We follow Sonic Corp (SONC) as one of the most interesting chain restaurants. The company seems to be on a perennial teeter-totter. CEO Cliff Hudson said this week not to expect 20% restaurant margins again, and President W. McLain noted it would be several quarters before significant franchisee new unit growth would occur.
To be sure, we are all relieved that the same store sales trend is now positive, at least through April. May/June sales appear to be down, but it was almost impossible to tell via the confusing earnings call. Thus far, the stock price reaction has been mute. Price targets remain in the $12 to $14 zone.
Morgan Stanley’s John Glass asked a really good question: There seems to be a tension in Sonic’s heritage between drinks and food, entrees vs. snack food, value vs. mix, and how could the company extract itself from that situation? That
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