Sonic

Feb 5, 2021 | Report Announcements

Sonic enjoys strong brand equity (particularly in core South & Central Plains markets) around its drive-in format with car stalls, friendly carhops and a plethora of specialty drinks & frozen treats. Its unique drive-in format increases the chance that every customer will be first in line, served by car hops (brand ambassadors) that help to generate high scores for friendliness. This format also allows customers to take their time ordering without concern about slowing a drive-thru line. The brand’s current re-branding effort includes: the theme that Sonic provides an oasis in everyone’s daily routine with drive-in service providing a fun “summer mindset” experience; a tagline tweak from “this is how to Sonic” to “this is how we Sonic”; new ads featuring families/groups of real customers having fun parked in a Sonic stall (this is how WE Sonic…); a logo upgrade & new color palettes for packaging to communicate change; and a new, more relevant “Delight” prototype. Sonic’s re-branding reflects a current consumer lifestyle characterized by a daily grind marked by insufficient time & money. To this end, Sonic is portrayed as providing an escape from the grind, offering stressed consumers with fun breaks/special time between driving family from daycare to sports as an example. The emphasis is on a prevalent car culture and Sonic’s offer of freedom is to choose access (drive-in, drive-thru, order-ahead) and to choose from nearly unlimited menu combination options. Sonic’s craveable & fun (made-to-order) menu items span 5 dayparts (drinks, desserts & sides drive snack hour sales) with the full menu available all day and it is notable that the chain’s plethora of high margin, unique drink/treat options generate strong trial & appeal to women who generate the most traffic and transactions (especially during happy hour when drinks & slushes are offered at 1/2 price). Notably, the system’s 2019 comp turnaround reflected: increased product innovation; price increases; and new order ahead functionality. This was continued with 2020 comp strength which reflected Sonic’s post-lockdown advantage of offering not just drive-thru service, but an opportunity for families/groups/individuals to get out of their house to eat-out in the safety of their own car in a drive-in stall. However, over the long-term and after a return to normal, Sonic must still address how to drive higher average checks from drink/dessert customers sufficient to bring its AUV closer to the segment average. Also, Sonic must face its ongoing challenge to gain sufficient share of voice in new markets (particularly in colder climates where frozen drinks/treats have seasonal appeal) in order to fulfill its goal of achieving a national footprint. In conclusion, Sonic’s positioning works well in a post-lockdown world and hopefully the brand will be able to leverage this window to drive higher tickets in core markets and greater frequency in newer markets.

Signup
NoBullEconomics
Restaurant Research

Email Sign-up

15 Second Posts

We Have a Plan to Rescue the US Dollar

While NoBull’s simple 1% Plan to fix America’s deteriorating financial condition will not cure our condition overnight, it could buy us some time by setting the U.S. dollar on a firmer foundation.  

A Run on the Fed?

The Fed has crushed its own bond portfolio by hiking interest rates. Maybe there will not be a run on the Fed, but perhaps we should be more concerned about a run on the US$.

China Schools the US on Morality

Must read: China lectures about U.S. Hegemony & Its Perils. Maybe China would prefer if it had hegemony instead? Some classify this diatribe published in February 2023 as an informal declaration of war.

What is Going on with the Banks?

The frailty of the banking system has come front & center over the last couple of weeks as more secondary, unintended symptoms develop from the Fed’s race to raise interest rates.

Powell Faults an Overheated Labor Market for the Need to Hike Rates Again

Despite growing evidence of systematic bank risks associated with the Fed’s aggressive rate hikes over the last year, Powell hikes another 25 bps anyhow, citing labor pressure as the culprit. However, in the real world, labor conditions are already improving.

Fixed-Income Issuance Says a Lot About Economy

Total U.S. fixed income (FI) issuance declined -34% y/y to $8.8 trillion during 2022 as interest rates ramped up.

Bank Deposits Growing Much Faster than Business Loan Demand

Banks have been parking excess deposits in various forms of government debt that are subject to interest rate risk & in some cases, risky crypto bets. This is causing systematic risk.

Nerdwallet Survey Shows an Indebted & Very Stressed Consumer

Consumers are combating the higher price of living & higher interest rates by driving less, buying store brands & taking on more debt.

The United States of America is Worth Saving

Americans need to be reminded about our heritage as the single most productive nation as measured by GDP/person with a unique capability to bless the entire world if we can simply get back to business.

Should Private Banks Go Extinct?

Since the 2008 Great Recession, 134 banks with assets of $1.25 Trillion have been closed by regulators. At the same time, the Fed’s ballooning balance sheet now amounts to nearly 50% of total domestic bank deposits.

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company