Digital signage driving increase in average checks at Sonic Drive-In
The Sonic Drive-In restaurant chain is rolling out new digital signage screens and menu boards after a pilot showed an increase in average ticket sales.
The quick-service restaurant chain featuring drive-in dining is in the midst of an extensive technology rollout that includes what it's calling a new "point-of-personalized-service" feature. The POPS system is expected to be rolled out throughout the next three years and should be completed at company-owned restaurants in Q4, according to Claudia San Pedro, the chain's vice president of investor relations.
San Pedro and CFO Steve Vaughan provided an update on Sonic's initiatives, including the POPS system and a new POS system, during the 14th annual Oppenheimer and Co. Consumer Conference held recently in Boston:
The POPS system is situated in customers' drive-in stalls and includes a digital menu board with a screen that plays dynamic content. During initial tests, Sonic realized the functionality is twofold: It offers suggestive selling opportunities to customers watching the content and, once their orders are confirmed, it can suggest add-ons.
"As customers look at products, we've seen an increase in average check as opposed to a static board," San Pedro said. "We can change daypart (displays). And once the franchisee makes the initial investment, over time, we can target that message on a more personal basis and increase functionality."
The system includes a touchscreen, and it can connect to a mobile app to help create tailored messages, which San Pedro expects will happen in three to five years. Vaughan said the investment in the new systems is about $135,000 in total, but the company is receiving an underwriting of a portion of the cost from its vendor.
"Coming back will be about a $40,000 contribution from our vendors toward the POPS system, so it will be a little under a $100,000 investment for our franchisees," he said. "It has created a lot of excitement about this initiative."
The new POS technology — replacing a 20-year-old system — will be a key enabler to the POPS feature. Vaughan said it includes robust back office tools that, he expects, will lead to labor and food cost savings.
"We have great momentum in the brand right now, and in two, three, five years, we'll really see the benefits from this technology investment," he said
Sonic CEO Cliff Hudson talked about the POPS system during the company's Q1 earnings call in January.
"When you take the POPS system and combine it with our physical drive-in format, this should allow us to engage customers where they live and using the likes of mobile technology and social media, both on-lot and off-lot," he said. "This will provide an opportunity to more fully integrate the Sonic experience with customers."
The company expects this "more targeted and personalized" initiative to be a significant factor in sales growth and a brand differentiator within the next several years, he said.
"It is our view (because of the drive-in format) that we have the ability to maintain and connect with customers with targeted messaging and customized promotions in a way our competition doesn't really have," Hudson said.
In January there were about 60 drive-ins with the POPS system, with the first implementation about two years ago. The company was testing content to see what drives sales.
"The beauty of this thing is it's the gift that keeps on giving," Hudson said on the call. "You have the ability to evolve it."
Alicia Kelso Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.