Sonic Plans Ambitious Expansion

Sonic

Sonic Corp. has ambitious expansion plans to introduce its 1950s style Sonic Drive-In restaurants and their roller skating carhops in new parts of the country. Over the next decade, the Oklahoma-based company plans to open 1,000 new outlets throughout the U.S.

For those living in areas that unfamiliar with the chain, Sonic is a 1950s retro drive-in restaurant that enables customers to pull in, park, order and eat without leaving their vehicles. The menu includes burgers, hot dogs, grilled sandwiches and a variety of tater types. Sonic is particularly known for its vast selection of frozen desserts, shakes, slushes, and sodas. Drinks and desserts make up 40 percent of the chain’s current sales, in spite of their afternoon “happy hour” during which the fountain drinks and slushes are half price.

Sonic started as a root beer stand in Shawnee, Okla., in 1953. After adding some additional locations, the founders christened their chain SONIC in 1959 and adopted a “Service at the Speed of Sound” slogan. Since then, the restaurant expanded to its approximately 3,500 locations in 44 states. However, in large parts of the country there are few locations. Conversely, almost half of the chain’s current outlets are in five states: Oklahoma, Tennessee, Texas, Arkansas and Louisiana.

Sonic’s ambitious expansion plans include opening 40 to 50 new locations this year, 60 to 70 more next year and 80 to 90 the year after. Overall, the plans are to increase the chains size by almost 33 percent and be in all 50 states within 10 years. They have already been fueling pent-up demand and curiosity with national advertising that has aired in Sonic-less cities.

The northern states are ripe with expansion opportunities, according to Bob Franke, their Senior VP of franchise sales. He notes the brand’s small presence in the North combined with high customer awareness from the advertising campaign.

The chain did recognize, however, that it needed to make some changes in its formula as it expands into colder climates. They recently introduced an indoor dining room prototype to offer customers an alternative in colder climates to the iconic outdoor drive-ins. Sonic has also been opening prototype sites that are much smaller. They believe these will be better suited to rural communities and allow them to expand further into areas with expensive real estate, like Southern California.

California is a big part of the expansion plan. Over the past 24 years, Sonic has only opened 65 units in the state. By 2020, however, the company hopes to have 300 locations in California. Expansion in Los Angeles will not be easy. The chain is largely unknown there. In that part of the country, they are a 60-year-old start-up, as a Sonic spokesperson put it.

Besides the real estate cost issue, the retro 1950s carhop environment needs to appeal in an area known for embracing the latest fad. Sonic will also face stiffer competition in Southern California, competing with the significantly larger national chains and a wealth of regional chains, including larger ones like In-N-Out Burgers and Carl’s Jr. However, the ambitious plans for expansion should create buzz for Sonic and help pave the way.

By Dyanne Weiss

Sources:
Wall Street Journal
Sonic Drive-In
Los Angeles Times

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