Sonic Corp. on Wednesday reported profit and revenue were down in the first quarter while same-store sales inched up slightly.
The Oklahoma City, Okla.-based drive-in operator said profit fell to $5.5 million in the quarter ended Nov. 30 from $7.2 million in same period of 2010, which had included a tax benefit. Earnings per share were 9 cents in the first quarter, compared with 12 cents in the prior-year period with the favorable tax settlement.
Revenue for the quarter dipped 0.7 percent to $128.3 million from $129.1 million in the year-ago period.
Systemwide same-store sales increased 0.1 percent in the quarter, the company said, showing increases of 0.2 percent at franchise restaurants and 0.1 percent at company-owned locations. Sonic said it expects same-store sales to remain positive this fiscal year.
“While our fiscal first quarter reflected continued sales volatility, we remain pleased with our long-term initiatives,” said Cliff Hudson, Sonic’s chairman and chief executive.
He added that the company plans to refine its promotions and enhance its food and carhop service.
“Our business continues to generate strong cash flow for debt paydown and share repurchases,” Hudson said. “We expect to generate $35 million to $40 million in free cash flow during the current fiscal year.”
Sonic said margins at company-owned restaurants decreased by 130 basis points, or 1.3 percent.
“The decrease was caused by higher commodity costs as well as higher operating expenses resulting from higher drive-in level technology costs and credit card processing fees, slightly offset by labor efficiencies,” the company said in a statement.
Sonic reported 3,555 drive-ins in its system at the end of the quarter, down three from the year-earlier period. Of those, 446 were company-owned and 3,109 were franchised.
Editor's Note: A previous version of this story has been corrected to reflect that the earnings reported were for the first quarter.
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