QSR September 2022

BEST FRANCHI SE DEALS

SonicDrive-In

built for the post-COVID world. Diverse offerings in both traditional and non-traditional models. Average EBITDA of at least $100,000 on average revenues of at least $1 million. Part of the Inspire Brands family of brands, some very rich incentives are being offered by Inspire, for all stores opened between now and 2025.” THESKINNY: Without much debate (see Council comment), Sonic was uniquely positioned to thrive over the last couple of years. Simply, the brand’s classic pull-up/drive-thru model met the contactless need of custom ers across the country. As “car picnics” became cool again, Sonic was already embedded. And it’s played into those strengths of late with guest-centric marketing campaigns and continued tech innovation (the ability to tip carhops) that’s worked to strengthen convenience and remove friction across multiple channels. Of Inspire’s fleet of brands, Sonic reported the highest two-year same-store sales jump last year at 25.8 percent. The chain’s five distinct dayparts are now being served across one of the industry’s most flexible footprints, too. This includes the “Delight” prototype, which features docks for parked cars and a drive-thru, as well as a covered, string-lit out door patio complete with lawn games. Sonic’s mobile order-ahead capabilities and rewards program allows consumers to control their experience in a way few chains can rival. It’s helped alleviate drive-thru capacity as Sonic, essentially, boasts a built-in curbside footprint that guests have been using for decades. Like Rusty Taco, Sonic franchisees also have access to the full breadth of Inspire’s col lective resources. JackintheBox NUMBER OF U.S. FRANCHISE UNITS: 2,055 NUMBER OF U.S. TOTAL UNITS: 2,218 TOTAL SYSTEM-WIDE SALES: $4,077,467 FRANCHISE AVERAGE UNIT VOLUME: $1,800,191 TOTAL AVERAGE UNIT VOLUME: $1,858,441 FRANCHISE FEE: $50,000 ROYALTY: 5 percent MARKETING FEE: 5 percent TOTAL START-UP COSTS: $1,697,000–$2,694,600

NUMBER OF U.S. FRANCHISE UNITS: 3,232 NUMBER OF U.S. TOTAL UNITS: 3,534 TOTAL SYSTEM-WIDE SALES: 5,835,448,575 FRANCHISE AVERAGE-UNIT VOLUME: 1,708,000 TOTAL AVERAGE-UNIT VOLUME: 1,681,000 FRANCHISE FEE: $45,000 ROYALTY: 5 percent

“ SONIC IS ONE OF THOSE RESTAURANTS BUILT FOR THE POST-COVID WORLD.”

RENEWAL FEE: 20 percent of then current license fee (currently would be $9,000 for traditional Drive-Ins and $450/year of term for non traditional restaurants) MARKETING FEE: 3.25 percent (minimum) of gross sales traditional and 1.85 percent non-traditional TOTAL START-UP COSTS: $1,768,000–$3,543,000 FRANCHISEE INCENTIVES: New and developing markets incentive. The NDM Incentive is designed to introduce and increase the presence of the Sonic brand in certain markets that we designate as new or de veloping markets. If you qualify and wish to participate in the NDM Incentive, you must sign a development agreement to develop one or more Sonic Restaurants on or before March 31, 2023. Under the NDM Incentive, you will pay the full initial license fee when you sign the license agreement, but we will credit $30,000 from the initial license fee you paid toward the royalties owed under that license agreement, provided you submit development costs to us within 120 days of opening the restaurant, and build the restaurant in the design, to the specifications, and at the location we approve. Under the NDM Incentive, Sonic may reduce your royalty fee based on when your restaurant opens as described in Item 6. CORE MARKETS INCENTIVE: The CM Incentive is designed to continue growing the presence of the Sonic brand in certain markets that we designate as core markets. If you qualify and wish to participate in the CM Incentive, you must sign a development agreement to develop one or more Sonic Restaurants on or before March 31, 2023. Under the CM Incentive, you will pay the full initial license fee when you sign the license agreement, but Sonic will credit $30,000 from the initial license fee you paid toward the royalties owed under that license agreement, provided you submit development costs to us within 120 days of opening the restaurant, and build the restaurant in the design, to the specifications, and at the location we approve. Under the CM Incentive, Sonic may reduce your royalty fee based on when your restaurant opens as described in Item 6. 2022 PULL-FORWARD STRATEGIC INCENTIVE. If Sonic and you already signed a pre-existing development agreement with a development schedule that requires you to open a restaurant in 2023 or later, and you sign a license agreement for and open that restaurant on or be fore December 31, 2022, or if you the development schedule requires you to open a restaurant in 2024 or later and you sign a license agreement for and open that restaurant on or before December 31, 2023, then you are eligible for our “2022 Pull-Forward Strategic In centive” program. Under this program Sonic will credit $30,000 from the initial license fee you paid towards the royalties owed under that license agreement, provided you submit development costs to Sonic within 120 days of opening the restaurant, and build the restaurant in the design, to the specifications, and at the location Sonic ap proves. As described in Item 6, you also will pay reduced royalties based on when your restaurant opens.

FRANCHISEE INCENTIVES: Under current development incentive for new franchisees, executing at least a three-unit development agreement, the royalty (which is currently 5 percent of gross sales) will be reduced to 1 percent of gross sales for the first year, 2 per cent of gross sales for the second year, 3 percent of gross sales for the fourth year, and 5 percent for all subsequent years. For existing franchisees (operating as of March 23, 2021) who sign a multi-unit development agreement before October 1, 2023, the brand offers the following incentives: Zero percent royalty for years one

to three, 2 percent of gross sales for Year 4, 3 percent of gross sales for year 5, 4 percent of gross sales for Year 6; and 5 percent for all subsequent years.

SIZINGUPFROMTHESIDELINES: “The new multi-unit development agreement incentives are very enticing. Beyond that, the recent acquisition of Del Taco gives cur rent/future excellent co-brand and portfolio diversification options at a fraction of the typical cost. Experienced/high character corpo rate/development team also a huge plus.”

SIZINGUPFROMTHESIDELINES: “For a brand with such rich history, Sonic is one of those restaurants

GUILLOCHE BORDER: ADOBE STOCK / SAIFUL, SONIC DRIVE-IN, JACK IN THE BOX

www.qsrmagazine.com | QSR | SEPTEMBER 2022

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