Sonic Corporation (SONC), which operates and franchises a chain of quick-service drive-in restaurants, recently declared its preliminary fourth-quarter 2009 results for the fiscal year ended August 31, 2009.

Sonic’s comparable sales continue to be hurt by a battered economic environment. Comps at Sonic slid 4.5% during the quarter compared to a 0.6% decline in the year-ago quarter. For partner drive-ins, in which the company owns a majority interest, comps fell 5.4% compared to a 6.3% decline posted in the prior-year quarter.

The rate of decline in comps decelerated from the third-quarter of 2009 due to company’s sales driven initiatives, which include a new pricing model, enhanced consumer service and the introduction of value-for-menu products. Traffic count remained relatively flat year-on-year. Comps dipped 5.4% and 7.7% at Sonic and partner drive-ins, respectively, during third-quarter 2009.

Despite a credit-constrained market, Sonic continues to expand aggressively. The company opened 41 drive-in restaurants in the fourth quarter, including 40 opened by franchisees compared to 34 opened in the third quarter, including 32 opened by franchisees.

In the fourth quarter of fiscal year 2008, Sonic opened 58 drive-in restaurants, including 45 opened by franchisees. In fiscal year 2009, there were 130 franchise openings compared to 140 in 2008. As a part of the company’s refranchise program, Sonic refranchised 200 partner drive-ins restaurants during fiscal year 2009.

Sonic will report its fiscal 2009 results on October 20, 2009.

The drive-in restaurant chain also gave an encouraging outlook for fiscal year 2010. Sonic expects earnings per share to rise in the range of 10% to 12% from fiscal year 2009, driven by lower commodity costs and a fall in interest expense. Management expects a $3 million decline in interest expense.

Sonic expects comps to remain flat at both partner and franchise drive-ins, with improvement in restaurant-level margins. Sonic expects to open 115 to 125 new drive-ins in fiscal year 2010, of which 100 to 110 restaurants will be opened by franchisees. Capital expenditure is expected in the range $30 million to $40 million for the fiscal year 2010.

Sonic and other fast-food chains, like McDonald’s Corporation (MCD), Burger King Holdings (BKC), Yum! Brands (YUM) and Chipotle Mexican Grill (CMG) are faring better than casual and upscale dining restaurants, as budget-constrained consumers are trending towards lower-priced dining options.
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