Unemployment continues to drag on sales at Sonic Corp.'s restaurants, the company said Wednesday, leading it to lower its fiscal 2010 earnings outlook.
Sonic, which is scheduled to release its third-quarter results on June 21, said Wednesday that it expects same-store sales for the three months ended May 31 to fall between 6 percent and 6.5 percent. The operator or franchisor of 3,500 drive-in restaurants said it anticipates same-store sales to fall 4 percent to 8 percent in the fourth quarter.
“Though negative, same-store sales improved from March to April, but deteriorated in May,” Sonic said. “Unemployment and underemployment continue to be a headwind for the industry and particularly for Sonic in the near term.”
The company reduced its earnings forecast for fiscal 2010 to between 50 cents to 55 cents a share, down from an earlier expectation of 55 cents to 60 cents a share. Sonic earned 81 cents a share in fiscal 2009.
Sonic said it has put in a place menu and marketing strategies to stem the sales declines, including a new ice cream formula and emphasizing premium sandwiches by offering a free medium order of tater tots with purchases. Clifford Hudson, chairman and chief executive of Oklahoma City-based Sonic, said that strategy helped keep the check average steady in the third quarter.
Hudson also said Sonic would introduce a quarter-pound foot-long chili-cheese hot dog at a special price in July.
"We believe our high quality, distinctive products in a fun and unique format will lead to improved sales and earnings performance over time," he said.
Contact Ron Ruggless at [email protected].