Sonic & Annual Databook Insights 2023

Feb 7, 2023 | Insights, Restaurant Research

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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.

Sonic Market Share Chart
Sonic Market Share Chart

Annual Databook

RR’s Annual Databook features unit level AUV & margins, new build costs, valuations, system stats and units by state for 50+ $1B+ Chains.

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