'Sonic is running over 30% positive for the quarter' as it unveils new drive-in design: Inspire Brands CEO Paul Brown

Paul Brown, Inspire Brands CEO, joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Sonic’s new drive-in restaurant Design, Delight, Buffalo Wild Wing’s latest esports partnership, new offerings from Arby’s and much more.

Video Transcript

ALEXIS CHRISTOFOROUS: As more of us take our food to go and eat outdoors amid this pandemic, restaurants are rethinking how they do business. Joining us now is Paul Brown, CEO of Inspire Brands. That's the company behind names you know-- Arby's, Buffalo Wild Wings, Jimmy Johns Rusty Tacos, and Sonic.

Paul, that's a lot of brands. Good to have you here this morning. Before we talk--

PAUL BROWN: It's great to be here.

ALEXIS CHRISTOFOROUS: --specifics, including a redesign for Sonic, which is very exciting, I want to talk about business right now for your restaurant brands. Is there one brand that's sort of shining through or outperforming the rest during this Pandemic

PAUL BROWN: Really, our two QSR brands, Arby's and Sonic, are the ones that are outperforming. Sonic is running over 30% positive year-over-year for the quarter. And Arby's is running in the mid teens positive year-over-year for the quarter. So they're really the ones that are shining the most right now.

ALEXIS CHRISTOFOROUS: Paul, you have two Sonics now in this redesign. Take us through what you were hoping to achieve in that design. And is that a design that you can apply to some other brands in the portfolio, like an Arby's or even a Buffalo Wild Wings?

PAUL BROWN: Yeah, what's happened at Sonic is the result of the same process that we do with all of our brands when we bring them into the portfolio, starting with Arby's and the Buffalo Wild Wings, is first getting clear around what is the positioning and promise of the brand, and then making sure that carries through to all elements of it, whether it be the marketing or the physical plant or even the menu. And so this year earlier, we launched a new marketing campaign for Sonic, which has been phenomenal, and actually quite convenient that we launched that campaign before COVID.

And then, obviously, the new building design, which has been incredibly well received. The one in Tahlequah has been open for a couple of months. It was a scrape and rebuild. So it's just a new building on the same site. And it's running positive 80% year-over-year. And customers are loving that spot.

ALEXIS CHRISTOFOROUS: Paul, your Buffalo Wild Wings locations are sort of known as a gathering spot to watch sports. And we know that fans are not in the stands. But it's hard for people to gather in places now. What have you done? How have you pivoted business within Buffalo Wild Wings?

PAUL BROWN: Well, the first is real movement to digital take out and delivery. At the very beginning of this in April, we obviously had to shut down all the dining rooms and move entirely to take out and delivery. And as an example, our digital sales in take out/delivery went from an annualized $800,000 a restaurant to an annualized $2.2 million a restaurant in the period of about three weeks as we moved to entirely take out and delivery.

That's now settled down at around an annualized $1.4 million. So again, continuing that as we've opened the dining rooms. What we're really doing--


PAUL BROWN: --in opening dining rooms is obviously--

BRIAN SOZZI: Oh, go ahead, Paul. Go ahead. Good.

PAUL BROWN: As we open the dining rooms, just being very careful about how we do it and making sure that we're bringing guests back safely. But we're seeing them return, looking forward to being able to have draft beer again, which is hard to do in the house, and coming for other reasons than just sports.

BRIAN SOZZI: You mentioned-- Paul, I want to get back to what you just said about Sonic. Sales up 30%-- that's on par with what we just heard from Papa John's a week ago. You guys are now, I guess, suddenly two of the hottest brands in the QSR space. How do you explain those type of sales gains amidst a recession?

PAUL BROWN: Well, the two things-- first is a car-centric model. So only 2% of Sonics have dining rooms. And so the ability to serve the customer through the drive-through and through the drive-in is obviously right in line with what's happening today. And we were able to do it by adding some capacity through speed to the drive-through. And so that's worked really well for us.

But also our digital sales-- we've gone from 4% of our sales at Sonic to be order-ahead through our digital platform to over 10%. And so that's also helped us as well. It's just a great concept. It's a nice oasis in people's daily routine. And it also just has a great product offering that just people want to have, snacking and at lunch.

BRIAN SOZZI: We've talked in the past about the Inspire Brands model. I've watched you build this portfolio of brands from the ground floor. In this type of environment, are you inclined to keep the acquisition pace going?

Look, this morning, we saw Fat Brands come out, get a pretty good deal on Johnny Rockets for $25 million. Are you still interested in building out this portfolio, let's say eight or ten total brands?

PAUL BROWN: Well, really, the thesis we have around the value of having a broad brand portfolio and achieving scale through acquisition really has played out very much over the past several months, just the value of the portfolio and the value of our scale. What that turns into as far as additional acquisitions, I really can't speculate at this time. But the thesis has certainly been validated over the past several months.

ALEXIS CHRISTOFOROUS: Before we let you go, Paul, I'm pretty excited about this League of Legends Championship e-sports league. You're partnering with them for what, just Buffalo Wild Wings?

PAUL BROWN: Yes, just for Buffalo Wild Wings. We want to be the official place for e-sports. It's obviously the fastest-growing sports spectatorship. And we feel like we're a great opportunity to be a good partner with them. We're super excited about that partnership.