Faster fast food: Roller skates at Sonic
The drive-in restaurant brings back carhops on wheels, but is it a personal-injury lawsuit waiting to happen?
Carhops on roller skates are one of those quaint throwbacks rarely seen outside of grainy '60s-era movies. Men in fedoras would pull up in a car with giant fins and order a phosphate soda from a bouncy blonde on eight wheels and think nothing of it.
Well if you’ve got a hankering for nostalgia -- or just enjoy some entertainment while you eat -- you’re in for a treat. Fast-food chain Sonic (SONC) recently announced plans to revive carhops on roller skates at its drive-in restaurants across the U.S.
The real question for shareholders, of course, is whether the move will cause customers will roll in at Sonic’s 3,500 chain restaurants . . . or just result in sprained ankles and worker's comp claims.
Skating carhops were common at Sonic stores in the 1960s and '70s, but by the end of the 1990s, the servers on skates were all but gone -- except for a smattering of drive-ins around the U.S. Kellie Pickler, a previous American Idol contestant, was actually a skating carhop at a Sonic store in Albemarle, N.C. But skating carhops like Pickler are far from common at drive-ins, and the vast majority of Sonic servers are just hoofing it. At least, for now.
Perhaps the decline of skating at Sonic was because it just wasn’t efficient -- or the ranks of skilled skaters were thinned by video games and cable TV. But chances are that the insurance and worker’s compensation costs scared most SONC managers off a little razzle-dazzle on roller skates. Post continues after video:
As the company looks to make roller skates more common at its locations, Sonic is looking to mitigate some costs by suggesting wrist and knee pads and safety head gear -- not as cool as the old-school carhops, but surely more cost effective. It remains to be seen if SONC stores are willing to let servers just sign a release and risk their own hides or if they’re going to get heavy handed and mandate equipment for skating servers.
But with the insurance premium for just one store at around $20,000 a year according to industry estimates, it may be wise to make some sort of safety gear part of the uniform. (SONC execs won’t reveal what the real price tag is per restaurant.)
The skating is not all downside, of course. The average Sonic with skaters pulls in $50,000 more in annual sales versus one without, says Sonic CEO J. Clifford Hudson.
With a saturated U.S. fast-food marketplace, companies are almost out of tricks to boost same-store sales. Many restaurants from Burger King (BKC) to Wendy’s/Arby’s (WEN) have relied on value menus to boost same-store sales.
Others are looking overseas. Yum! Brands (YUM) chain Taco Bell is seeing big potential in India, and Domino’s Pizza (DPZ) recently announced that global sales are now nearly half of its pie. McDonald’s (MCD) has also relied mainly on overseas sales growth to fuel its success in recent quarters.
And with the recession taking a toll on many restaurants, it’s getting even harder to show shareholders that there is growth and profit potential in your stock.
Sonic may have found a good way to revitalize its existing locations without much expense -- that is, assuming the wait staff can keep up and stay safe. Otherwise Sonic may find out the hard way that the only way to stop when you’re skating downhill is to steer into the grass and fall down as gracefully as possible.
Which, for the record, isn’t very graceful at all.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
3 stocks will be in the spotlight Thursday as investors try to make sense of the numbers from the sector.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.