Sonic Rises as New Ad Strategy Helps Boost Earnings Forecastby
Sonic Corp. advanced the most in nine months after raising its forecast for earnings growth, saying its advertising programs are boosting sales while new equipment in its restaurants is trimming costs.
Profit in the year through August 2016 will rise 16 percent to 20 percent on a per-share basis, the Oklahoma City-based company said Monday in a statement. That’s up from a previous forecast of 14 percent to 18 percent growth.
Sonic has had success by shifting from local to national advertising, a move that’s helped build more awareness for its drive-in restaurants. The chain, with about 3,500 locations, has attracted customers beyond lunch and dinner time with its Happy Hour half-price drink specials, as well as breakfast items that are sold all day. Executives said Monday on a conference call that a new software-based checkout system in its restaurants is helping profitability as well.
The shares climbed 7.8 percent to $28.69 at the close in New York, the biggest gain since Jan. 7. Sonic has advanced 5.4 percent this year.