Sonic: We’ll Define Value as Brand Experience, Not Price
Sonic Corp. is the decade’s first QSR operator to cry uncle and declare it no longer wants to play the discount game. The fourth-largest burger chain is getting its own ball and drafting game rules that once again put brand experience ahead of price in defining value.
After announcing disappointing results for his company’s first quarter of fiscal 2010 in the morning, Sonic Chairman-CEO Clifford Hudson told analysts during an afternoon conference call that the time has come to push back against an “industry so heavily focused on price.” Sonic won’t/can’t stop appealing to consumers’ desire for value, he said, but it can “find a way to talk about value in a Sonic sort of way.”
Hudson declined to provide specifics but said that Sonic’s marketing focus from February through April will be products and services that differentiate the Sonic dining experience. That means some new menu products but also will include spotlighting the chain’s made-to-order food, carhops and other brand attributes rather than price.
During the fiscal quarter ended Nov. 30, 2009, Sonic Drive-In’s systemwide same-store sales declined 6.5%, and were off a stunning 9.1% at partner units (in which the company owns a majority stake). One-third of the quarterly drop was due to traffic erosion; the other two-thirds can be laid at the feet of a decreased average check, the company said.
Like other quick-service chains, Sonic has tossed out a steady stream of budget-priced lures, such as a $3.99 chicken dinner and the recent Brown Bag Special with two burgers, two tots and two drinks for $7.99 (see agency Barkley’s TV spot at left). The chain also developed an Everyday Value Menu. While Sonic will continue to periodically promote lower-price options, focusing solely on price rather than experience hasn’t worked, Hudson said.
With Sonic’s same-store sales already projected to decline 4% to 6% for the full fiscal year, Sonic can’t keep playing the discount game. “The best thing [to do] is to focus on points of difference rather than respond” to every competitor’s challenges, he told analysts. January 6th, 2010 | Tags: Advertising, burger, BurgerBusiness, chain, commercial, Pricing, promotion | Category: Advertising, Business, Marketing, Menu, Pricing, QSR Burgers | Leave a comment
They just opened the First Sonic in the San Francisco Bay Area yesterday in Hayward, Ca. and it was packed with cars out to the street.
If they want to define value in brand they don't have much work to do after what I saw yesterday. Only 14 Sonics in Ca. They could build easily 300 stores in Ca. alone. They have barely exposed themselves to the Western states. This is a strong buy on this dip IMHO...