q profit and sales drop

OKLAHOMA CITY Drive-in operator Sonic Corp. said Monday that profit fell 6.5 percent in its February-ended second quarter, as it saw same-store sales and revenue decline.

 

The parent to the chain of more than 3,500 drive-ins said net income in the quarter totaled $8.7 million, down from $9.3 million in the same quarter last year. Latest-quarter earnings per share totaled 14 cents, and reflected a 6-cents-per-share gain from a discounted purchase of $25 million in corporate senior notes. Earnings per share in the second quarter of last year totaled 15 cents.

 

 

 

Latest-quarter revenue fell 3.2 percent to $169.0 million, reflecting a systemwide same-store sales decline of 3.6 percent. Same-store sales at corporate restaurants fell 6 percent. During the quarter, 27 new drive-ins were opened and 12 relocations or rebuilds were completed.

 

 

 

Sonic’s chairman and chief executive, Clifford Hudson, said menu refinements such as the chain’s new “Everyday Value Menu” have helped to stem traffic decreases. The menu was introduced late last year and features items for $1.

 

 

 

“This new aspect of our menu strategy is backed by a strong advertising push and, in little more than two months, we have seen traffic increases across multiple day parts,” Hudson said. “During the third and fourth quarters, we will combine these efforts with promotions for premium-quality products to improve average check and complement our value menu’s positive impact on traffic.”

 

 

 

Hudson said the improved menu and pricing strategy, along with an easing of commodity costs later this year, would help the system record improved sales and profit in the second half of the company’s August-ending fiscal year.

 

 

 

Sonic said it recently signed agreements to refranchise 90 additional corporate units in nine markets, which will bring the fiscal-year refranchising total to 111 locations.

 

 

 

Hudson said proceeds from Sonic’s recent refranchising efforts were used to purchase at a discount about $25 million of its $559.5 million senior notes, a transaction that helped strengthen the corporate balance sheet.

 

 

 

Contact Ron Ruggless at [email protected].

 

 

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