SONIC: An American Tradition
The Next Generation
In a period of tremendous growth, more than 800 SONICs opened between 1973 and 1978. By early 1975,
SONIC Drive-Ins were in 13 southern and southwestern states. Jim Winterringer established the SONIC School to
formally train new managers. The first SONIC television advertising was seen by the public in 1977.
Rough Road
Interest in SONIC skyrocketed, but first the oil embargo early 1970s, 21-percent interest rates, and record
inflation later in the decade took a big bite out of business. Profits fell 21 percent during 1978 and 1979.
Despite the downturn, January of 1980 saw the first SONIC National Convention. This demonstrated to franchise
owners that company management was determined to weather the storm and increase cooperation between SONIC and
its franchisees. Plans were unveiled for more evenly paced growth.
Unfortunately, the 1980 annual report showed sales and operating revenues down more than $5 million, with a net operating loss of $300,000. In response, SONIC consolidated store operations and development, and closed 28 low-volume, company-owned drive-ins.
SONIC was down, but not out. The key element to SONIC's comeback was its traditional franchise policy of owner-operators.
The SONIC Boom
In 1984, SONIC was more like a collection of independent stores than a cohesive business entity. Less than 1000 SONICs
operated in 19 states, yet there was no national advertising program or a national purchasing cooperative. This was
the same year that Cliff Hudson joined the SONIC legal department. He was instrumental in making several major changes
in the company before eventually becoming president and CEO in 1995.
Hudson was on a team which led SONIC's management in a successful leveraged buyout from its franchisee shareholders for $10 million in May 1986. He also spearheaded two pivotal changes in the company. The first of these was taking SONIC public in March 1991 and initiating a secondary stock offering in 1995 which raised enough cash to pay off the company's debt and add to its working capital. Second, franchises in 17 key markets began purchasing together, giving significant cost savings to franchisees, and consistency and quality to customers. Advertising also increased to one-percent of sales.
By 2000, SONIC's media spending approached $64 million, and during the same fiscal year, SONIC's estimated market value grew to more than $600 million.
SONIC 2000 And Beyond
In 1994 and 1995, customers, franchisees, suppliers and drive-in managers were invited to join a series of Dream Team
meetings to discuss what SONIC was doing right and what SONIC could improve.
The meetings spawned SONIC 2000, a new multi-layered strategy to further unify the company in terms of a consistent menu, brand identity, products, packaging and service. As a result, the new "retro-future" SONIC logo was introduced, and the entire system adopted a consistent new look and menu, including a section dedicated to Fountain and Frozen Favorites™. The strategy allows SONIC continued success. The chain is expanding, brand awareness has increased, franchises are enjoying accelerated growth and chain operations are better unified for greater cost efficiencies. Today with almost 3,000 SONIC Drive-Ins from coast to coast, SONIC is the nation's largest drive-in chain and has a market capitalization of approximately $2.0 billion.
The country and the fast food business have changed a great deal since Troy Smith installed the first intercom system at the Top Hat Drive-In. Food fads have come and gone, but SONIC has differentiated itself through its business model, unique menu items and, of course, friendly "Service With the Speed of SoundSM."
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