Sonic Case Study

13 Pages 3360 Words

ppe, four more Top Hats were opened. However, their lawyers informed them that the Top Hat name was copyrighted. They changed the name to Sonic to go along with the restaurant slogan of "Service With the Speed of SoundSM."1
In 1973, a group of ten principal franchise owners became the officers of the company. Shares were offered to each store owner. Because of the amount of stock offered, Sonic became a publicly traded company with 165 stores in the chain.
Between 1973 and 1978, Sonic grew tremendously. 800 new stores were opened and a Sonic School that formally trained new managers was established. Sonic’s first television advertising campaign was launched also.
When Cliff Hudson joined the legal department in 1984, Sonic had a loose collection of around 1000 independent restaurants in 19 states. There was no national advertising program, accounting was done manually, and packaging was inconsistent, and even the menu varied from store to store. He realized that changes had to be made to turn Sonic’s poor financial performance around. After he led a successful buyout in 1986, Hudson was instrumental in the resurrection of Sonic.
Hudson headed two different stock offering in 1991 and 1995. These offerings raised enough capital to pay off the company debt and add to working capital. He also had the franchises purchasing together, which resulted in cost savings, consistency and quality.5
In 1991, Sonic was the 5th largest in the fast-food industry. Today they call themselves the largest chain of drive-ins in the country. They have to compete with McDonalds, Burger King, Wendy’s and Hardee’s. Sonic relies heavily on the opening of new restaurants to maintain their expansion. However, Sonic has shown a reluctance to enter new geographic regions.


Problem Statement

One of the main things that sets Sonic apart from the rest is it’s drive-in service. However, this service is n...