Sonic Drive-in

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Sonic Drive-In
Case Background
In 1953, Tyro Smith founded the prototype of the first Sonic drive-In in Shawnee, Oklahoma. Before 1953, he had already tried opening two other restaurants. Smith eventually bought a steak house that had a root beer stand on the lot. He intended to tear the stand down to add more parking for the steak house, but the root beer stand, called Top Hat Drive-In, proved to be more profitable and even outlasted the steak house. While traveling in Louisiana, Smith saw homemade intercom speakers at a hamburger stand that let customer order right from their cars. He liked the idea so much that he contacted the innovator and asked him to install the same intercom for Top Hat. The speaker system was placed, a canopy was added for cars to park under, and “carhops” delivered food directly to the customers’ car.

Charlie Pappe, a manager of a local supermarket but looking for a new venture, dined at Top Hat while visiting his friends in Shawnee and was si impressed with the whole concept that he introduced himself to Smith. In 1956, Pappe successfully opened the second Top Hat Drive-In. Four Top Hats had been opened by 1958, when Smith and Pappe discovered that the Top Hat name was copyrighted and began searching for a new name. Top Hat’s slogan had been “Service with the Speed of Sound,” so they agreed on Sonic, which means moving at the “speed of sound.” The first Sonic Drive-In was in Stillwater, Oklahoma, and still serves hot dogs, root beer, and frozen favorites on the same site today.

Smith and Pappe helped the new partners with the layout, site selection, and operation of their new Sonic Drive-In. they charged a royalty fee of one penny per sandwich bag used by the franchisee. Pappe died in 1967, and Smith was left alone to run the company along with two franchisee who had been invited to run the supply and distribution division of Sonic. In the early days, there was no national advertising and there were no territorial rights. In 1973, a group of ten principal franchise owners, who became the officers and board of directors, restructured the company into Sonic Industries. These groups of directors purchased the sonic name, slogan, trademark, logos, and supply company and offered shares of stock to each store operator. Sonic was now owned by its franchisees and was a publicly traded company. At this point, there were 165 Sonics in the chain. From1973 to 1978, Sonic experienced a period of temendous growth. During this time, 800 new stores were opened. Sonic Advertising Trust was introduced during this period, which established a Sonic School to formally train new managers and launched Sonic’s first advertising campaign.

In 1995, Sonic introduced “Sonic 2000”, an aggressive “multi-layered strategyto further unify the company in terms of a consistent menu, brand identity, products, packaging and service”. A key element of Sonic 2000 was a “new, retrofitted exterior that features futuristic red pylons with fiber-optic lights, oval roofs and new logo”. Between 1996 and 1997, the percentage of customers who recognized the Sonic brand increased from 43 to 66. In 2001, Hudson took Sonic International by opening a store in Monterrey, Mexico, with more restaurants planned in Mexico City. By 2002, 2432 Sonic Drive-Ins operated in more than 30 states and two countries. Sonic grown to be a strong regional competitor, but as Sonic executives pondered additional growth, understanding the nature of the competitive environment became increasingly important. Environmental Analysis

Sonic is located primarily in the Sun Belt state and know for its personal carshop service and unique made to order menu item including toaster sandwiches, extra long cheese, coneys, frozen and fountain favorites. SONIC esp. menu allowed the chain to differ itself from other fast food outlets and to avoid price wars with its major competitions. Hamburger are serve in aluminum foil to preserve the heat, drink are put styro rather...
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