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Sonic Corporation

Sonic Corporation

INTRODUCTION

BACKGROUND INFORMATION

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...