The unusual drive-in restaurants known as Sonic franchises provide a one-of-a-kind menu of high-quality food items that are prepared to the customer's specifications and emphasize cutting-edge technology.
The operation of Sonic restaurants, which provide an assortment of foods including specialty beverages, ice cream desserts, cheeseburgers, chicken meals, hamburgers, hot dogs, and more, is licensed out by Sonic Franchising LLC (often referred to simply as "Sonic").
History of Sonic Restaurants
In the early 1950s, the Sonic brand was established. Since 1974, Sonic has been in the business of selling franchises. In the United States, there were about 3,500 Sonic locations as of January 2021, and they were spread out throughout 46 different states.
There are 3,251 restaurants that are owned and run by franchisees, while the remaining 271 stores are owned and operated by Sonic or one of its subsidiaries.
Since the month of December 2018, Paul J. Brown has been serving as a member of the Board of Managers. Since the company's founding in February 2018, he has also served as the Chief Executive Officer of Inspire Brands, which is headquartered in Atlanta, Georgia.
In addition to this, he has held the position of Chief Executive Officer of Arby's Restaurant Group, Inc. (also known as "ARG"), which is a brand owned by Inspire Brands from the year 2013.
Competitive Landscape of the Fast Food Industry
After being purchased from Inspire Brands, the same company that also controls Arby's, Buffalo Wild Wings, Jimmy John's, Rusty Taco, Dunkin', and Baskin-Robbin, Sonic is now in a position within the fast food sector where it is well positioned to thrive.
Due to the fact that Sonic has been operating for close to seventy years and is supported by a multi-brand restaurant corporation such as Inspire Brands, they have the managerial and financial resources necessary to continue growing in a market that is notoriously cut-throat.
A company that is similar to Sonic is McDonald's, which has over 13,000 franchise and company-owned units, which is more than 4 times as many as Sonic's total number of units.
Despite this, Sonic maintains a loyal client base because of the one-of-a-kind beverages it offers and the drive-through nature of its business strategy.
Sonic Franchise Models
The 'traditional' and 'non-traditional' licensing agreements are available from Sonic. A conventional license has a validity period of 20 years and may be renewed for an additional 10 years at a time.
A non-traditional licensing agreement may have a duration of anywhere from 5 to 10 years, with the option to renew it for an additional 5 years. The following is a list of the available choices:
Traditional Sonic Franchise
A traditional Sonic restaurant is a freestanding structure with one level and provides in-car service for about 8 to 24 vehicles. These parking spaces are surrounded by canopies to protect customers from the elements.
Drive-through service and patio seating are offered at a number of Sonic locations, and some of these restaurants also have indoor or covered patio sitting available. Traditional Sonic Drive-Ins include not just stand-alone restaurants but also those that are co-branded with other businesses inside the same complex, such as gas stations and travel plazas.
Non-Traditional Sonic Franchise
A restaurant that is not a Traditional Sonic Drive-In but is still owned and operated by Sonic is referred to as a Non-Traditional Sonic location. These restaurants can be found in locations such as the following:
military and other governmental facilities
educational facilities
sports and entertainment venues
shopping centers and industrial facilities
airports and other transportation facilities
other public facilities
There is a $45,000 licensing cost associated with opening a typical Sonic restaurant, and the overall investment might range anywhere from $1.24 million to $3.54 million (excluding land).
There is a $22,500 licensing cost associated with opening a non-traditional Sonic restaurant, and the overall investment might range anywhere from $356,500 to $977,300 (excluding land).
In most cases, the process of securing a Sonic site takes between six and eight months. It takes an average of one hundred days to open a Sonic location, depending on the region and the model, and this time period starts after the site selection process has been completed and construction and build-out of the restaurant have begun.
The corporate office of Sonic provides its franchisees with access to a full support team and a variety of services, including helpful demographic data and in-depth site analytics, with the goal of making the process of site selection and construction as easy and profitable for franchisees as is humanly possible.
The process of securing a location normally takes between six and eight months. It takes an average of ninety days to launch a Sonic Drive-In franchise once the location has been selected, construction has begun, and the build-out has been completed.
Sonic Drive-In Franchise
The original drive-in model of the Sonic franchise is a conventional shop layout that generally consists of 8 to 16 drive-in stalls, a drive-thru, and patio seating. For the best possible build-out, a standard Sonic restaurant needs a lot that's about a quarter of an acre in size.
Sonic Indoor Dining Model
They altered their initial shop design to fit the demands of customers when SONIC moved into northern areas, such as in upstate New York. They came up with indoor eating areas that are appropriate for the cooler season.
The Indoor Dining Model has fewer requirements for the number of drive-in stalls needed since it provides patio sitting and also has a drive-thru.
Sonic Travel Plaza Model
SONIC end-cap units are travel plazas that are constructed on major thoroughfares for travelers searching for familiar eating alternatives that are dependably high-quality and high-value.
This type often does not have the well-known parking spaces and canopies that are included in a conventional SONIC Drive-In restaurant.
Sonic Conversion Model
Sonic also helps franchisees to transform existing restaurant premises into Sonic restaurants in the most cost-effective manner feasible, using the existing kitchen, dining area, and patron washroom facilities.
If it is decided that the site placement in a certain region is ideal, the best option may be to convert an existing structure. This is the case in several situations.
Sonic Counter-Service Model
Where there is a lot of foot traffic, such as at airports, crowded malls, and college food courts, the counter-service concept works quite well. This business strategy is consistent with their well-established brand as well as their excellent food quality and service to customers.
Sonic Franchise Cost
Sonic food franchise allows individuals to build their own restaurants and operate them under the Sonic brand name. You will be required to pay an initial investment fee of $45,000 before beginning this franchise. This fee must be paid at the beginning of the process, and it will pay the costs associated with getting the franchise up and running.
To get the franchise up and running, in addition to the initial franchise fee, you will also have to pay several extra fees for restaurant equipment. This may include items such as real estate, equipment, supplies, and promotion. It is possible to spend anything having a net worth of $1.2 million to $3.5 million when first investing in a Sonic franchise.
To break the investment range down into its simplest terms, purchasing a Sonic franchise requires an estimated initial investment of $45,000 in addition to extra fees such as the following:
Advertising Funds: $2,000 to $5,000
Insurance Premiums: $10,000 to $20,000
Payroll: $56,000 to $137,500
Ongoing Fees
In addition to the initial payment, one must also be prepared to pay continuing fees in order to own a Sonic franchise. The following are the three primary categories of recurring fees that franchisees are required to pay:
Royalty Fee
The royalty charge is a percentage of your monthly gross sales and is 5% in the case of a Sonic franchise. This price must be paid in order to operate the franchise. This payment is sent to the franchisor and contributes toward covering the expenses incurred by utilizing the Sonic brand name and offering assistance to franchisees.
Brand Fee
The brand fee amounts to 9% additional funds for Sonic franchisees, which is one of the fees that are taken out of your revenue each month. This charge contributes toward the expense of promoting and advertising the Sonic brand to customers.
Advertising Fee
These advertising funds constitute a monthly price that is 3.25% of your gross sales and helps to pay the expense of promoting the Sonic brand via various advertising and marketing activities. The fee is calculated as a percentage of your total sales each month.
As a franchise owner, it is essential to keep in mind that these costs may quickly pile up and have the potential to have a substantial effect on your overall profitability. The royalty fee for a Sonic franchise is slightly lower than the industry average, while the marketing fee is slightly higher.
Given that the average royalty fee for the food and beverage industry is 5.3% and the average marketing fee for the industry is 2.3%, this indicates that the royalty fee for a Sonic franchise is slightly lower than the industry average.
Steps to Open a Sonic Franchise
Request Information
Fill out a form on Sonic's website to request information about owning a franchise.
Informal Phone Interview
A representative from Sonic's franchise team will call to discuss your intentions and financial qualifications.
Receiving and Reviewing the Franchise Disclosure Document (FDD)
If you are a good fit, you will receive the FDD which contains important information about owning a Sonic franchise.
In-Person Meeting
Schedule an in-person meeting with the franchise development team to further discuss the franchise opportunities.
Qualification and Approval
Final business approval steps are taken, including credit approval, a business plan, and a background check.
Franchise Discovery Meeting
Attend a meeting at Sonic's headquarters to meet key decision-makers and stakeholders.
Signing the Franchise Agreement
Sign the agreement to officially become part of the Sonic family.
Site and Construction
Secure a site and begin construction. Sonic offers support and training to help you reach your sales goals.
This is the process for opening a Sonic franchise, which can take between one year to 18 months from start to finish. Sonic has a comprehensive support system to help franchisees every step of the way.
Pros of Sonic Franchise
Owning a Sonic franchise offers several benefits for potential franchisees. Below are a few key pros of owning a Sonic franchise:
Unique Concept
The Sonic Drive-in is one of the most distinctive concepts in the quick service restaurant (QSR) sector. The Sonic experience is centered around customization, control, and choice, allowing customers to create their own unique meal and dining experience. This concept has proven to be very successful and is highly valued by customers.
Recognizable Brand
Sonic is known for having one of the most well-known and effective QSR advertising campaigns in history. The "Two Guys" campaign has given franchisees instant brand recognition and unmatched advertising power on opening day and beyond.
The campaign has helped to make Sonic a household name and has increased brand recognition and awareness.
National Advertising Campaign
Franchisees that open a new location now have a national advertising campaign working for them, thanks to Sonic's continuously growing market share. This national campaign is designed to reach a large audience and create awareness of the Sonic brand.
Franchisees can leverage this campaign to generate customer interest and drive sales in their own location.
Experienced Support
Sonic provides comprehensive support to franchisees to help them every step of the way. This includes business and operations training, service team recruitment, marketing and PR support, and other opportunities to help franchisees reach their sales goals.
Sonic's experienced support team is dedicated to helping franchisees succeed, and provides them with the resources they need to run a successful business.
Strong Financial Performance
The quick-service restaurant industry is a large and growing market, and Sonic is one of the leading players in this market. This has led to strong financial performance for the company and its franchisees.
Sonic franchisees have the opportunity to tap into this growing market and benefit from the company's success.
Cons of Sonic Franchise
Lack of financial resources
Potential franchisees who do not have the financial resources required to make an investment in the franchise may find that the absence of financing alternatives is a significant obstacle for them.
This might reduce the number of people who are eligible to become franchisees and make things more challenging for those who are interested in owning a Sonic franchise but do not currently have the financial resources to do so.
High quantity of labor
The ownership of a Sonic property comes with a number of potential drawbacks, one of which is the demand for a substantial quantity of labor. Because of this, the franchisee could have to pay higher wages to its employees, which would reduce their earnings.
Finding and training a big number of workers may be a process that is both time-consuming and demanding. Additionally, managing a large staff can be tough.
Sonic Franchise Training
Sonic provides a comprehensive training program for its franchisees to ensure their success.
The franchise principal and one manager of the restaurant must attend and successfully complete the two-phase career development program before the restaurant’s opening. This training is designed to provide on-the-job training for each position in the restaurant so that franchisees can learn how to operate the restaurant and train their staff.
First phase
The first phase of the training program consists of 440 hours of on-the-job training at a technical training Sonic restaurant that the franchisor selects at various locations throughout the United States.
During this training, franchisees will learn the day-to-day operations of the restaurant and receive hands-on experience in each role.
Second phase
The second phase of the training program is focused on leadership development. At least one full-time manager working in the restaurant must complete the general manager leadership class training within six months of assuming the management position.
This training will provide the manager with the skills and knowledge needed to effectively lead and manage the restaurant.
On going training
In addition to the initial training program, Sonic also provides ongoing training opportunities for its franchisees. The franchisor offers additional self-directed ongoing training programs, online training, and webinars for management personnel.
These programs include station courses and the assistant manager learning development program, designed to help franchisees continually improve their skills and stay up-to-date with industry trends and best practices.
For the franchisee’s first three Sonic restaurants, as part of the pre-opening training, the franchisee will send at least one general manager, four assistant managers, and two crew leaders to another certified Sonic restaurant for additional certification training.
This training will help to ensure that the franchisee’s staff is fully prepared for the opening of the restaurant and will provide them with additional hands-on experience.
Conclusion
The Sonic franchise is considered to be one of the extremely well-maintained companies in the quick-service restaurant sector. If you are thinking about buying this franchise, you should know that it is one of the top industrial domains, so it is without a doubt going to be a better alternative for you. However, you should evaluate your options carefully before making a final choice.