
Sonic Executive Summary
Sonic enjoys strong brand equity (particularly in core South & Central Plains markets) around its unique drive-in format with car stalls, friendly carhops and a plethora of specialty drinks & frozen treats. Every menu item & LTO has a fun, American twist which has become engrained in the brand’s identity. Notably, Sonic seeks to re-position around a QSR burger focus (with less emphasis on specialty drinks & frozen treats) which could work well to support its expansion into newer, colder markets and this strategy is supported with an abundance of burger LTOs & burger upgrades. In any case, the chain is well known for offering fun breaks/special times by leveraging a car culture, the freedom to choose access (drive-in, drive-thru, order-ahead) and nearly unlimited menu combination options. Craveable, made-to-order menu items span 5 dayparts with drinks, desserts and sides driving afternoon snack hour sales and the brand’s snacking options fit well with the current eating trends of Millennials & teens. Sonic’s drive-in format increases the chance that every customer will be first in line and car hops (brand ambassadors) help to generate high scores for friendliness and access is complimented by drive-thru available in ~40% of the system (mostly in newer stores). While value is primarily expressed by a differentiated product & experience (drive-in/car hop), price value is also available with offers like: 2-4PM Happy Hour featuring ½ priced drinks/slushes; 1/2 price drink & slushes available all-day for app orders; and value promotions. Sonic’s newer digital order platform has extended its brand reach into a younger demo and loyalty helps translate drink-only mobile traffic into incremental food sales. Having said all this, the chain’s smaller scale as 6th largest QSR sandwich player necessitates a higher ad contribution rate (as a % of sales) and the system is challenged to drive development to gain enough share of voice in new markets (particularly in colder climates where frozen drinks/treats have seasonal appeal). Also, Sonic’s ability to drive sales growth by repositioning as a burger led brand still must be evaluated while its core indulgent positioning (specialty drinks & frozen treats) represents a vulnerability during the current economic difficulties. In conclusion, while Sonic’s unique positioning provides valuable brand equity, the chain’s prospects will also be a function of the success of its burger repositioning and, likely, the strength of its value equation given the current economic environment.

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