Sonic president will lead the chain after Inspire deal closes

Dive Brief:

Sonic’s longtime CEO Cliff Hudson will step down at the end of the year, when the drive-in chain expects to close its $2.3 billion sale to Inspire Brands, the company announced Wednesday. With shareholder approval, current president Claudia San Pedro will take the reins after 12 years with the company. She will join Inspire’s executive team, which also oversees Arby’s, Buffalo Wild Wings and Rusty Tacos, reporting to Inspire CEO Paul Brown.
San Pedro, a former finance director for the state of Oklahoma, joined the company in 2006 as treasurer, moving to VP of Investor Relations and then to CFO in 2015. “Claudia’s skill and vision are well respected within our industry, and I look forward to working with her to ensure that SONIC has the capabilities and resources it needs for long-term growth,” said Brown in the release.
Hudson, who will serve as an advisor through March 2019, has spent 34 years with Sonic, first as an attorney in 1984 and eventually as CEO since 1995. Under his watch, the 1,500-unit chain more than doubled in size, expanded to nearly all 50 states and increased sales from $905 million to $4.5 billion.

Dive Insight:

Sonic hasn’t had many leaders in its 65-year history — only two, in fact, in Hudson and founder Troy Smith. Smith’s daughter, who still deals in the company’s real estate holdings, credited Hudson with introducing the world to the Sonic brand in yesterday’s press release. But these are no ordinary times for the iconic drive-thru.

Roark Capital Group, a private equity firm that runs Inspire Brands, has been on the restaurant prowl for the past couple of years, acquiring not just Sonic but also Buffalo Wild Wings under Inspire (which already owns Arby’s) and Jamba Juice under Focus Brands. The latter company, parent also to Auntie Anne’s, Cinnabon and Carvel Ice Cream, recently put out feelers for an IPO. Sonic’s stock surged 21% to about $43 per share after news of the Inspire deal broke in September, signaling investor confidence in Roark despite Sonic’s recent sales slump. Comparable sales fell flat this year, falling 1% since 2017.

Inspire boasts an impressive track record since dragging Arby’s out of three straight years of dropping sales following the 2008 recession. The brand hired a former Hilton chief who led the sandwich chain to double-digit sales jumps and refocused marketing efforts on prudent innovation, versus its previous see-what-sticks strategy. Now, Arby’s tests new items in select markets before unveiling them across the board, usually at a limited-time discount.

That combination of strategic innovation, savvy PR and catchy marketing aligns with Sonic’s track record. Under Inspire’s wing, San Pedro can offer her financial expertise in promoting celebrity-filled commercials and menu campaigns. Sonic's TV ads have hit home with millennials, a difficult demographic to capture. Ice cream treats have also been a particular boon, exceeding $500 million in sales for the first time in 2015.

As perhaps the most recognizable drive-thru chain, Sonic fills a niche void in the quick-service segment. — and Inspire and investors seem to think it has a bright future ahead. San Pedro’s experience with the brand should can help maximize Sonic's lasting appeal, which departing CEO Hudson nurtured year after year.