On Wednesday, Sonic celebrated yet another quarter of outstanding results. Sales at stores that have been open for at least 13 months rose by 8.5 percent in the first quarter of 2015. Profits jumped 23 percent. And the company's stocked surged by roughly 10 percent on the day.
The encouraging performance, which comes as the chain aims to expand its presence in the United States, is hardly an isolated event. Rather, it marks the latest in a string of signs the Oklahoma-based fast food chain has figured something out that other chains—namely, McDonald's—have not.
Sonic's stock has risen by more than 30 percent since October, and roughly tripled since early 2013. The southern burger chain hasn't reported a decrease in same-store sales in more than three years.
Meanwhile, the quirky drive-thru's competition has struggled, and mightily. McDonald's, the country's largest burger chain, is Exhibit A. It's been more than a year since the maker of the Big Mac reported a monthly increase in same-store sales.
Part of the divergence could be tied to the fact that Sonic, unlike other fast food burger behemoths, has yet to saturate its audience in the country. Most of the chain's outlets, are still located in the south, and much of its expansion has happened in states like California and New York, which aren't as familiar with its brand. There are also simply fewer Sonics in the United States than there are other fast food chains. Sonic has roughly 3,500 branches nationally. Wendy's has nearly 6,000; Burger King has closer to 7,000; and McDonald's has more than 14,000.
Sonic has also benefited from its strong marketing campaign, which has long advertised to audiences nationally, despite the chain's small presence outside of the south. The most memorable bit of its national campaign features two men, talking about eating Sonic, while eating Sonic in a car. But the company has also signed celebrities, including N.B.A. basketball superstar Kevin Durant.
But Sonic's reluctance to invest in salads and other healthy options, a strategy other chains have long employed, has likely propelled a good part of its success too.
"I think Sonic understands their core customer more than the big guys do," Will Slabaugh, an industry analyst with Stephens Inc, told CNN on Thursday. "You're typically going out to indulge. You're watching that waistline a little less and your wallet a little bit more."
Sonic's menu reflects that understanding. The menu is simple, straightforward, and, predominantly, cheap. The chain sells nine different burgers, ten different hot dogs, an array of chicken-based foods, almost all of which are fried, and sides, which range from french fries to chili-cheese tater tots. Beyond that, there's a 'Smart' menu, that offers no salads, or carrots, but rather calorie-controlled portions of its burgers, sandwiches, and hot dogs. And there are milkshakes.
McDonald's, on the other hand, has opted to expand its menu, which currently sports almost 200 items, and largely with salads, wraps, and other healthier, but also more expensive fare. There have been many problems with that strategy. For one, those items, along with the chain's other, pricier options, are pitting McDonald's against the likes of Panera and Chipotle, fast casual brands with which McDonald's has been hard-pressed to compete. The price point, as Fortune recently noted, has put McDonald's at a serious risk of losing customers.
Most importantly, McDonald's strategy seems to point to a misunderstanding of its audience: namely, that Americans who walk through its restaurants' doors do so to indulge in cheap, but also, for lack of a better word, indulgent food. The Economist notes this very quirk in a new piece:
Most diners want a Big Mac or a Quarter Pounder at a good price, served quickly. And, as company executives now acknowledge, its strategy of reeling in diners with a “Dollar Menu” then trying to tempt them with pricier dishes is not working.
Dangling salads, especially now that calorie counts are pasted all over fast food menus, undermines the essence of what the fast food world offers Americans. People visit cheap burger chains for a respite from their (hopefully) healthier dietary regimen, not yet another reminder from their conscience that they could be eating something much healthier. Sonic seems to understand that. McDonald's? Not so much.