The biggest chain of drive-in restaurants in the U.S.,
) recently inked a deal to set up five new drive-ins in San Diego
County and 10 new drive-ins in the greater Los Angeles area in
association with present franchise partner, SPG Management. The
restaurants will be developed over the next six years.
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Oklahoma-based Sonic has a long-standing relationship with SPG
Management. The franchise partner boasts superior local market
knowledge and a proven track record in the restaurant industry.
One of SPG's principals even served as a CFO for a
) contractor and helped build 70 McDonald's restaurants during
SPG currently owns and operates five other Sonic Drive-Ins in
Southern California. We believe, the latest alliance reflects
Sonic's intent to make California one of the prime markets for
expansion considering the state's potential to generate about
$67.4 billion in restaurant sales in 2013, as per the national
Not only Sonic, another restaurateur Dunkin Donuts, a subsidiary
Dunkin' Brands Group Inc.
), is also considering expansion opportunities in the markets of
Los Angeles, Riverside, San Diego, San Bernardino, Ventura and
Orange counties. Dunkin is planning to open new restaurants in
these regions by 2015.
A Zacks Rank #3 (Hold) company, Sonic is gradually moving in a
positive direction. The highlights of its second-quarter 2013
earnings, reported in March, were strong comps momentum and
margin expansion based on stringent cost control measures. On the
developmental front, Sonic is aggressively tapping existing and
new markets and is primarily focusing on franchise development.
It also cut a franchise development deal this month for five new
drive-ins in the Rochester, NY market over the next four years.
As part of its initiative to expand into new markets such as the
Northeast, it is teaming up with franchisees to test new drive-in
prototypes that cater to market specific needs.
At the end of the second quarter of 2013, this drive-in fast food
chain operator had a total of 3,526 drive-in restaurants.
Management expects new franchise drive-in openings in fiscal 2013
to be slightly higher than fiscal 2012. However, Sonic
anticipates the rate of growth to accelerate in 2014. Another
eatery worth considering is
AFC Enterprises Inc.
) carrying Zacks Rank #2 (Buy).