sonic drive in unit Sonic

Sonic to roll out more tech initiatives this year

Drive-in brand to layer in personal offers, more convenience

Sonic Corp. is poised to hasten order deliveries, increase customization through technological initiatives and offer more smartphone convenience, the company CEO said Wednesday. 

Clifford Hudson, Sonic CEO, in discussing first-quarter earnings, said Sonic this year will further leverage the point of personalized service, or POPS, displays now in more than 70 percent of its 3,500 restaurants.

Sonic’s Integrated Customer Engagement, or ICE, will by summer begin incorporating Sonic’s smartphone app for orders and payment as well as increased customization. The result, Hudson said, will be “the most personalized customer experience in QSR.”

The Oklahoma City-based drive-in brand is already testing store segmentation and a suggestive selling through the POPS digital kiosks in some markets.

By summer, the company plans to layer on tests of smartphone ordering and payment, Hudson said.

That will allow Sonic to send customized offers, based on the patron’s order history, and drive incremental traffic in targeted dayparts and seasons, he said.

The result plays to Sonic’s drive-in format, which offers 25 automobile stalls at most locations, and provides a faster experience for the customer than at competitors’ drive-thrus, Hudson said. 

“Once the order is placed and paid for on their smartphone or tablet, the customer proceeds to the lot where they are recognized on the POPS screen as they pull into a stall,” Hudson explained.

“The screen will then tell them where their order is in process and it will identify the carhop; it will be by name and he’s going to be bringing their food to them shortly.”

Hudson said Sonic’s drive-in provides a differentiated customer experience.

“They literally are first in line every time they come to Sonic,” he said. “Our competitors don’t have those 25 stalls.”

Analysts greeted the expansion of the technological platforms optimistically.

Brett Levy, an analyst with Deutsche Bank, said in a note Thursday that “we believe restaurant companies that are investing in their tech effort to improve operations, potentially drive sales and learn more about/reach its guests are likely building more robust infrastructures for future prospects and potential gains.”

The ICE platform also helps restaurant operators tailor their offerings, Hudson said. 

“Using store segmentation, for example, a customer would pull into a drive-in stall and see a message unique to the characteristics of that store or market,” Hudson said, offering the example of a special cooling beverage on a hot day in a Southern market. 

“As the guest begins to place that order, the order is cross-referenced with similar orders in our database that generate add-on suggestion with a good degree of relevance for whatever it might be — that daypart, that time of the year, etc.,” he added.

Hudson said the number of orders now being paid through the Sonic app is “nominal” or in the low single digits, so the company expects that to grow quickly as new features are added.

Sonic on Wednesday reported same-store sales for the first quarter ended Nov. 30 declined 2 percent at franchised drive-ins and 2.4 percent at company-owned restaurants.

Net income in the quarter rose 5.3 percent, increasing to $13.1 million, or 28 cents a share, from $12.5 million, or 24 cents a share, in the prior-year quarter. Revenue was down 11.1 percent, to $129.5 million, from $145.8 million in the same period last year as the company refranchised 56 drive-ins in the quarter.

Sonic refranchised 104 stores between when the initiative was announced in June 2016 and the end of December, Hudson said.

“Our negotiations are underway for the remaining 42 stores that were originally identified for disposition, and we expect to conclude those sales by the end of the third fiscal quarter of this fiscal year,” he said.

Sonic does maintain a passive interest in the refranchised drive-ins and in most cases maintains an ownership in the real estate, Hudson said.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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