Sonic History

Sonic Corporation operates and franchises a chain of drive-in restaurants in the United States . As of 2002, the Company had 2,432 restaurants in operation, consisting of 511 Company-owned restaurants and 1,921 franchised restaurants, principally in the southern two-thirds of the United States . At a typical Sonic restaurant, a customer drives into one of 24 to 36 covered drive-in spaces, orders through an intercom speaker system, and has the food delivered by a carhop within an average of four minutes. The Company has two operating subsidiaries: Sonic Industries Inc. and Sonic Restaurants, Inc. Sonic Industries Inc. serves as the franchisor of the Sonic restaurant chain, as well as the administrative services center for the Company. Sonic Restaurants, Inc. develops and operates the Company-owned restaurants.

Sonic's major competitors include McDonald's, Burger King, and Wendy's. In terms of total restaurants, sonic is on 8%, 21%, and 40% the size of its rivals respectively. In 2001 McDonalds recorded a net income of $1.64 billion, while Wendy's and Sonic recorded net income of $194 million and $6.814 million each. This equated into earning 54,479.72, 32,103.26, and 2,801.81 per store respectively. Burger King only listed net sales for the period, net income was not available. This information shows that per capita, Sonic restaurants are not as profitable as McDonald's or Wendy's.

Sonic restaurants offer made-to-order hamburgers and other sandwiches, and feature Sonic signature items, such as extra-long cheese coneys, hand-battered onion rings, tater tots, specialty soft drinks including cherry limeades and slushes, and frozen desserts. In addition, the Company's restaurants offer certain other items during limited-time promotions. Sonic began offering a breakfast menu in certain test markets in October 1999. The breakfast menu is offered in markets comprising approximately 17% of all Sonic restaurants. Beginning in the spring of 2002, the Company plans to expand the number of restaurants offering the breakfast menu to about one-third of all Sonic restaurants. Those restaurants serving a breakfast menu are open beginning at 6 a.m. to 7 a.m. and serve the full menu all day. Items on the breakfast menu include sausage, ham, or bacon with egg and cheese Toaster sandwiches, sausage and egg burritos, and specialty breakfast drinks.

As of August 31, 2001 , the Company owned or franchised drive-in restaurants located in 29 states, but principally in the southern two-thirds