Sonic Corp., the nation’s largest chain of drive-in restaurants, has announced that fiscal year 2011 same-store sales increased 1.8% for company drive-ins and 0.5% for the system. This improvement represents a significant reversal in trends from the decrease of 7.8% for the system in fiscal year 2010.
Sonic’s fourth quarter same-store sales increased approximately 0.4% for company drive-ins and declined an estimated 0.5% for the system. While the slight decrease in system-wide sales for the quarter was below the company’s original outlook of positive low single digits, same-store sales have been positive since mid-August, reflecting adjustments in the company’s promotional strategy.
“We are pleased to see the continued positive impact of our initiatives,” said Clifford Hudson, Chairman and Chief Executive Officer. “We remain confident in the strategic direction of our business and believe that the new product and service initiatives that we have implemented over the last two years have helped to promote and strengthen the quality and distinctive nature of the Sonic experience, as demonstrated in the overall improvement in sales performance during fiscal 2011. Our emphasis in fiscal 2012 will be on refining these initiatives to continue to enhance the customer’s eating experience.”
The company expects its initiatives to drive sales improvements going forward. However, uncertainty with regard to the macroeconomic environment and its impact on consumer confidence may result in greater-than-expected sales volatility. The outlook for fiscal 2012 anticipates the following elements:
- The opening of 30 to 40 new franchise drive-ins;
- Positive same-store sales; a 1% change in same-store sales equates to approximately $0.03 in net income per diluted share;
- Flat restaurant-level margins as a result of labor efficiencies, offset by commodity cost increases, particularly in the first half of the fiscal year;
- Selling, general and administrative expenses of $69 to $70 million;
- Depreciation and amortization of $41 to $42 million;
- Interest expense of approximately $32 million;
- An income tax rate of between 37% and 38%; and
- Capital expenditures in the range of $25 to $30 million.
Sonic expects to report its fourth quarter and fiscal year end results after the market close on October 18, 2011.