CEO blames traffic shortfall, lower consumer spending
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Sonic Corp.’ systemwide same-store sales will likely be down about 2 percent for the fourth quarter ended Aug. 31, the company warned Tuesday.
The Oklahoma City-based company said preliminary results indicated same-store sales were down 3 percent at company-owned drive-ins and down 1.8 percent at franchised restaurants.
"While we delivered a solid overall fiscal 2016 performance with 2.6 percent systemwide same-store sales growth, the fourth quarter was below our expectations from both a sales and a profit perspective,” said Cliff Hudson, Sonic CEO, in a statement.
“The shortfall was largely driven by lower-than-expected traffic, reflecting lower consumer spending in restaurants and continued aggressive competitive activity,” Hudson said.
Sonic will report full fourth-quarter earnings on Oct. 24.
For the third quarter ended May 31, the company posted a systemwide same-store sales increase of 2 percent, with company stores up 0.9 percent and franchised units up 2.1 percent.
Third-quarter net income fell 20.4 percent, to $15.4 million, or 31 cents a share, from $20.4 million, or 38 cents a share, in the same quarter last year. The company took special items for the extinguishment of debt. Sonic revenue in the third quarter rose 0.3 percent, to $165.2 million, from $164.7 million the previous year.
Sonic has more than 3,500 drive-ins nationwide, with about 90 percent of them franchised.
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