Sonic sees opportunity in breakfast
Dec. 11, 2015
by Monica Watrous
Sonic has offered its full menu all day since its national breakfast roll-out over a decade ago.
NEW YORK — All-day breakfast at McDonald’s isn’t a “significant concern” for Sonic Corp., said Cliff Hudson, CEO, president and chairman. The Oklahoma City-based drive-in chain has offered its full menu all day since its national breakfast roll-out more than a decade ago.
“The reason it’s not our concern is because … we sell much more non-breakfast food in the breakfast hours than we sell breakfast food in the non-breakfast hours,” Hudson said during a Dec. 8 presentation at the Barclays Gaming, Lodging, Leisure and Restaurant Conference in New York.
Sonic’s business encompasses five dayparts: breakfast, lunch, afternoon, dinner and evening. At about 12 percent to 13 percent of sales, breakfast represents the daypart with the lowest sales.
|Cliff Hudson, CEO, president and chairman of Sonic
“I think one of the reasons breakfast has worked for us when some of our competition has struggled with it is because 4 percent to 5 percent of those sales, four to five points of the 12 percent to 13 percent are drinks,” Hudson said. “So this has made our breakfast work for a long time. But … I think there is real opportunity for us at breakfast. There’s opportunity at all dayparts, but more so at breakfast than any other daypart because it is smaller.
“The other dayparts have 20 percent, 22 percent, 24 percent of our sales, whereas breakfast is 12 percent, 13 percent. So I think there’s more opportunity there. And it is an area we’ll be focusing on in 2016.”
The breakfast menu at Sonic features breakfast burritos, french toast sticks and the signature Breakfast Toaster sandwich, which includes melted cheese, fluffy eggs and a choice of sausage, bacon or ham on thick Texas toast. Hudson said breakfast items on the menu represent only about 5 percent or 6 percent of the sales mix.
“…it’s not that we sell breakfast in the afternoon and evening; it’s more likely the guy that’s been working all night comes in and buys a hamburger at 8 a.m.,” Hudson said.
Beyond breakfast, Sonic’s competitive strategy positions the company against new challenges facing fast-food restaurants today, Hudson said.
“QSR is getting poached in a way differently than it was 5 and 10 years ago,” he said. “The low end gets poached significantly by convenience store; on the high end, getting poached by fast-casual…
“We believe we’re best suited amongst almost all of our competition to keep that convenience store customer. We’ve had happy hour for 20 years, as an example, and snacks that go along with happy hour. And yet, at the same time, with things like this premium chicken sandwich, (we) kind of head off the casual dining hit as well… Whereas, you may see Wendy's primarily come out with the higher quality sandwich, etc. You may see McDonald's primarily come out with the two buck thing…. We’re playing both areas, and we get both.
“I think for a smaller brand, now approaching $5 billion in our case, we’re pretty nimble, and the brand presents a lot of flexibility in this kind of environment.”