Sonic Profit Rises 28%

For the period ending Feb. 28, the chain reported profit of $12.6 million, or 20 cents per share versus $9.8 million or 16 cents per share in the second quarter last year. Total sales grew 19% to $132.6 million and same-store sales grew 7%, compared with 6.6% in last year's second quarter. Sonic's expansion included 32 new drive-ins during the quarter, including 26 by franchisees.

For the first half of 2005, the company opened 66 new drive-ins, including 56 franchised restaurants, compared with 70 drive-ins opened during the same period last year. The company remains on track to open about 200 new drive-ins in fiscal 2005, including approximately 170 by franchisees.

In its conference call Wednesday, Sonic cited the slightly lower number of new stores in the first six months of this year versus last year, which it attributed in part to persistent wet weather across many of our markets this year, along with the lingering effects of the summer hurricanes on Florida and the Southeast. It noted that it had a total of 150 area development agreements in place at the end of February for franchises, calling for more than 500 new stores over the next several years. The company has also terminated 28 area development agreements inthe past year in cases where franchisees were not meeting theirdevelopment schedules and has replaced those with new agreements with a higher potential for new store openings.

Some Sonic Drive-Ins have actually closed in recent months, primarily because of two weaker operators in two markets, but the company believes those closings "are not indicative of Sonic's success." Instead, it says the stores closed because of the franchisees' inadequate financial capital, a situation that it has taken steps to correct by tightening the financial qualifications of new franchisees. The chain expects that many of the closed stores will reopen under new franchisee ownership in the coming months. Sonic ended the second quarter with a total of 2,934 drive-ins, up from 2,773 at the same time last year. The 2,934 included 548 company-owned stores and the remainder franchised operations.