Case Study on Sonic Drive-In Restaurant

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The fast food industry is one of the most competitive industries to enter in the entire world. Why? For one, established chains dominate the market and newcomers are often shunned for their inability to relate to customers with longstanding ties to other brands. This sample case study explores how Sonic Drive-In management consistently has its work cut out for themselves; the company is one of the smaller competitors in the fast food industry but continuously maintains a stronghold because of its well-established niche in offering an “eat in your car-centric” service.

Sonic Drive-In: A successful chain?

Over the last forty years, and regardless of the health risks associated with fast food, these chains have infiltrated every nook and cranny of American society. And now the industry is firmly placed within the global society as well. With so much money at stake, and with the vast array of competitors—just look out the window on a long stretch of highway and you’ll see the giant illuminated signs of dozens of fast food chains vying for the top spot—one wonders how some of the smaller competitors, such as Sonic Drive-In, can stay afloat in this industry.

In 1997, Americans spent over $100 Billion dollars on fast food alone. However, this powerful industry is relatively new. In the 1970s, fast food restaurants were few and far between. But when the Women’s Liberation Movement swept the nation, housewives and single ladies put up their aprons and joined the workforce. In 1975, a third of American mothers work outside the home. Today that number has doubled. The stereotypical atomic family, where dad earns the money and mom cooks the pot roast, has been upended. Now the American family relies on automated systems and low-wage workers to do the cooking (Schlosser, 2012).

Hundreds of millions of dollars annually, per each restaurant brand, are spent on advertising. That adds up to billions of dollars spent each year on advertising alone by the fast food industry. This is done to maintain companies’ current consumer base and, now also increasingly, to groom their up and coming consumers, i.e., children, with ads that promote familiarity and a positive association with the brand (see TV ads geared towards children and the problem with inequality) (Mayo, 2009). From 2003 to 2009, fast food ads viewed went up twenty-two thirty percent among pre-school and school-age children (fastfoodmarketing.org).

Fast food marketing and advertising is no joke

So who are these consumers who are so heavily advertised to? Common thought is that low-income people eat at fast food restaurants because their prices are the lowest among the options available to those who wish to dine out. But according to a recent article in Time Magazine, researchers from the University of California, Davis found that fast-food restaurant visits increased commensurately with an individual’s income. And they also found that these visits tapered off once an income reached approximately $60,000 annually. The middle class is the main consumer of fast food. The study authors described the typical fast food consumer as:

“A lower-middle income head of household, who is budget-conscious and harried and likes the convenience and low price of fast food, compared with other restaurants” (Melnick, 2011).

The above information regarding fast food consumer demographics is interesting when compared to their target advertising market of fast food restaurants. According to reuters.com, a 2009 report revealed that fast food restaurants are stepping up efforts to market their products and brand name to children. Jennifer Harris of the Yale University Rudd Center for Food Policy Obesity in Connecticut spent a year studying 12 of the largest fast food chains with colleagues. She and her team documented the fast food buying habits of children and teens, and the advertising habits of these fast food chains. “Despite pledges to improve their marketing practices, fast food companies seem to be stepping up their efforts to target kids,” said Harris (Fox, 2010).

The role of children in a successful fast food brand

The marriage of the target market and the average fast food consumer is a wholly perfect union. Children and teens are among the largest demographic with readily available spending money and the middle-class head of household, attracted by the low pricing, is available as a source to provide the products that these target market kids have been seeing on television. That’s not to say that kids are the only demographic advertised to in the fast food industry, as women are unfairly represented in advertisements as well, but this practice is definitely rife among some of the larger chains. There are only so many dollars out there, and based solely on the previously mentioned advertising budgets alone, the competition is fierce.

Sonic's early start in Oklahoma

Among the sea of chains in the fast food industry, Sonic Drive-In, the nation’s largest drive-in chain, has maintained its position with only a recent slight dip. According to the Sonic website, Troy Smith opened the first Sonic Drive-In in Shawnee, Oklahoma in 1953, but back then they called it Top Hat. Troy had always been interested in becoming a “real” restaurant owner. He had an old burger shack on the same lot as his restaurant that he never really got around to tearing down and it just sort of grew from there. People would order from the walk-up window and eat in their cars. He got the idea to ad an intercom system and car-canopy, and the first version of the modern Sonic was born. Once he and his partner found out that the name “Top Hat” was copyrighted they came up with the idea of “Sonic: service at the speed of sound,” and the rest was history.

One of the features that keep Sonic ahead of the competition is its dedication to maintaining the Americana authenticity of the car-hop experience. Not only did the chain develop innovative advertising techniques in the drive-in concept, but it kept them up to standard through the years. Carhops still deliver food prepared-to-order right to the customers’ cars. In addition to that, Sonic has kept its classic menu of burgers and shakes that its customer base has come to love (sonic.com).

But not all of Sonic history was golden. According to an article in QSR Magazine, Sonic CEO Clifford Hudson redoubled the company’s efforts to strengthen the brand after the company had some major losses in sales. There was a sales decline of over $200 million from 2009 to 2010 after experiencing a steady gain for 22 consecutive years. Food standards were raised (better burgers and “real” ice cream), new items were offered to add menu diversity, customer service was strengthened, and these changes were broadcast to a national audience (Smith, 2012).

Sonic's new measures to ensure success

In addition to quality improvement, a new advertising agency was hired. And contrary to the standard bright and shiny fast food advertisements that worked at appealing to kids and teens, the Sonic ads had bland colors and camera/film quality, and featured two paunchy, middle-aged men goofing around in their car while enjoying Sonic products and being amusingly ironic and silly. The advertisements were so popular that even after the ad campaign ended, the two guys decided to “go rogue” and continue making Sonic ads on their own in an attempt to gain support in petitioning to get their old jobs back. The plan worked. People identified with the “working-stiff-as-underdog” concept (Newman, 2012).

Sonic also has various other marketing and media programs in place to expand its brand beyond its usual base of customers. The Oklahoma newspaper Ardmoreite reported on the charity donation to education programs that Sonic helped raise funds for through limeade sales (Lindsey, 2012). And Self Magazine included a mention of Sonic’s french fries in a feature that highlighted low-calorie ways in which the guilty-pleasure could be enjoyed guilt-free (Clarke, 2012). In the limeade sales fundraiser, we see Sonic giving back to the community while also strengthening its own brand—no other fast food chain does limeade. And in the french fries feature we see a commitment to the history of Sonic (burger and fries). But in this we also see a dedication to ensuring excellent food quality (since the fries landed on a best-of list) and a branching out into newer territories (i.e., the “healthy” french fry).

Reflecting on Sonic's business development

When all of the above information is considered, it becomes clear how Sonic has consistently maintained its place among the extremely competitive world of the fast food industry. It branded itself almost from the moment of their own inception; and executives kept to that brand. Executives also made sure to strengthen the brand and up the quality during periods of decline—thus going back to what made it a success in the first place (i.e., being very good at being unique and delicious). As discussed, new things are added from time to time, but never in such a way as to detract from Sonic’s “Sonic-ness.” In addition to this, Sonic was able to capitalize on the historic aspect of the drive-in restaurant that it helped to define, becoming a part of Americana history and a destination all on its own. Sonic is uniquely itself.

References List

Clarke, S., Jarosh, W. (2012). Best of the Worst. Self Magazine. Retrieved from http://us.vocuspr.com/Newsroom/ViewAttachment.aspx?SiteName=Sonicattachmentid=282213f3-70f9-4490-a216-01e20fc4c23dattachmenttype=Fentity=Newsentityid=48777547

Fastfoodmarketing.org. Fast Food Facts in Brief. Retrieved from http://www.fastfoodmarketing.org/fast_food_facts_in_brief.aspx

Fox, Maggie. (2010). Fast-food restaurants target U.S. kids, study shows. Retrieved from http://www.reuters.com/article/2010/11/08/us-fastfood-usa-idUSTRE6A73R120101108

Lindsey, J. (2012). Teachers Receive Checks through ‘Limeade’ Program. Ardmoreite. Retrieved from http://images.burrellesluce.com/image/2080C/2080C_13259

Mayo, E. Nairn, A. (2009). Consumer Kids: How Big Business is Grooming our Children for Profit. London: Constable.

Melnick, M. (2011). Fast Food’s Biggest Constomer: Not the Poor, But the Middle Class.

Time Magazine. Retrieved from http://healthland.time.com/2011/11/07/fast-foods-biggest-customers-not-the-poor-but-the-middle-class/

Newman, A. (2012). Sonic Drive-In Revives ‘Out of Work’ Spokesmen. New York Times. Retrieved from http://images.burrellesluce.com/image/2080C/2080C_13103

Schlosser, E. (2012). Fast-Food Nation: The True Cost of America’s Diet. Rolling Stone. Retrieved from http://www.mcspotlight.org/media/press/rollingstone1.html

Smith, D. P. (2012). A Sonic Rebound. QRS Magazine. http://www.qsrmagazine.com/growth/sonic-rebound?microsite=9341

Sonic.com. Brief History of Sonic Drive-In. Retrieved from http://sonicboomsc.com/sonichistory.html