Sonic Corp.’s systemwide same-store sales for the second quarter ended Feb. 28 rose 11.5 percent, the company said Monday in an earnings pre-announcement.
The Oklahoma City-based drive-in operator, which will release full quarterly results on March 24, said same-store sales increased 11.3 percent at company-owned restaurants and 11.5 percent at franchised units. Systemwide same-store sales increased 8.5 percent in the first quarter ended Nov. 30. In the second quarter last year, same-store sales grew 1.4 percent.
“Product innovation, continued growth in our core menu items and our national media strategy all contributed to an exceptionally strong sales quarter,” Cliff Hudson, Sonic chairman and CEO, said in a statement.
Lynne Collier, an analyst with Sterne Agee, said the “significantly better-than-expected” 11.5-percent same-store sales increase exceeded her estimate of 5.5-percent growth and “marked the best quarterly SSS gain in the company’s public history.”
“We believe that the number was particularly impressive in light of unfavorable weather in Sonic’s key markets of Texas, Arkansas and Oklahoma in late February,” Collier added.
The winter months are typically the slowest for Sonic, Hudson noted. “We are particularly pleased that the majority of our sales growth was driven by traffic, reflecting the positive impact of our multiple initiatives and economic tailwinds,” he said.
In the past six months, Sonic has expanded its extensive beverage menu with lower-calorie sodas, offered snack-sized hot dogs and opened a culinary innovation center at its corporate headquarters to expand the new-product pipeline.
Nicole Miller Regan, senior research analyst at Piper Jaffray & Co., said Monday in a note to clients that “although the specific pieces of the pre-announced comp were not quantified, we believe pricing remained similar to the 1Q15 quarter at 2.5 percent, thereby suggesting strong traffic/mix.”
Regan said the sales numbers were encouraging because Sonic was still in the process of rolling out its new point of personalized service, or POPS, platform to franchisees. The POPS platform is intended to leverage sales and increase average check and traffic.
Regan noted that completion of the POPS rollout is targeted for early summer, and those technology investments are “potential frequency drivers over time.”
Sonic has 3,500 drive-ins nationwide.
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