Just finished getting a.

Thank you thank you.

Students.

Head but Dean said who park Six months ago
in Oklahoma City when he came to visit

me and asked that I come and speak to
this class and I was honored to do that.

Today I'm going to talk about three things
little bit about myself and how I got here

second talk about our strategic
framework at Sonic and

then share a few leadership
lessons that I've learned

along the thirty plus years I've
been in corporate America so

my hope is that in the next time if you
can get one or two and I get so busy.

From from my talk today and I would be
happy to answer any questions at the end

that we would have accomplished our
mission so that's the plan today.

So talk about my personal
story a little bit mentioned I

graduated in one thousand nine
hundred I came to Georgia Tech in

the fall of one nine hundred seventy
six and at that time the campus

looked very different from what it is
today as you can imagine and these parts.

Of town were not so great to be
alone especially after dark and.

As I have come back and forth and
visited this campus over the last

few years I've seen this rain A songs
I mean the development in this area

has been great new buildings
new roads You OTOH new

businesses it's all about the innocence
of Atlanta says the lympics.

So this is the first time.

I've set foot in a Georgia Tech good day
here in the last thirty three years though

not because of my choice but
I appreciate the education I had head and

great lesson ships with several people but
it just interesting that I brought

over the country and this is one of the
cities I did not get a chance to limit so

I would come here you know off and on for
business visits and visit the campus but

I have never been inside a GA Tech
buildings in one thousand nine hundred so

a little bit about myself I came in as
an international student in seventy six

was born in India educated in
Pakistan as well as in England and

then came in seventy six with actually you
nothing major and I changed to business

to gain more experience in Saturday and
into and

developing my interpersonal sites so I
could meet people because i believe me and

them are good team building dynamics and

actually being a leader
in corporate America.

Went to school in Minnesota because
I got you to system ship there and

got my M.B.A.
in one thousand nine hundred two.

You know the curriculum for.

Your role has changed completely
since my days and today the M.B.A.

curriculum is very different
from what employers and

I went to graduate school a lot
of the work was done manually.

Theses were just coming out.

So we would have a computer class and
we would run show bunch of punch cards.

We would write a program and actually done
it on the punch card to see the output it

was a laborious process nobody had any
more polluted places there were no laptops

it was a different era and so
the point is things that advanced so

much in the last thirty years for
the better and we are better for it.

After my M.B.A. I was recruited by for.

But he is a large conglomerate that
had a large restaurant division and

as part of that I still division was
a company called Burger King of a life.

And bills but he would hire folks that
had come out of graduate school or

best choice programs to join
their designit program so

I had various operational Rosabeth
bills but the interest on division

Burger King did some turnaround
situation the Godfather's had a solid

foundation on from an obstinate
point then went to Pepsi Co Again

as you recall Pepsi quite a large
restaurant holding that included.

The domestic business.

And it spun off into a separate company
called Tricon and then you know.

And it's still the largest.

Company in the world in
terms of number of stores.

So did several functional roles
because of my business background my

advanced degree I was able to get into
some financial world I would see afford

the best individual for
several use I did some development rose in

concept development or development
in real estate of construction.

Set a good balance between
operations finance development

that India helped me prepare to
the next level into senior management.

And you know.

I did some work
internationally as you know.

Yum has a big international presence and

I was just talking to some
alumni students about.

The kids their kids see is
the number one brand in China

is bigger than Coke is bigger
than all the car companies.

Thirty seven underscores.

Just in China and

I remember when we opened our one
thousand store we had all the.

Team members grew up on the wall
of china and spell young and

it took a little picture.

And still resonates in my mind so
it's been a great journey.

Then I went to a public
another public company called

Steak N Shake which some of
you might be familiar but

at length it was one of markets
here about twenty five stores.

I well you could profit margin I was
the chief operating officer there and

I was telling some folks one of
the one of the best practices that we

Stormfront summit was happy hour.

Sunny introduced happy hour to the
industry some of you might be customers

at happy hour because help raise
drinks and slush from two to four

in all thirty five hundred Sonics
across the country so at Steak and

Shake we're trying to reinvent our
business and we call this idea of happy

zero to do it and steak and chicken so
Steak N Shake has that tradition.

While I was there I was recruited by the
C.E.O. and chairman of the board for Sonic

to come to the brand to help revitalize
the operational side of the business

Sunny because the company to run for sixty
years has been a very very successful

it's been a benchmark in the industry
because for twenty two straight years it's

in and profit growth until we got to two
thousand and eight when we did a session.

Then we needed to revitalize
the brand you know it and

reenergize a faint chese So we brought in
some new executives including myself so

that's where I am today but happy to
be here for the last four years and

I'm happy to report because
of the collective efforts or

the scene image Mint team and myself and

Cathy who's a regional vice president
here in the southeast business plan and

our stock prices are up fifty five percent
for the year so there you have it.

OK.

It's always important to recognize
the results because efforts are good but

results matter so let me talk about
Sonic a little bit before I do that or

I have some trivia to throw
out about the seventy's

about Atlanta Georgia Tech to see if
anybody that might be some faculty member

that might have answers to these but since
so in one thousand nine hundred ninety six

Atlanta it was a site of
the tallest hotel in the world.

Rich or tell it was it.

Peachtree plaza that's
correct today is the best and

force a couple of years approaches
the tallest hotel in the world it.

Always means been dumped like
ten times over since then but

that's a unique landmark.

And everybody that came to Atlanta would
go visit that voting restaurant on top

it was a big deal.

Question number two you did so

in one thousand nine hundred ninety
nine the biggest event on campus.

What was the biggest event on campus

in one thousand seventy
nine if I got my ear right.

Talk to do this by the president
of the United States Jimmy Carter

the Alexander What were your Coliseum.

That was the biggest event and he was
the sitting president so and and and

not a graduate of Georgia Tech but
let me just for a few years here tech and

talk about how difficult it was for
them to get through school here.

But but that was a big event
like Let's talk about something.

So we are sixty years in the business it's
a publicly traded company on the Nasdaq

and you can see the ticker symbol of so

and see a new revenues close
to four billion we expect to.

Achieve the landmark this year.

Thirty five hundred stores in forty
four states now that's good and

bad and good and opportunistic in
that we have more development.

To go to in the U.S.
And then internationally B.

have no presence currently so that F.
projection e and run to be in front of us.

We are eighty eight percent French.

So twenty percent of our stores
are great means our company on so

we have a fair share or
what do you call a skin in the game.

So we understand the impact of promotions
new products as well as competition and

can really guide our franchisees
to be more successful but

thirty one hundred over thirty five
hundred stores are independent operators

across the country the average
size is about ten stores and

we have large franchisees
a couple hundred stores.

We have a very sustainable
royalty stream the reason for

that is it's mostly a franchise business
Secondly as I'll explain to you

the that we have a system of designed
as we have it escalating royalty

excluding royalty program which means that
I use the more it is the period of percent

of your revenue and that's I would
put the design from the from its

inception has been a very profitable
cash flow stream for for us.

We reinvest in the business
significantly in terms of technology

new points of distribution.

We are getting late to launch our new
POS system which will help us gain some

margin improvement as well as drive
growth for our franchisees and

as I mentioned earlier we have significant
long term opportunities in terms of new

new States and overseas groet.

Fundamentals things that we espouse
our core values and beliefs and

every company has a culture so when you go
when you graduate from Georgia Tech and

choose a company what to think you should
look at is what defines the culture and

the core values of the company because
that then will define how well you fit

in with the culture and whether you like
to you know move up with the company or

not some of the things that are listed
in many basic and fundamental

one of the things that diversity respect
for everybody that's touched by them and

that includes our franchisees that
includes our suppliers that includes our

distributors so we have many cognizant of
that and make every effort to ensure that

we are getting feedback and communicating
with these folks where you dignity.

Entrepreneurial spirit in the power of the
individual so son Nick hundred fifty two

of the three hundred or so franchises
that we have I wanted to unit operators.

And it's interesting our founder
Troy Smith who started the company in

the fifty's or early fifty's you
know started with one store.

And use wood ones to blame for individuals
that wanted to make it a family business

and literally been rife and
the kids or wrote the story.

And lived nearby and needed a business so
the entire family worked the store kind

like some of the other big chains that
started so even today Tara franchisees and

college families to operate
the stores as opposed to.

Corporations and sort of the fundamental
premise behind that was if you have

been a family running the business
they have been doing what's right for

the business because their entire
network has stayed up into the business

they want stealing from each other
they want to cheat each other.

And you will get.

Them kind of effect by the family
doing better to improve their labor.

And the final piece that lives

very actively today is that commission so
I see when Chairman the board

makes it a bit every month we have
an employee meeting once a month and

he personally sings Happy Birthday to all
employees that had a border that month.

And recognizes and it works very well if
something is done for thirty years and

you personally believe that
that meeting every month so

that's one example of a recognition and

the spirit in the company and
this is what has made us successful.

We don't have any differentiated concept.

So if you think about our competitors at
McDonald's They're both kings of Andy's

the new folks coming up the smash
burgers the five guys especially

what you're selling is I mean you know
because at the end of it is a transaction

you're doing a cash transaction they give
you the food and you go on your merry way.

Sonny.

Is all about the experience and

I'm sure how many people it have
been to a sonic some at some point.

So most of the folks that's good.

So hopefully with a good experience
you should have a skating come up

come out to your car interact with
you at the car we take you or

when you're ready not when we have
any you can come as you are right if

you don't want to close you can just
drive up you can send it into book.

And then feel like pressing the red button
and we'll bring your food out to you so

it's more of an interaction
than a transaction so

I had a basic premise is we have a high
quality food but the experience and

the person a service that we offer.

Heads to the venue where you.

So that I have installed experience
as a pediatrician right now

you know new markets and

developing markets such as Atlanta be
doing breakthroughs are going to be

directing the latest drive thru offers
a convenience and sometimes people are.

In it for that they want a quick fast

experience they don't want to sit in
the car maybe it's too hard maybe they're.

Frequenting us for

breakfast at cetera so we have been
linked right through it in our stores

very diverse menu I assure you and I mean
that forty percent or sixty percent of.

Product mix is non sandwich items.

That he divorced from either Q.

or source and then we make it to order and
deliver the car pick speeds.

Do whatever typical sonic looks like
this is one picture without a drive

through we got storm and both sides
we're probably eighteen hundred of these

the other eighteen hundred
have drive through so

we're still about a half white chain
that does not offer a great through

again the premise being that it was
you know kind of nostalgic going back

to the fifteen sixteen that people had
more time to sit in enjoy a meal with

their family and friends we have
patio service on the patio and

it's a more relaxed atmosphere especially
in the evening with half price ice cream.

So we're talking about the menu
take a look at this so

sixty almost sixty percent
nonsense which items and

I would point to this here later
thirty nine percent is in Fountain So

these are ice cream and fountain.

Beverages so slushes we have one one

million different combinations of drinks
and you can make up an order on to

our number one seller chili
laminates has got fresh lame J..

And sprite.

And we are the fourth largest I
believe the fourth or third largest.

Customer of Coca-Cola in the US.

After McDonald's and one of the brand so
that's a big part of our menu.

As you might have heard or been to a Sonic
and seen on a commercial that we have half

price ice cream after eight PM has become
a big part of our day part you know so

much promotion so
we sell a list cream at night and

then slush which is a very
unique combination of.

Beverage and
ice we also sell their soul but

even the different from other story in
terms of being part makes Again the chart

on the left is the traditional US I was
sixty plus percent of the for you coming

in at lunch and dinner if you look at
us on the right the less than half.

And to be of any other day parts that
have become much larger parts of

our business and
traditional sources afternoon so

happy used to be five six
percent of us here before have.

To do is twenty three percent of all you.

It's amazing if you ever
said I would set a sonic.

And at two o'clock o'clock.

People line up from two to four is
the highest number of things actions we do

in a two hour thank you friend for
that if people know something done.

And then after due to their partners
a big part of our business because

we've been for morning after I say scream.

The last two or three summers.

So we have much more balance departs
this also requires operators to work.

SARS going don't.

Make the operators work so

it helps us manage the business
differently it's more profitable than.

Then it gives us the flexibility
of scheduling when it comes to

management scheduling.

So when I came to sonic The one thing
bed really defines competitiveness

in this business and I'm talking
about service industry not only but

take for example take hotels they can eat.

All these businesses
are highly competitive

one of the common denominators
is how you build value.

So we need to find a venue where you
know which was the experience to be so

divided by the price we charge.

And that essentially has to be maximized
to really enable the customer.

To come back to us more frequently and

that's at the end of
the day that's our game.

So to be maximizing the value question is
a big part of the D.N.A. of the service

industry everybody is trying to do that so
if you think about this equation.

If you're experiencing the lackluster and

your prices are high then you
have any equation to diminish.

The customers that are going to
frequent you in the business will die

on the other hand if experience
is how you can charge more.

So if you think about some of the new
competitors in our space like the smash

partners in the fire you guys and
the support lives I grow

the brands in the last seven to ten years
one of the reasons they are able to

charge a slightly higher price is selling
the experience especially I don't quality.

Organic fresh things of that nature.

And so this is part of our D.N.A.
for the industry and everybody

is trying to maximize that one of the
other things that defines us and Sonic for

the last four years you can see on this
progression chart the first thing we did.

When I came on board with any
focus on our service experience

you're behind a Third Party coalesce and
you that made your customer experience.

We had no idea where we were relative to
the industry you work on the fundamentals

improve our service and
the quality of service.

Second thing we did was invest in quality
so we bought more expensive ice cream

invested in our bread quality and
rested and see that said to really

elevate the quality experience or
off the menu items that we offer.

Those two things than anybody does
to improve the value perception that

I just talked about.

The other things that we've done recently
is improve our creative relates to

advertising I want to show you a couple of
commercials you've probably seen the two

guys talking you know going back and forth
that has been very very effective for

us not only from a comedic
value standpoint but

it will actually selling products that
enabled us to grow sales and profits.

And.

Just one second.

To go really so Graham is.

One more.

Thank you.

So as I said the two guys have really
been successful in driving sales for

us and
offering some comedic really was and

I hope you enjoy these guys one of the key
things that we have been focused on again

as it relates to driving value is
doing the special one day event so

you saw one of the commercials talk
about half a Seeburg cheeseburgers.

We did that one day event in August and
D's are types of promotions that

are taking place instead
of doing coupons and

print activity a new way of adding
value to the consumer relative

to a competitive activity as opposed
to flooding the market with coupons.

So back to our multilayered
growth strategy so

as I capture the essence of a steady
framework what you see in front of you is

our free work to drive growth into
the next decade it all starts for

same store sales that is
the basic foundation.

All businesses need to
continue to drive and

be measured that same store
meaning comparable store sales so

not sales or
total revenue which would include new

store openings I'm talking about the same
store that we had opened a year ago.

That is increasing sales this year versus
last year that is the crew measure of

success in the service industry
measured day by day by day and

by store by week by month by
you that is the foundation

the advertising the creative
the venue you know talk about or

drive same store sales and
if we have an issue but.

Those same store sales then we look at
one of those levers that I talked about.

The second piece that we do well is
a fancy the addition is operating leverage

so when you improve your
really do have checks and

balances to improve our flow through
traffic flow through from every

dollar incremental in sales I remember
that a thirty to forty percent as

being a good pro through number and
so we get operating leverage from

the comp sales of the drapes that
then gives us an opportunity

to add new points of distribution or
new stores or new drive ins.

At one point you know history people are
going to go three percent unit growth per

year we're not there yet but we are plan
is to get back there very soon.

If I knew our markets are doing well and

we can recruit new franchisees and
want to come into the brand and

build new stores heartland for
example has in this deal about one hundred

mile radius of the center is
about fifty stores very underpin

it traded from a growth market in our
estimation many more growth opportunities.

Given the size of the metro area and
the population.

But these two things help us
drive the development and

that's what our focus is the ascending or
do you say it is interesting because as

our franchisees grow sales in the system
continues to grow we get a higher share

of that into royalty income and since
eighty eight percent of our units are fan

base it's a very stable cash
flow stream for a piano.

And then finally the optimizing the use of
free cash flow so to the this date to be

have financed all of new store
openings our investment in technology.

You saw free cash flow not.

Debt financing and
we're very proud of that so

a couple of things that we have done
recently read a cash flow stream and one

pay down our debt to a buy back stock and
both of those have helped us drive U.P.S.

and share price and as a result
of that we had up as I said fifty

five percent on stock price
last twelve months so.

This is operating leverage framework and

we expect to continue driving each of
these levers to grow into the next decade.

OK before going to our leadership lessons.

Let me throw out another trivia

from the seventy's this is
about Georgia Tech football.

So.

I knew this was going to be a good
week because Georgia took one and

Georgia a lot.

I know Georgia Tech one but
it was like I was.

And when I was going.

To college only used to play lacrosse but
I don't know what it

was the look on the steamboat showed up to
play football or what they got blown up.

Anyway so it could be what was
the biggest win of the tech for

both in the mid seventy's and
eat anything come to mind.

Bingo soul in Nineteen seventy six.

But the best so in seventy six Nov seventy
six we had a freshman quarterback.

And then was getting the needed
he was the starter thing or

Damon then feel noted in
quarterback will join Montana.

Right now odds were against us and I think
sacked him sacked Galen in the first

play or something like that and decided
not to throw up S. for the entire game.

And used to run that
Fishbone often said that.

And that made more damn but
I think ten points or twenty points huge

victory big celebration and Montana
going on to indictment after three.

OK some leadership lessons that I learned
nonetheless thirty years so I wanted to

give you some concrete examples of this so
I made some notes number one a simplified.

Something some of these effects
what do I mean by this.

I have met a lot of people
through my classrooms and

the different companies I work for
they like to overcomplicate things

because they want to appear as
they're smarter than everybody else.

And that is the worst thing that you can
do when you get into corporate America.

You know your job as an engineer or
you know people or

a manager or assets is to take
complex problems and simplify them.

That's how you become successful
one plus one does not equal fight.

Most people can't figure that out.

And so being able to take complex issues.

Find the common denominators get
to the root cause of the issue and

offer solutions is a big idea
in corporate America and

they pay big bucks for that So
remember simplifying complex things

is a big idea the next thing is
keeping big bucks the big rocks

I don't know if anybody is done that X.
A is you know they do that a lot in

executive education where that they
could judge in a bunch of oxen and

ask you to put rocks in the jar
to see if you can fit them on it.

The point of the exercise if you
start putting on the smaller box and

you can't fit the big boxes never work and
so at the end of the day

the model of the story is you've got to
have your priorities right and probably.

Position of tasks and prioritization
of activity is a big idea and

driving results lots of things
that on a smaller UK source.

Try to take over and
you lose sight of what the end goal is

because the end of the day results
activity that important results matter.

One of the things we did
at Sonic two years ago.

Was to I had Boston Consulting Group
to help our city define a key

initiative that would drive the framework
I just showed you the five lever and

they actually came in and you know B.C.D.
McKinsey Bain big consulting

companies only hire Ivy League M.B.A.'s
very smart people and

they come into companies and look at the
business from all the stick standpoint.

And tell you what you should already know.

So they came in and this studied our
business they looked at other management

structure and
said Your priorities are screwed up.

Here is I know we would prioritize
what your goals should be and

the activities I know letting you go that
would lay the results that you need.

And so that helped us craft what
we call the scheme initiative

to drive our strategic framework and
we use that today.

Is really the building blocks
of course our strategy.

Number three execution is the key to
success of any strategy so that a lot of.

In this room.

That is very good at
coming up with strategy

at the end of the day
somebody has to execute that.

You can have a team that can execute
whatever else you have on paper

there's never going to succeed let me give
you a couple examples of how many people.

Travel Southwest Airlines or some.

Point.

Many of you.

What does Southwest do that any of
the other ones can't figure out today.

Very simple what was it.

I'm sure that your guy was so
Southwest is going to.

Miss them if you can use what I am getting
at is the ability to open the door.

A sub a simple concept.

Or.

Southwest has a standard twenty six
minutes from the time the plan gets

the jetway till the judgment is pulled and
the planned it leaves.

Twenty six minutes just for
unloading cleaning the plane and loading.

And if you wish travel Southwest I mean
you don't have a return on your on your

i Phone or Blackberry and
they're moving doors open and out.

The other means you're stuck in there for
half an hour.

A very simple concept that makes them
turn planes in twenty six minutes.

Yesterday when a flight from
Denver to Oklahoma City.

The captain or.

His on but am I would take the plane
reading every passenger welcome but

come on board you know how to do that
that's just the culture they like to have

fun but they love the guests and
they only show it depth a way to talk

hey at the end of the it's all about
execution and leading by example.

You don't see that another and

that's my point now the example I would
give you is a company that started here

in Atlanta I believe it on company called
one of my biggest competitors chick flick.

Why it's so

successful because they're very
disciplined on how they do what they do.

You know a four billion
dollar company no day.

They're debt free and I know this
because I visited with the C.E.O.

spend some time with the senior
management team couple years ago.

And the premise is keep things simple.

Let the big bucks be the big bucks and
focus on the consumer.

So one of the things one story that I
was told by one of the senior managers

was that several years ago.

There was a company called Boston
market he would remember that

Boston Market started expanding
there were one thousand stores.

And so.

The senior team it.

Was very concerned and then a meeting
there but all this said to you guys

instead what should we do what should
we do that taking up market share.

And so.

I asked the rest of the team to graph and
come back with a plan to present to him.

Came back said we've got a plan to.

Boston Market.

And I plan is we've got people
knocking on our door to lend us money.

One of their good money and build
a thousand stores and the next five years.

We're going to blow them
up dominate the market.

That was the plan and the C.E.O.
was the son of the founder of.

God but he excited.

And he banged his fist on
that on the table and said.

The customer will dictate when we
get big we have to get better first.

Because when we get better the customer
will dictate and we get bigger.

As the only way to grow and so
a company to admit I don't for

fifty five sixty years
there's only a fifteen or

stores very disciplined
development plan they only phase

one story time to a single operator
dept or under store no more than once.

Because that one person like you needed
to be tied to that store success and

do a good job to keep
the simple things simple.

So those two are probably benchmarks
in my mind when it comes to

execution of a strategy.

Next point is flexibility and adaptability
to change is fundamental growth rate

for our business one of
the things we're doing

at Sonic today is putting
new POS in our stores and so

it's a change in mindset it's a different
paradigm we're spending a lot of time.

On change management as folks understood
have to really understand and embrace

change for the for the right reason as
a growth strategy as opposed to change for

change sake so adaptability to change and
flexibility is a big idea

from a personal standpoint as well
as from a universal standpoint.

When it comes to people.

A couple of other nuggets one is whenever
you're trying to communicate your strategy

or vision to a team or will stick to
him to explain that wise people will

follow you and for the study and
tactical plan you have to understand

the why behind the what that is
essential part of communication

that senior managers Miss often they
don't realize Deborah vision but

tactical plan they want to communicate
to the company and they send a memo to

e-mail out and expect everybody to
execute and that does not happen because

people are not ingrained into
the reason behind the change.

Take initiative on a proactive
obviously go getters.

People that really.

Are trying to go be.

Head of the what ifs understanding
that what ifs scenarios but

any kind of business tactic or
business proposition is essential

quality with folks that you
want to have on your team.

The third bullet is what I want to
embellish on a little bit one of

the things that has made me
successful in this business

is that of any point which is
if you do the right things that

right way which is all about
being effective and efficient.

Especially if you do it.

On the timeline of your boss or
the boss's boss people recognize that.

A lot of times you're probably your door
lead this is just not what you know but

who you know right or are there.

That's not always true what I mean tell
you is if you do the right things in

your position and doing the right way
people will notice and you can get ahead.

By doing the right things right so
that's an essential for me and

then finally everybody loves recognition
it's amazing the culture that we had and

young when I was with it was all about
driving technician at the store level

above store at the corporate level and
people love being recognized even

the C.E.O. like was being recognized
as the last person to be recognized and

everybody if you recognize
a C Everybody thinks you are you know

pink playing favorites of brownnosing But
the C.E.O. appreciates it because he or

she loves being recognized and recognized
recognition as a multiplication effort

multiplication impact on that
person's output in the future so

I don't I would underestimate the power
of the individual because I want to leave

you there is it is but
the final quarter forever what

do Emerson which is one of my favorite
ones and it says what lies behind us.

And what lies before us are tiny matters
compared to what lies within us and

this captures the essence
of the human spirit and

synergy from a team's inspiration
to drape to words a common goal.

The latest example of this is Diana Nyad
you are about what she did on Saturday.

So five times she has tried and

four times failed at age sixty
four swims from Cuba to the Keys.

What made her keep trying.

And then what made her
complete the journey

after really fourteen is
the essence of the human spirit.

And you will be amazed that it had
that as you go into your corporate.

Careers and really work with
your teams to inspire them.

Thank you.

Question.

And my question is So

from my notes it shows that you know Sonic
really values the power of the individual

in an entrepreneurial mindset what
kind of strategies do you use or

does your team use to actually empower
the owners of established franchises so

the owners have complete autonomy
in terms of operating the stores

I don't leave things we ask them
to follow very common menu.

And comments operating standards
beyond that decide they want pricing.

There's a guideline you know
hours of operation but by and

large they have some flexibility there.

The autonomy to develop
where they want new stores.

I do with that one you know get
involved in communities for

social causes a set of really and
cutting as well.

Within your franchise and he's.

Just sort of so you can see
counterintuitive to me because it's

actually a disincentive for
the franchise fees to generate

higher repartee hard to record
your heart would be right and

given the fact that sonic seems to have a
lot of price giveaways like this one half

price happy hour despite half priced
ice cream which must put tremendous

margin pressure on your franchise so
how do you react to that change that

I understand benefits from several weeks
of trying to stand out as I mentioned

earlier part makes is quite different so
that gives them a little bit more leverage

than most of us are you know the words
if you have a more balanced depart mix

we have I don't see those coming in the
afternoon late night because it would not

have had had not had
the promotional activity behind it

I just drew that you know it might
sound to come to intuitive in terms of

the different lead thing impact
of royalties but that avenue but

the floor through of each increment
of delegates here is very high and

in spite of the fact that we're doing
something more selectively today

of traffic yeah baby happy
to be back on margin.

You know.

Just.

I am I have a question
about accountability and

how you said that if you do the right
thing that people will notice

do you have an example of
when you were accountable for

something in the knock on positive
effect once from the Absolutely so.

Supervise the company stores as
well in my current position so

you know it's on credit for
US foreseen image meant to

take initiative be proactive and to come
up with a tactical plan to drive sales and

profit growth every year and
one of the things we have done.

Is to offer different incentives and

change the compensation plan for
our store level management and about store

management to drive that growth and
that was not predicated by anybody it was.

An instant so initiative.

Says and profit growth as well as put more
money in their pocket and it works so and

people recognize that in
terms of our share price.

Wal-Mart and McDonald's are currently
getting a lot of heat for

the hourly wage and
sometimes benefits that the provide How do

does Sonic respond to this social issue
good question so you probably would be

Affordable Health Care Act that was
passed and it's going to affect anyone

not of the service industry is going to
cost incremental cost I should say or

be showing before a worker's we're taking
the high road we expect to be the employer

of choice by offering health benefits to
our employees that work thirty plus hours

and really starting on their kids you know
because we believe that if you do that it

is a way to Asika you know happy employees
take care of customers who are happy and

they come back and spend more money in
your store as opposed to cutting costs and

I think employers leave and

go somewhere else which is
a detrimental impact on the business so

be investing heavily in that and
we expect to see the benefits from it.

How to do it.

Right.

Yes.

Absolutely.

Yes.

Anybody here want to be a.

Yes or somebody experience in
the in the industry is helpful

we would like the faith to operate
the store live in that community so

they have some vested interests.

Obviously have some liquid assets.

Requirements about a million
dollars in liquid Yeah

five store in your development agreement
and net worth of about two million.

But you know as I mentioned earlier
if you want to single stores.

Much looser and that's how most of our
fans show you started so we'd love

to have some entrepreneurs in this room
you know best and Sonic in the future.

Question.

Do you in your franchise each selections
do you only take individuals or

do you have people who team up partnership
Absolutely partnerships are encouraged.

To franchisees come that way we're three
people who get together the resources and

want to study at a time when income they
have an operator with them that operates

the stores and involved in the day to day.

And to start with one store maybe a two or

three story area development
agreement over five years and

it can be very profitable over time
the great thing about the restaurant

business is if you involve in
the community that you saw and you operate

the restaurant properly it could be a
customer who cannot feel you cannot fail.

That's a fact.