Sonic Drive-In Franchise FDD, Profits, Costs & Fees (2024)
Sonic Drive-In, an iconic brand in the American fast-food landscape, began its operations in 1953 under the original name “Top Hat Drive-In” in Shawnee, Oklahoma. The founder, Troy Smith Sr., along with his partner Charlie Pappe, transitioned the business into the Sonic brand in 1959, marking the start of its franchising journey.
Today, Sonic is headquartered in Atlanta, Georgia, and operates as a subsidiary of Inspire Brands. Known for its unique drive-in format, Sonic offers customers a nostalgic dining experience where they can order and receive their food without leaving their cars.
This model differentiates Sonic from other fast-food chains primarily focused on traditional dine-in or drive-thru formats. Sonic serves a variety of items, including burgers, hot dogs, chicken sandwiches, and an extensive beverage menu that features many unique drink combinations.
Sonic Drive-In Franchise Stats
Sonic Drive-In
Number of units: 3,195 franchises
Initial investment: $699,000 - $3,371,000
Average revenue (AUV): $1,528,000
Initial Investment
How much does it cost to start a Sonic Drive-In franchise? It costs on average between $699,000 – $3,371,000 to start a Sonic Drive-In franchised restaurant.
This includes costs for construction, equipment, inventory, and initial operating expenses. The exact amount depends on various factors, including the type of restaurant you choose, the location, and whether the franchisee chooses to lease or purchase the property. Indeed, Sonic Drive-In offers 2 types of franchises:
| Franchise Type | Initial Investment Range |
|---|---|
| Traditional Sonic Drive-In | $1,714,200 to $3,370,900 |
| Traditional C-Store Sonic Drive-In | $699,200 to $1,390,900 |
We are summarizing below the main costs associated with opening a Traditional Sonic Drive-In franchised restaurant. For more information on the costs required to start a Sonic Drive-In franchise, refer to the Franchise Disclosure Document (Item 7).
| Type of Expenditure | Freestanding Leased Amounts |
|---|---|
| Initial franchise fee | $45,000 |
| Travel and living expenses during training | $8,200 – $93,600 |
| Certified Training Team expenses | $15,200 – $42,500 |
| Prepaid expenses | $2,000 – $125,000 |
| Building costs | $800,000 – $1,100,000 |
| Site work | $450,000 – $1,200,000 |
| Restaurant equipment | $175,000 – $260,000 |
| Point-of-sale system & other technology | $105,000 – $160,000 |
| External signage | $50,000 – $150,000 |
| Beginning inventory | $20,000 – $50,000 |
| Advertising funds | $2,000 – $5,000 |
| Insurance premiums | $10,000 – $20,000 |
| Payroll | $26,800 – $94,800 |
| Additional funds (3 months) | $5,000 – $25,000 |
| Total Estimated Initial Investment | $1,714,200 – $3,371,000 |
Average Revenue (AUV)
How much revenue can you make with a Sonic Drive-In franchise? A Sonic Drive-In franchised restaurant makes on average $1,528,000 in revenue (AUV) per year.
Here is the extract from the Franchise Disclosure Document:
This compares to $1,548,000 yearly revenue for similar burger franchises. Below are 10 Sonic Drive-In competitors as a comparison:
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Sonic Drive-In Franchise Disclosure Document
Recent Legal Disputes and Litigation
Sonic Drive-In, a well-known fast-food franchise, has been involved in several legal disputes with its franchisees in recent years. One significant lawsuit occurred in 2021, where franchisees filed a complaint against Sonic over its alleged unfair business practices.
The franchisees claimed that Sonic was forcing them into a costly technology upgrade without proper consultation or offering reasonable financial assistance. This upgrade involved point-of-sale (POS) systems and back-office software, which many franchise owners argued was burdensome, especially for smaller operators.
The lawsuit brought to light the growing tension between Sonic’s corporate headquarters and its franchise network. The plaintiffs, comprising several franchisees, argued that Sonic’s requirements placed undue financial strain on their businesses, especially during the COVID-19 pandemic, when many restaurants were already struggling to maintain operations.
For potential franchisees, it’s essential to remain aware of these issues and ensure that the terms of any franchise agreement are clear, particularly regarding financial obligations and corporate support.
Frequently Asked Questions
How many Sonic Drive-In locations are there?
As of the latest data, Sonic Drive-In operates over 3,500 locations across the United States. These locations are primarily franchised, with a small number of company-owned outlets. Sonic has a strong presence in the Southern and Midwestern U.S., although its footprint extends across the nation.
What is the total investment required to open a Sonic Drive-In franchise?
The total investment required to open a Sonic Drive-In franchise ranges from $699,000 to $3,371,000.
What are the ongoing fees for a Sonic Drive-In franchise?
Sonic Drive-In franchisees are required to pay a 5% royalty fee on gross sales. Additionally, there is a marketing fee of 3.25% of gross sales, which contributes to both national and regional marketing efforts. These fees help maintain consistent brand promotion and operational support across all Sonic locations.
What are the financial requirements to become a Sonic Drive-In franchisee?
To become a Sonic Drive-In franchisee, candidates must meet certain financial requirements. The minimum net worth required is $1 million, and franchisees must have at least $500,000 in liquid capital. These financial thresholds ensure that potential franchisees have the necessary resources to invest in and successfully operate a Sonic Drive-In location.
How much can a Sonic Drive-In franchise owner expect to earn?
The average gross sales for a Sonic Drive-In franchise are approximately $1.53 million per location. Assuming a 15% operating profit margin, $1.53 million yearly revenue can result in $229,500 EBITDA annually.
Who owns Sonic Drive-In?
Sonic Drive-In is owned by Inspire Brands, a multi-brand restaurant company. Inspire Brands acquired Sonic in 2018 for approximately $2.3 billion. Inspire Brands also owns other major restaurant chains, including Arby’s, Buffalo Wild Wings, and Dunkin’, making it one of the largest restaurant groups in the U.S.
Disclaimer
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