Sonic Drive-In is one of the most recognizable American fast food chains. The restaurant is known for carhops on skates, which aren’t a requirement for workers today. Still, some employees choose to wear skates.
Sonic has a distinct menu line-up as well, especially with beverages. The limeades, the shakes, burgers and 12-inch coneys are available for customers. Sonic has grown to more than 3,500 locations over the past 60 years.
How much does it cost to open a Sonic Drive-In? To operate a Sonic Drive-In, you’re required to have a liquid capital of $500,000 and a minimum net worth of $1,000,000. The estimated investment to open a traditional Sonic Drive-In is $1,242,200 to $3,537,700. The franchise fee for a traditional unit is $45,000.
Are you ready to learn what it takes to operate a Sonic Drive-In? Find a franchise that fits your goals and budget with our 7-minute franchise business quiz. Read on below for more information regarding this fast food chain’s sales, facts, advantages, and challenges before you apply to become one of their franchise operators. I reveal the fees, advantages and challenges of this concept that you need to know about.
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Sonic Drive-In Franchise Facts
- How Much Does Sonic Drive-In Make in Profit?
- Advantages of a Sonic Drive-In Franchise
- Challenges of a Sonic Drive-In Franchise
- Is the Sonic Drive-In Franchise Right For You?
Financial Requirements and Fees
Below are the fees to expect for a traditional Sonic Drive-In:
|Fees / Expenses||Financial Amount|
|Net Worth||Minimum of $1,000,000|
|Total Investment||$1,242,200 – $3,537,700|
Do note that the details listed in the table above are for traditional units only. For the non-traditional ones, the liquid capital and net worth remain the same but the estimated total investment is around $361,900 to $978,700 with a license fee of $22,500.
What’s the difference between Sonic Drive-In’s traditional and non-traditional units? Traditional units are chains where you see full stand-alone restaurant with a parking space of its own. It comes with drive-in slots for around 8 to 24 cars along with the carhop service. The store could also provide patio seating and indoor dining. Non-traditional units are the restaurants you see in malls, airports, educational and governmental facilities, and the like. These non-traditional usually won’t have a drive-in service.
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The license agreement for a traditional Sonic Drive-In is 20 years with an option to renew for another 10 years. Non-traditional agreements are between 5 to 10 years with an option to renew for 5 additional years.
Other fees to note are Sonic Drive-In’s royalty fee that’s a 5% maximum of your store’s gross sales if you signed up for a traditional unit, while it’s 4% for non-traditional. Renewal fees are also $9,000 for traditional and $4,500 for non-traditional.
More technical details will be discussed with you prior to you signing up with Sonic, but these are the fees that you should note before you apply to become one of their franchise operators. From a investor / operator perspective, make sure you’re good with these fees.
Average Sales / Revenue per Year
Sonic Drive-In has billions in annual revenue. For the year 2020, Restaurant Business Online reported system-wide sales of $5.680 billion. They also reported that there was a 21.2% growth in their sales compared to the previous year’s sales of $4.687 billion.
These figures come as a relief since most businesses were hit by government lockdowns during this time period. But Sonic Drive-In was able to survive and grow because of the chain’s president Claudia San Pedro’s change in marketing around 2018 where Sonic began showing customers eating inside their cars. Though this marketing strategy was implemented years before the health crisis in 2020, you’ve got to admit that was a fantastic time for a shift in marketing strategy. Sonic Drive-In was already growing with a 5% growth of sales in 2019.
Sonic Drive-In Franchise Facts
|Total Units||More than 3,500|
|Incorporated Name||Sonic Corporation|
|Subsector||Food and Beverage|
Sonic Drive-In was once known as Top Hat Drive-In in 1953 in Shawnee, Oklahoma.
Top Hat was founded by Troy Smith who converted the establishment from a root beer stand to a place that served hot dogs and hamburgers made to order. But since the name Top Hat was copyrighted at that time, Troy Smith had to stop at four units and changed the name Sonic with a tagline that said “Service with the Speed of Sound”. By 1973, Sonic grew to more than 100 locations.
In 2001, Sonic Drive-Ins reached $2 billion in sales. They were also awarded by Forbes as one of the “200 Best Small Companies in America” in 2003 for the 10th consecutive year. Sonic was also known to employ a lot of teens that they were awarded as “Top 10 Jobs that Rock” by Teen People’s magazine. Today, Sonic Drive-In holds the 14th spot at QSR Magazine’s Top 50 Biggest Brands in America for the year 2020.
Sonic Drive-In is most famous for their carhop service. This type of service allowed cars to park in a spot where there are intercoms to make your order. The staff then delivers your orders to cars where you don’t have to pull out of the driveway to head home and enjoy your meal. Instead, you get to eat right away.
The chain’s menu includes burgers, hot dogs, foot-long coneys, breakfast burritos that are served all day, crispy or grilled chicken sandwiches, and sides that include mozzarella sticks, onion rings, tots, fries, pretzel sticks, and popcorn chicken. They also partnered with Cinnabon to serve Cinnasnacks which are bite-sized cinnamon pastries that are specially made with Cinnabon’s signature ingredients.
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You would think that’s already a lot of menu items at Sonic Drive-In. But the biggest variety comes from the drinks. Sonic’s beverage line takes up 39% of their menu. They’re known for their limeades. The Strawberry Limeade is regularly cited as a top seller. Milkshakes are also popular along with iced tea. Sonic Drive-In boasts more than 1,063,953 drink combinations. You can go to Sonic every day and never get bored of their drink options.
To franchise a Sonic Drive-In, the company requires that there should be some experience needed in order to operate their unit. The following is what Sonic Drive-In looks for in an applicant:
- Has a restaurant background or a multi-unit experience
- Can inspire, lead, and help develop a management team
- Entrepreneurial skills must be strong
- Must have an active presence in the community
- Has experience in retail sales
They also require you to reside in the area or near the possible location of your proposed Sonic Drive-In unit. You will also be hiring a lot of people. A least 25 employees must be hired to run one Sonic Drive-In.
Once everything is approved, it takes 6 to 8 months to secure your future Sonic Drive-In location. And once construction begins, an average of 90 days is to be expected to get your Sonic Drive-In unit up and running.
Currently, Sonic Drive-In is headquartered in Oklahoma City and owned by parent company Inspire Brands who also carries Arby’s, Baskin Robbins, Buffalo Wild Wings, Dunkin’ Donuts, Rusty Taco, and Jimmy John’s Sandwiches.
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How Much Does Sonic Drive-In Make in Profit?
According to data by Statista from 2009 to 2018, Sonic Drive-In’s net income is $71.21 million. You can expect that these numbers have changed and grown by now especially with their revenue growth for the year 2020.
Other industry data reports franchise owners saw average gross sales in 2015 to be $1,246,000. 23% of Sonic Drive-Ins also exceeded $1.5 million in gross sales in that same year. Again, with Sonic Drive-In’s fast growth, you can expect that these numbers may improved even more.
Advantages of a Sonic Drive-In Franchise
Handling a business will always give you ups and downs. I’m here to let you know what they are before you dive into them so you can expect what the ride will be. Here are the advantages of this franchise.
With more than 3,500 locations, you can bet that everyone knows what Sonic Drive-In is. Yes, even those who don’t have a Sonic location near them know who they are and what they sell because the company airs Sonic commercials everywhere.
With that in mind, you don’t need to worry about marketing a Sonic Drive-In. There’s a good chance that a lot of people will come to check your store out whether that’s because they’re curious about you or because they know who you are already and they’re there to satisfy their cravings. This is the power of national marketing campaigns that include television, radio, and online advertising.
Having thousands of locations in the United States is good, but what happens when you reach this goal? Does the company have any more expansion plans?
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You’ll be pleased to know that Sonic Drive-In isn’t just going to stop with domination in the United States. They have plans on expanding internationally too. Where those possible locations will be, we don’t know yet. Claudia San Pedro, the president of this massive fast food chain, hasn’t divulged any specifics yet. But this brings hope to many who wish to franchise a Sonic Drive-In outside the United States.
Preserving the Classics
After all these years, Sonic Drive-In continues serving the classics. And it’s not just the food. In an era where Drive-thrus are popping up for most fast food chains, Sonic Drive-In is well positioned. In addition, not all locations may have the carhops on skates, but they haven’t done away with it completely yet with some servers in some locations still skating towards the customers with their orders.
Sonic Drive-In’s interior and exterior designs also bear that classic but also futuristic diner look that’s positively timeless.
Challenges of a Sonic Drive-In Franchise
Here are some of the challenges I found after researching this franchise.
Does Not Offer Financing
Despite being a huge name, Sonic Drive-In does not offer financing for those wishing for assistance in franchising their units. They do have a preferred list of lenders as stated in the FAQs on their website and that’s the most they can do to help you.
As mentioned above, Sonic Drive-Ins requires a at least 25 employees to run a store. As you might have heard, we are in the middle of a historic labor shortage in the hospitality and food service industry so filling these roles with quality employees can be a challenge.
It would probably be easier if Sonic shifted to drive-thru service rather than drive-in to reduce the number of employees needed. But I also understand that’s part of the old-school appeal that brings in customers.
Because of their drive-in service, the fast food chain takes too much space to accommodate the number of cars that can park and dine in their area. This can be expensive when it comes to leasing or buying a location for your possible Sonic Drive-In.
Is the Sonic Drive-In Franchise Right For You?
If you have the budget, go for it! The expenses to franchise a Sonic Drive-In are huge but the profit seems to be good. It’s still best to consult a financial advisor if you want more of the specifics.
What is an alternative Sonic Drive-In franchise?
If it’s a classic burger place you’re looking for that also has a huge name, try Burger King. Their franchise fee is $50,000 and the total initial investment is $316,100 to $2,660,600. Check out our guide on franchising Burger King here.
I hope this guide on franchising Sonic Drive-In helped! Applying to be a part of their franchise family not only lets manage one of America’s iconic fast food places, but you’ll also be a part of their growth and in their future expansion plans.