Sonic Drive-In on COVID-19’s effects on supply chain and consumer demand
The chain’s format conduces social distancing amid the pandemic
November 18, 2020
For all the tales of woe coming out of the restaurant industry during the pandemic, Sonic Drive-In has a very different story: A story of growth. Perhaps that’s because it’s uniquely situated due to its drive-in format that naturally social distances.
But perhaps it’s also because of Sonic’s forward-thinking president, Claudia San Pedro. She joined the company in 2006 and served as vice president of investor relations and CFO before being named president in 2018. San Pedro spoke with NRF about what Sonic — which is owned by Inspire Brands — has done differently to flourish during the pandemic and how she is steering Sonic to embrace cultural differences.
What has Sonic done during the pandemic that stands out in the industry?
For all of us, the key piece is to adapt and adjust in real-time. In this time when there is incredible stress for our physical health and our financial security, what matters most is how we continue our business in a way that is healthy for our guests and employees.
We give ourselves grace in the decisions we make today. They may be the right ones for today but tomorrow things may change. That’s OK. What’s been hard is the constantly evolving and changing environment. It can be very frustrating. Give yourselves grace and focus on people and on caring first. It’s all about going with the flow.
What have you learned from the pandemic that stands out?
From a supply chain standpoint, we learned that we never want to run out of product — ever. But during a pandemic, guess what? There will be supply chain disruptions. We operators and guests all need to have a little grace. It’s OK if we don’t have all of the items all of the time. There must be a little more forgiving.
What did you run out of?
A number of things. Initially, we saw a decline in our business, but we started seeing great results about four weeks in. We had a 30 percent increase in demand for burgers. This, at a time the system was experiencing a 40 percent decline in production and processing. Yes, we were able to meet demand in the end but we hit some potholes along the way.
How has the pandemic impacted Sonic’s business overall?
Starting in mid-April, we have seen our same-store sales perform in the area of 20-30 percent increases. Our drive-through model facilitates this. It’s all about the experience of eating in the comfort of your car. You can pull into the drive-in any time and you’re in control of the process.
At the same time, our carhop service still provides an element of human connection that’s so needed right now since we all feel so isolated. Any human connection is meaningful.
Take a look at what Sonic’s parent company, Inspire Brands, is doing to breed customer affinity here.
Technology played a role too, right?
Yes. In August we launched our order-ahead app to suit the lifestyle needs of our customers. You order what you want and customize your food as you want it. If you want a BLT that’s not even on the menu, we’ll make it for you. You decide when and where, and you pick up and pay through the app. Once you get to the app, you check in and the carhop delivers your food. You don’t even have to wait in the drive-through line. The food is ready and waiting for you.
What other key takeaways does Sonic have from the pandemic?
One key takeaway is the incredibly important role restaurants play during times like this. We not only feed our guests and supply jobs, but we’re there for the community. We really are a human connection point. While technology has helped us do business, the ability to be able to connect with people in a healthy way is vital.
“While technology has helped us do business, the ability to be able to connect with people in a healthy way is vital.”
Claudia San Pedro
How did the pandemic impact your staffing?
We saw a reduction in staffing, but we didn’t have to furlough or lay off anyone. We saw a reduction of people coming to work. Staffing is still a challenge.
The nation is facing so many issues right now, including cultural issues for people of color. As an executive of color, how are you impacted?
Everything we’ve lived through over the past five to six months is a constant reminder that we still have a lot of work to do. We have to look hard at how we are doing and what we are doing to constantly improve.
Sometimes we have a tendency to get complacent. Events like the past six months shake us and remind us. As the leader of a company, I have to engage and have conversations and take action.
How do you engage Sonic’s team in this?
We have redesigned our unconscious bias training and put more emphasis on it. How does it become part of who we are culturally? But the circumstances you have in a restaurant may be different than in a corporate setting, so sometimes we have to redesign the program.
We have made sure that all team members go through training. This is a mindset and a cultural issue. It’s not a one-and-done program. We’ll be talking about this all the time, not just once a year. It’s part of how we do business every day.
What did you learn and experience as a young, Mexican immigrant girl growing up in Oklahoma?
I grew up in a mindset where you didn’t talk about your differences. You needed to be like everyone else. Now, I want to make sure we approach this from a sense of not only talking about our differences but celebrating them. It’s only through sharing different perspectives that we get better at understanding each other and attracting the best talent.
“It’s only through sharing different perspectives that we get better at understanding each other and attracting the best talent.”
Claudia San Pedro
What are Sonic’s growth plans and how did the pandemic change them?
For sales growth, we had a 2020 goal of reaching average sales of $1.5 million per unit volume and $200,000 in average unit profit — and we far surpassed that. Now, we’re looking at going up to the next step and hitting $1.8 million by 2025.
What about adding more stores?
Our brand has 3,550 units in 48 states. We’d like to grow at 2-3 percent annually.
What is your best advice for entrepreneurs who want to get into the retail business?
Make sure you think about how you will innovate and connect with people.
What is the American Dream — and are you living it?
I am totally living the American Dream. But we can’t lose sight that we need to offer non-traditional paths to success. There is no one right path to success. There are many.