Analysis of Sonic Corporation
In 1953 Sonic Corporation was founded by Tony Smith in Shawnee, Oklahoma
under a different name of the Top Hat. Tony Smith started the company as a
drive-in restaurant featuring hot dogs, hamburgers, and french-fried onion rings.
In the mid-50s Smith was asked by Charles Pappe for assistance in establishing
a similar restaurant in a rural town also located in Oklahoma. This was the
beginning of a partnership between the two men .
CURRENT INFORMATION
In 1991 Sonic Corporation was the fifth largest chain in the fast-food
industry, servicing in the hamburger segment, behind McDonald's, Burger King,
Hardee's, and Wendy's. Sonic has and is still carrying the tradition of being a
high-quality franchise-based organization in the Sunbelt states. The following
case will be broke down into five different stages beginning with early
strategies, problems, new strategies, a ratio analysis, and a recommendation.
EARLY STRATEGIES
UNDER TONY SMITH
Tony Smith introduced the Top Hat as a drive-in restaurant that reduced
start up cost by not having eat-in space. This new restaurant featured drive-in
stalls for automobiles, that were equipped with a two-way intercom enabling
customers to order as soon as they drove in, opposed to conventional practices
of waiting for a carhop to take an order. Delivery of the fresh fast-quality
products was do to the unique design of the kitchen, and the use of carhops.
Sonic Corporation preferred to do things as easy as possible and avoid
sophistication. Another strategy Smith implemented was a collection of
franchise royalties. This was done in a way such that Sonic franchise holders
were required to purchase printed bags at an additional fee that Smith arranged
through a paper-goods supplier.
Pyramid-type selling arrangements were formed by franchisees in money
making efforts by starting other franchises through friends. This lead to
original store managers having a percentage of their own store earnings and a
portion of the new operation of the recruited friend manager. This idea further
developed to multi-ownership of almost all Sonic operations as store managers
were also part owners. This concept of pyramid-type selling carried Sonic
forward with rapid growth.
PROBLEMS
RAPID GROWTH
In the later-70's almost one new Sonic store...
... middle of paper ...
...the past year. This ratio also
measures the risk that a company has in financing its debt.
RESEARCH IN 1992
Research in 1992 shows that Sonics typical customer is female between
the age of 18-24 with an average income between $10,000-$15,000. Forty-six
percent of Sonics business was done during lunch hours, and 44 percent done
during supper. Sonic's average meal price was $2.25.
CONCLUSION AND RECOMMENDATION
Sonic Corporation is an ever improving company that is striving for
efficiency, freshness, and quality. Over the life of the company management has
always been trying to increase profits and taking steps into the future. Sonic
Corporation also learned that in maximizing profits one must incorporate all the
ingredients from attitudes of the mangers and owners to the products they offer
their customers.
In looking at the ratio's Sonic Corporation is looking stronger every
year. I would recommend to keep management minds striving to new and better
innovations that could again revolutionize the company as it had under the
leadership of Mr. Lynn. In doing so the company assure itself and ever lasting
life in the fast-food drive-in industry.
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