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Sonic Shifts Media Spending, Building Design

Filed under Design/Decor, Media, News

Sonic Drive-In says it is shifting its media-buying strategy to give its brand—now operating in 43 states—a more national profile. And while “non-TV” media spending will be slashed to 7% of its budget, compared with 17% in 2012, the Oklahoma City-based chain says that represents primarily a minimizing of outdoor advertising not digital spending (although, near-term, Internet advertising is not growing).

Sonic says its new prototype (not shown) reduces car-hop stalls and emphasizes drive-thru business.

For Q1 of its current 2013 fiscal year, Sonic reported a 3% increase in same-store sales (+4.2% at company stores). For full-year 2013, the chain expects positive, low-single-digit improvement in comp sales.

This year, Sonic will put 67% of media dollars into national cable TV, up from 48%, while local TV spending drops to 26% from 35%. Chairman-CEO J. Clifford Hudson told analysts this week that the shift will “have an impact of increasing the number of times that the average viewer—average consumer and our potential customer—in every U.S. market will see our commercials. We expect this change in increased gross rating points for all of our markets to drive increased traffic in all markets.” Sonic spent approximately $140 million on media in 2012. Goodby, Silverstein & Partners handles creative; Publicis Groupe’s Zenith unit handles media.

The products that advertising promotes will continue to reflect Sonic’s “layered daypart promotional strategy.” That means advertising items for breakfast, lunch/dinner, snacks, drinks and dessert/ice cream dayparts. Sonic currently is promoting the lunch/dinner segment with the Ultimate Grilled Cheese Sandwich line previously reported here. Beverage advertising will promote the “398,929” drink combinations possible and that more than 20,000 of them have fewer than 60 calories, Hudson said.

The “Two Guys” continue as Sonic spokesmen.

The Premium Chicken line of sandwiches on ciabatta bread introduced in November is a permanent addition. CFO Stephan Vaughan noted that “we underindex in chicken overall, so we do see this as quite an opportunity for us. Chicken is about 6% of our product mix versus burgers being at 18%. So we do see an opportunity here and feel very good about the results from that promotion.”

TV spots will continue to feature the “Two Guys” characters (improv actors T.J. Jagodowski and Peter Grosz) who were brought back from exile last spring.

Sonic, which now has 3,549 restaurants, says it has developed a lower-cost prototype that President W. Scott McLain says the chain expects “will become the primary layout for new stores in the future.” Seven already have opened. The design is based on the building size that Sonic used 15 or 20 years ago, McLain told analysts. “What we’ve basically done is reduce the amount of canopy space, the number of stalls, and put a little more emphasis on the drive-thru.”