Sonic Q2 2009 Earnings: Too Little Information

We all know it’s difficult being in the publicly traded company environment: lots of pressure, expense and analysts asking questions.

But on Tuesday we counted SEVEN specific circumstances where Sonic (SONC) Management (CEO Hudson, President McLain and CFO Vaughn) punted on different earnings or expectations related analyst questions. A lot of them had to do with the company’s so called Value Menu/Happy Hour, which looks to have eroded average check and margins, without driving in enough incremental customers, yet (see my earlier posts).

• SONC didn’t have or know what the incremental traffic counts were necessary to offset the average check decline due the Value Menu/Happy Hour.
• SONC didn’t have the dayparts [Breakfast, Lunch, Dinner, Snack] transaction mix.
• SONC didn’t have or wouldn’t say the price range of the new Chicken Sandwich [which they revealed on this call]
• SONC wouldn’t reveal the terms of the revised debt structure they negotiated and featured in their news release [this should have been good news]
• SONC didn’t have or wouldn’t say the percentage of transactions [versus sales] that came from the Value Menu.
• Wouldn’t say the Debt to EBITDA coverage ratio.
• Wouldn’t say the same store sales trends in the recently re-franchised stores, versus the core company markets.

SONC turned in $.08/share earnings (excluding a $.06/interest expense credit for early debt cancellation), versus $.15/prior year.

At least they had a profit. But, I wonder if there is an IT/Management Information problem, that’s bogging up the works.

Disclosure: Pacific Management Consulting group is an analytically focused restaurant management consultancy that takes no stock positions.