Sonic Power Point Slides Fa

Sonic Company Analysis GBA 687 Briana West Mihaela Gilea Cesar Cortez

Financial Analysis

Revenues and NIAT

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Revenues and NIAT are on an upward trend and have generated double digit growth over the past 3 years.

Liquidity Ratios 

Current Ratio

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Quick Ratio

The current and quick ration indicate problems with liquidity, but these have been improving over the past 3 years.

Activity Ratios 

Total Asset Turnover

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Average Collect Period

Asset turnover is under two showing lower asset base to deliver sales of the business. Average collection period is at less than 14 days which is a good indicator.

Leverage Ratios 

Debt to Equity

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Debt to Asset

The D/E ratio is below 1 indicating low investment risk The D/A ratio is also below 1 indicating most of the assets are financed through equity

Z-Scores

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The z-scores for the company fall within the safe region

Summary of Financial Analysis 

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The company has been well manage, has performed well and is in a strong financial condition. There is one major aspect that is problematic which is liquidity. From the liquidity ratios we can see the business has liquidity problems but looking at the overall business and the improved ratios over the past 3 years we can conclude that this will not be a major problem.

SWOT/TOWS

SWOT 

Strengths

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Weaknesses

 Differentiation

 Liquidity

 Strong

 Business

Management  Human Resource Policy  Fun Culture  Excellent Information Technology  Franchise Satisfaction

Model (Limitation of current model to open only in warm climate areas)

SWOT 

Opportunities  Broaden

Menu  Partner and expand to non-core markets by creating Sonics express non-drive in for cold weather areas.  Continue to build in developing markets  Attract younger generations

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Threats  Low

entry barriers  Aging population  Competitors (All food providers, mom and pop restaurants, McDonalds, Wendys)  Lower startup costs for competitors entering the market

TOWS 

SO  Customer

satisfaction and loyalty supports expansion

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WO  Change

business model by adding a sonic express

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ST  Utilize

existing franchises to experiment with healthier products

CURRENT STRATEGY Market expansion Differentiation Development strategy

Market expansion: a multilayered growth strategy design to diversify potential and strengthen profitability  Increased  Higher

number of restaurants

media expenditures

 Unification

of chain operations

Differentiation: The specialty menu allowed the chain to: -differentiate itself from other fast-food outlets -avoid price wars with its major competitors Points of quality (aluminum foil, Styrofoam cups) The differentiated concept consists of personalized, fast, and convenient carhop service as well as unique menu items

Development strategy Relies on: Franchise expansion  Same-store sales increases (low risk, high return) 

WHEN WAS THE STRATEGY LAST CHANGED? In 1995 Sonic introduced “Sonic 2000” an aggressive multi-layered strategy to further unify the company in terms of a consistent menu, brand identity, product, packaging, and service.”

CORPORATE CULTURE   

Create a positive environment for employees The promise of a positive work culture and comprehensive benefits The annual Dr Pepper Sonic Games created to motivate employees, enhance performance, develop customer service skills, and promote employee retention

Is the company involved in a planned change program? Install new IT system to centralize information for better reporting and communication  Change store layouts/facade 

IS THE MIS EFFECTIVE? 

The company’s management information system and use of information technology are effective.

Sonic attributes its successful operations to five essential components:     

A multilayered growth strategy A highly differentiated concept An accelerated expansion program Solid financial performance Corporate Culture - Training