Re: Sonic
Posted by:
Sound Investor
()
Date: January 06, 2012 09:46AM
Southeat.Jerome Wrote:
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> Why hasn't this chain made it further north than
> Fredericksburg? Is there business model requiring
> a large lot just not conducive to the NOVA real
> estate market?
This is quite possible. According to their Web site, you need 3/4 of an acre (32670 square feet) to operate a traditional Sonic with 16 to 24 stalls. I would expect that finding 3/4 of an acre that's suitable, in a good location, and is appropriately zoned anywhere in Northern Virginia would be a time-consuming and expensive prospect in and of itself.
Some other strikes against Sonic are that you must agree to operate two locations, which, following the power rule of difficulty, quadruples the amount of effort involved. You must also have a personal net worth of $1M and have $1M in liquid assets, and Sonic does not offer any kind of financing to open one of their franchises; you're on your own to find the money.
Lastly, the expected startup costs for a Sonic are between $710K and $3M, and given the area, I would expect your costs will be in the higher rather than lower portion of that range. That means likely $5-6 million dollars invested before you sell one single hamburger.
Most likely, anyone looking to get into the fast-food restaurant business in Northern Virginia looks at these numbers and decides that their dollars are better invested elsewhere, say in buying an existing McDonald's franchise (about $1.5 - $2M in this area, if I remember correctly).
The costs for a non-traditional Sonic franchise (located in a mall, for example), are much less onerous, and I suspect we'll see some of those open up in this area before we see a traditional Sonic.