From Drive-In to Digital: Transforming Sonic with Technology

In this episode of the Restaurant Technology Guides podcast, host Jeremy Julian speaks with Craig Miller and Cliff Hudson, two key figures behind Sonic's transformation into a digital-first, nationwide brand. They discuss their new book, 'Bricks and Clicks,' which details their journey of automating business practices right before COVID-19 and their successful implementation of a digital strategy. The conversation explores how they integrated technology to enhance customer experiences and improve operational efficiency, including the introduction of mobile ordering and digital payment systems. Their strategies not only bolstered sales but also turned technological innovations into significant business advantages. The episode also delves into change management, the importance of the partnership between business and tech, and the challenges and successes faced along the way.

00:00 Sonic

00:14 Introduction and Welcome

01:59 Meet Cliff Hudson: Sonic's Transformational Leader

03:34 Craig Miller's Journey to Sonic

04:22 The Evolution of Technology in Business

07:21 Sonic's Unique Drive-In Experience

11:00 The Impact of Credit Card Technology

13:50 The Tech Oval Vision

17:52 Building a Business Partnership

25:37 Implementing the Tech Oval

30:10 Craig's Arrival and Marketing Evolution

31:50 Building the Tech Backbone

34:59 Omnichannel Strategy and Franchisee Buy-In

36:38 Implementing Digital Touchpoints

42:53 Centralizing Marketing Efforts

49:29 Final Guest Experience and Company Sale

54:43 Reflections and Book Promotion

Transcript

Speaker: 0:02

This is the Restaurant Technology Guides podcast, helping you run your restaurant better.

0:14

In today's episode, we are joined by two of the members of the Sonic team that really grew Sonic into being a nationwide brand. Uh, Craig Miller and Cliff Hudson wrote a book that really talks about their journey and how they went from where they. Really started to helping to automate the business practices right before COVID. It's a really remarkable story of seeing a vision for where they wanted to go and executing it. And it really paid dividends both for them, for their franchisees, and for the communities at large, because they went digital in a time that, uh, most weren't. Check out the episode and let me know what your thoughts are.'cause uh, nowadays you can get at Sonic just about anywhere. And I remember when they first started, it wasn't something that you could get across the country. If you don't know me, my name is Jeremy. Julian. I am the Chief Revenue Officer for CBS Northstar. We sell the North Star point of sale product for multi-units. Please check us out@cbsnorthstar.com and now onto our episode.

Jeremy Julian: 1:18

Well, welcome back to the Restaurant Technology Guys podcast. I thank everyone that out there for joining us. As I say, every single episode, we're grateful that you guys get to spend time, hanging out and listening to some cool stories. And today is no exception. one of the most beloved brands in the country, I would say definitely in the Midwest. And we're gonna talk a little bit about where they, where they really reinvented, invented things from a digital perspective and, their new book. But Cliff, why don't you introduce yourself to get started and then you can introduce your, your co, co-author and, co-host for today's show where we get to talk about, what you guys built From Drive-In to Digital: How Sonic Transformed the Customer Experience

Clifford Hudson: 1:53

Happy to do so and appreciate the opportunity to be with you and your, listeners today. thank you for that. so Cliff Hudson, I, for purposes of today's, discussion, my background is with Sonic and, I spent 35 years with the company. The last 23 years as a CEO chairman and CEO of the company, 3,500 plus units across 45 states. And, in my time as CEO grew system-wide sales, it was 95% franchise system-wide sales from 900 million to 4.5 billion. pretty radical transformation on the technology front. My, partner on all of that, in terms of the, the deep and serious planning, strategizing, implementation. And, Ann now co-author on this book is Craig Miller. And, Craig and I had the pleasure of working together, going on eight years, from 2009 forward. And, in, all of the above in developing strategy and, ex execution of that strategy at Sonic and really transformational for our operators. And, only, regret I have is that we didn't beyond 2018, because the change of control of the company didn't have the opportunity to see next stage and get the benefit of all of our labors. So Craig and I, a great run together and I can turn it over to Craig for a moment. If you don't mind. let him talk about his background as well.

Jeremy Julian: 3:26

I had Love that Craig. why don't you share a little bit about where, prior to Sonic,'cause I think it's, it's critical so that everybody understands. And then, talk a little bit about what you got to do at Sonic.

Craig Miller: 3:34

Yeah, sure. so my, my background academically, was, computer science and compu and engineering. So you might say I, I was, came outta school as a computer scientist, but quickly, turned into a business strategist. I really enjoyed, really enjoyed business and the operations of business and, and really helping innovatively to grow businesses. But most of the, most of my early I'd say, The first quarter or third of my, my, career, I worked, on a lot of, advanced technology for, department of Defense and military. So some, the most advanced technology, that, that existed. and so that's how I cut my teeth on emerging type of technologies. again, my interest in business is quickly, shifted over and, started a company with, a partner. we, we grew it quite rapidly, at the time in the late eighties, and going into the nineties where there were two things that were happening in technology from an emerging standpoint. one, many businesses were moving from old mainframes to now. Everyone had a PC on their desk. And, computers were really, pervading all aspects of the business and. Many companies were failing to execute these new solutions. And we, we would come in and, help first fix broken situations and then eventually strategically help them. The other, the other, aspect of our business was, Microsoft was exploding with windows from DOS over to Windows, quite rapidly. There were a lot of, consumer products that were still in the old dos, dating myself a bit, but it, I think it connects with how, what led to experience to support Sonic and, and so we worked, we were one of the few non-Microsoft companies that actually knew how to develop Windows apps. for the, for, consumers and commercially, de deploy them into real retail. you bought software at that point? comp USA. It wasn't online at that point. And really developed, the advanced kind of business strategies, but also consumer facing type products. then, the left, the company and went back into large corporations really doing the same thing. And technology was just advancing quite rapidly. But Bank of America, Pepsi, co Nielsen, a lot of big companies, now with distributed computing web was, evolving quite rapidly. Even mobile started to evolve. And I went for a period of probably 10 years really learning now how to, how to execute from within large co companies. And and that eventually led me to a brand that was also. really thinking through how to leverage technology, which was how I met Cliff, and, that, that, that was, an exciting time because it was, and I'm sure we'll get into this, but cliff vision was, really far ahead of most any of the CEOs at that time, certainly in restaurants, let alone retail. And so it was an exciting time to partner with Cliff and, really help bring his vision to life.

Jeremy Julian: 6:42

Yeah. And I'm excited to talk through the change management process.'cause I know you and I were talking hit before to hitting the record button and oftentimes, the vision's there, but without the change management, it, it falters Cliff. you spent a lot of years of your career at Sonic, but for those that might not have had the privilege yet to experience a sonic, I know for myself, growing up on the West coast, I had never been to a Sonic until I came to the Midwest. And I was like, where has this been in, in my life all of these years? And then ultimately you guys put one in, in Fullerton, but it was like a 30 minute drive to get to a Sonic. So for those that aren't familiar with it,'cause it is traditional products, but not necessarily the way that you guys go to market isn't always the same as, as what you might think of as a, as traditional, traditional restaurant experience.

Clifford Hudson: 7:21

Sonic started in the early 1950s in Oklahoma. the town, then the town of Shawnee, Oklahoma. And, grew in a concentric fashion. from there it was given the 1950s a, a drive-in restaurant in which you had, in essence, a kitchen on a parking pad, parking spaces extending, out directly from the building canopy over the parking places. and, customer pulls into one of about 25 stalls. Varies, from drive to drive in. You pull into angular parking, gives you a little bit of privacy, vis-a-vis. The car is next to you and, there is a menu housing outside the driver window. You look at the menu, decide what you want, push a button on the intercom. historically, before the application of the technology, that's the topic of this book. Historically, then what would happen is a, a person inside the building. We'd come over the intercom and ask you what you wanted, you would place your order, the food would be made to order. But very quickly, our objective was to get food orders out in four minutes or less. And, then get the food. a car hop would bring the food out to the customer, in their car, hand it to'em through the driver window, and, take payment, make change, et cetera. And then the driver could stay or the driver would leave on average customers. the pre-technology application customers, would stay on lot about, or in the parking place, about 11 minutes. And so it was an unusual opportunity as we started putting together these plans. an unusual opportunity to, communicate with them, you might say, while they were in their, that parking stall. By the time, the company was acquired by Rourke Equity Group, work Capital. by the time it was acquired, that was pretty much still the business, although the application of technology was changing, quickly in terms of how, that worked in terms of order taking and payment methods and, and many of the drive-ins had added drive-through windows, et cetera. But it was a, mostly a traditional 1950s drive-in restaurant.

Jeremy Julian: 9:39

Yeah. and still today, even without the tech, you can still experience it. And again, I was talking to Craig prior to I, there's one right next to my chiropractor. I often will go in, for my morning appointment, grab a breakfast burrito on my way to, to go to the chiropractor. And, and, my wife, especially, one of the other uniquenesses that Sonic has is their, the drinks, the beverages. My wife, often I've got a 9-year-old who, one of her favorite places is to go have mom order it, hands her the phone in the back seat, she orders it, and then they go pull up to the spot. And I know we'll get to that. to get to that shortly, how you guys built that cliff. You said something interesting right before you, you passed the mic over to Craig that I think is unique that I'd love to have, have our listeners here. You, you talked about a business partnership and then I'm gonna talk with Craig.'cause all too often I have seen the CEO sees the tech team as a necessary evil. They don't necessarily treat them like business partners in their business. I've watched this across multiple brands across my 30 year career. There are some that, that truly treat them like business partners. And then I'd love to have Craig talk a little bit about how that has interacted prior to us jumping into kind of what you guys did, but how and when and where did that come about in your own thinking? Because all too often, like I said, I don't see that as being something that, that they emphasize and ensure at the executive level that they have a seat at the table to be able to drive the business to the place that you guys ultimately drove it to.

Clifford Hudson: 11:00

in the, first decade of this century, there were some technology, developments that were very positive for the business. I began viewing, we had always been about min about innovation, but that was generally about menu innovation with made to order food and so on day part innovation, in terms of when we would attract customers with what type of promotion and product and so on. innovation had been very much part of our history and culture, technology innovation. Became, more part of the culture than the other part of that decade. And that was with the application, installation of credit card readers at the individual stall, attached to the menu housing. And that was so successful. bro check when people used credit cards, they spent 40% more money with us. The average check on in 2001, before we rolled that out, the average check with cash was five bucks. The average check with credit card was seven bucks. And we had been told that people used credit, they spend more money. but it was quick and it was concrete, now to give you a sense, and I'll come back to answer your question more directly, to give you a sense of the impact of that. When we finished rolling it out, or as we began rolling out, we called that program Pays, which was an acronym for Pay It Your Stall. it almost doesn't make a difference what the acronym was. It's called Pays, but when we began to roll it out, credit card sales were 5% of our total sales. So cash in 2001 cash was, 95%. in, interestingly enough in oh three, then as we finished rolling out this attachment, the PACE program, we were brushing up against 2 billion actually in oh one, we had just passed 2 billion in sales. That's right. Oh one 2 billion in sales, 5% credit cards. When the company sold, I. 15, 17 years later, that 2 billion had gone to two and a half billion more, or four and a half billion total. The credit card sales were 55%. Now, 55% of sales, not 5%, but the credit card sales were two and a half billion dollars. They had gone from a hundred million to two and a half billion. So in, in other words, 100% of the incremental sales in that 15 year period worth your credit cards. So this could tell you in that 1, 2, 3, 4, 5 timeframe that if you move toward technology that was customer interfacing and agreeable with them, helpful to them, they would utilize it and they'd utilize it to their benefit and to our benefit. Okay. Simultaneously, we had started utilizing, Jim Collins good to great. And, I totally bought into the flywheel. utilized it in the next 15 plus years in all my discussions with our operators and used it and put it in our business plans. Used it with the management team, the employees franchisees used it in investor relations, presentations and so on, and used it in how we ran the company. the application of that and the flywheel. when we started looking at this burgeoning technologies, it occurred to me that the more we could link these technologies more, we could create a flywheel for our technology. And, but I didn't call it that because I felt like I'd be ripping off Jim Collins, so why would I do that? So I started calling it our technology oval because I would put all these points.

Jeremy Julian: 14:48

An oval instead of the circle.

Clifford Hudson: 14:49

Sit in the circle, gotta have my own deal, And, and for a short, the techno oval and, at any rate, so this was, so I started seeing it this way and it struck me that it really by oh three and oh four, my view was this really could become our future marketing vehicle. if we got enough information with customers on this, we could become communicating with'em more directly instead of having to pay television pay, radio pay, cable pay, so on. So this really was the thought. Now the challenge was that, when you talk about how CEOs viewed tech folks, this, the reverse was also true, and that was the tech folks viewed themselves. Having an isolated spot in the company. they spoke their own language. It didn't have to be English. And they would stand in meetings and say stuff. And I would sit there saying, what is he saying? And I'm not talking about Craig, I'm talking about his predecessors. And it was, in terms of this, distancing, it was mutual, and, to me, we were getting nowhere fast. We were getting nowhere fast on replacing a point of sales, systems across our sonic system. We were getting nowhere in terms of updating things effectively internally. And it was very frustrating. in the kind of the oh eight timeframe, I hired a search firm, and went, in a different direction. In other words, I hired a search firm from Connecticut and, and relatively shortly, they introduced me to Craig. And, when Craig came, we started talking. We, things clicked pretty fast because I could tell he had a broader business view. and when he came in and we talked about the nuts and bolts or as we would say, the wiring, plumbing, and wiring for the company, I also sit down and drew him the techno oval, And, I, on the one hand felt like I was taking a chance because a little embarrassing for a guy who's not a tech guy, me to be drawing on a piece of paper this oval and putting these touch points on it and saying, this is where I want to go, but we can't get our base systems in place. Anyway, I think this excited Craig, and he just, he took a fundamentally different approach than his predecessors the day he walked in the door.'cause he, his view was you, I'm here to not just fix this thing, but to help build the company. and so he and I just, had started having regular, you're always gonna have regular meetings, but more intense, more often, one-on-one, much more strategizing. And to be blunt, me getting him to educate me, about how this could have happened. And, so that's the process it took. And it just, it evolved and it was a different relationship than I'd had with any of his predecessors. And of course, his impact on the company was different than any of his predecessors.

Jeremy Julian: 17:51

I love that. Craig, talk to me a little bit about kind of the mindset. Obviously you came from the business mindset and I appreciate you sharing that earlier. I, and I know we'll eventually get to what you guys built, but I love to educate our listeners out there, especially those that are on the tech side, because I've watched people that are tech for tech sake. let me show you all these cool gadgets. Let me show you all of these things that you can do, but it doesn't drive the business. But you took a different approach and I really think that's why you guys were so successful, is it was about building the business. It was about making sure the franchisees could operate it, that the guests could operate it, that the, they could make money from it and the business could ultimately make money. So I'd love to have you talk through that mindset shift to educate some of our listeners that might be out there, that might be either young in their career or looking at taking that executive leap. And they go in and they don't speak the language. And as Cliff said, they're speaking a different language to the executives and they're like, I don't care. The bits and bites, I just wanna know what's it gonna do for our consumer or what's it gonna do for our business?

Craig Miller: 18:46

Yeah. Yeah. Happy to. so as I had, stated earlier, I had the wonderful opportunity to learn very early on, and with a lot of scars because, I came out, as I said, a computer scientist, but when I, when we started our company very early on and, and needed to put proposals together and influence, potential clients, I quickly learned, I really, I had to communicate fir first it was in proposals, right? But then, I really had to find ways to, communicate and educate at that time, potential clients. On how to think about technology. so a lot of it was to Cliff's Point was first educating, but in terms that would resonate and quite frankly, the different, different companies sometimes had different language. You really had. So if you're gonna influence, outcomes and come, you've gotta one speak English, in a way that they understand. but even some nuances in different companies. So I learned that very early on, that was how do connect. so for your listeners, it's very important. And honestly, it, I tell this story. My, my wife at the time when I used to have her review some of my proposals, she'd say, I don't understand. You need to start talking like, you're talking. And so it really helped me to develop those, the, the style and the technique. and then the other piece is I would quickly try to understand where they were coming from, and what they were concerned about. So I can connect with them, whoever clients. And then, even, like in Cliff's case, this was gonna be my boss, right? This is gonna be our CEO and our leader. and so that, that was a kind of a technique and a skill that I had, thankfully developed. Many tech technologists don't. I coach a lot of folks and a lot of my team even at Sonic is they would present something makes sense now put it in a way, you have to look through the problem, through the lens of the business. And so that you develop that. So that's really how I learned that. And in my meeting with Cliff, you quickly assimilating his frustration. and he meant, he said there were four things here that, that really I wrestle with and frustrating. One was the point of sale, we're on antiquated point of sale. So one was data and we've spent tens of millions of dollars on this data warehouse and we still can't get, what we need from a data perspective. the third one, was some of the technology, other technology that they had. We had in corporate on supply chain, we're still running our business on spreadsheets. we run a over a billion dollars of food and paper. And the fourth thing was his techno oval. now the other three I worked in the restaurant industry and those are like, it's like off the top of my head, I know what we need to do there to help you cliff. but this techno oval really was, really was stunning to me because, it, ha have having, talking to lots of CEO and board members,

Clifford Hudson: 21:51

he was more accustomed to circles,

Jeremy Julian: 21:53

Yeah, he's got the book behind his left shoulder that, says, good to great. But,

Craig Miller: 21:56

but what struck me is Cliff's vision was, as I said earlier, way far ahead of where most CEOs were thinking and that, and it starts with that. And so I started to dig into his rationale around it. and it really, he drew this circle had these tech, points around the outside of all these new ways we can communicate and connect with the customer. And this is pre-mobile, this is pre-social. And and in the middle was a customer. and to, and that's, I had learned a long, you always start there. So when I'm usually having to spend time with CEOs to say, okay, let's not, let's get back to who your customer, your business is. that's what Cliff started. And he had really grown the business by always starting with the customer and the vision that. That, that he had learned, really through the electronic, payment, is that if I can collect more information and data, I can learn more about my customers. That's how we win. That's ultimately where you start in any business and any, and I'm typically having to shift. So now it was just, I just said Cliff IA had to bring this together. I had to make this happen. and I think that was the beginning of connecting, I would say o over time, initially had laid out, I think within the first 90 days, here's what this would look like, and, over the next three to five years. and so I gave him a picture quickly of now what it could look like and educating them. and we'll get to the kind of the how. But the one thing I, that I would say that over time. Over the next year, I had to earn and, cliff's trust and confidence in my thinking. And what evolved from one-on-ones, typical one-on-ones between a, CEO and a, and another executive in the company. It turned into, these, and we have it in the book. We have a, we've replicated these sessions. we would get to a point, either have a challenge or we get to a point where we succeeded and needed to get to the next phase. And I would get a call, Craig, what are you doing tonight? after work? let's meet for some wine. help me understand how should we be thinking about it would always start that way. How should we be thinking about this? and so those would be become rituals for us. It could be a Sunday morning. All of a sudden Cliffs is he's, he wants, how do I think about this? And so our rituals really became, in both ways, he would educate me on, the dynamics of the brand and the businesses and how, and I would educate him, how we think about it, in ways that, that, you know, my predecessors really hadn't done. I think with Cliff and those became important.

Jeremy Julian: 24:56

cliff, why don't you, it's clear that your vision for where you wanted to go was there and able to be articulated and then it's, back to what you said, Craig, it's now how do we get there? But Cliff, I'd love, and I know it's in the book. So for those that, haven't yet picked up the book and that are now just discovering the fact that you guys have put this all down, talk us through kind of long-term where were you trying to go? Because I think, to, to what you had said, Craig, it's a three to five year process to get there.'cause it's not the big bang and everything's just there. You've gotta work through it. And so the fact that you kept the customer at the center of it and then said, okay, let's just keep pushing the envelope a little bit better, keep asking questions of the team, but give us that vision of what was on that oval for those that, that, that are sitting here listening, going, where are we going?

Clifford Hudson: 25:37

Yeah. so a couple of, lines of, events and thinking there. One, what was on the oval? everything that in oh 3, 4, 5, you, could have thought about, texting, e email, point of sale systems, anything that we had that was, digital and computer driven and or the customer had that I could see that we could eventually link with. my perspective was it could be helpful for the headquarters, the store, our employees at the store, our customers. And that the linkage that, that it would provide would only grow over time. But it would provide a way for us to start communicating with people that was one-to-one instead of through intermediaries. I shared it, 3 0 4, with our board of directors and, two interesting things about that. I think in terms of that, that board meeting. One, because I was thinking then, and I, it was ahead of things, but, I was thinking it would become mostly a marketing tool. And I asked our then C-M-C-M-O to present it to the board. the, and she may have had the title of president by then, but she had come up through CMO and she was still responsible for marketing. So I asked her to present it to the board at a board meeting. And, interestingly enough, she says to me, no, you present it

Jeremy Julian: 27:04

Hey, the non-tech guy is gonna present, this marketing.

Clifford Hudson: 27:07

I think her deal was, I think her view was, I don't know what the hell it is, and you're not pitting that on me. I think that was really the, the underpinning for her resistance. So I presented to the board. Okay. and, the points along the way where we look, we're gonna be going here anyway, and here anyway. Why not cause these things to link and get leverage out of them. And, Bob Rosenberg, who had been the 30 year CEO of Dunking Donuts and had retired not long before that, Bob grabbed it at the board meeting and he says, look, in the seventies, the Industry Restaurant Institute was all about just raw growth and chains developing. In the eighties. It really became about, financial refinement of how you managed your business and different kinds of executives started running companies to bring financial refinement to the business. In the nineties, it really became about brand building. This was Bob's comment to the board. Then the nineties, it became about brand building. He said, my view is what Cliff is showing us today is the future. And he says, he said, I think this is the next place for restaurants to go, and those who master it are gonna master the industry. That was Bob's comment like in oh three or oh four.

Jeremy Julian: 28:33

Interesting.

Clifford Hudson: 28:34

my, my reaction was, yay affirmation, and, glad my CMO forced me to present it. I got credit with the forward thinking board and so that was the early on, implementation of that. And then so how did, what was the drive to keep moving with it? I was convinced the thing could become something. strangely enough, I'm not naming names here except for guys that were helpful, like Bob Rosenberg. but I hired a CMO from next CMO from Yahoo. And, my thought was, this guy's been living in the digital world. He'll have us, he'll help us take it there. And he had been on a while and, and let's say oh six or so, and I was saying, okay, this is going fine and that's going fine, but I would need you to help us think about the tech oval. and he basically said to me in so many words, that's bullshit. He said, we're not moving off television anytime soon. And the idea of that being a, the big marketing tool, I'm not spending my time on it. And I thought, that's extraordinary. You came to us from Yahoo. what in the world, So anyway, I was frustrated with the marketing, lack of marketing buy-in within the company, but I was more frustrated that we weren't getting ahead on POS and so on, so forth. And so it was in the oh eight timeframe where, I changed CMOs but also changed, CIO. and it was Craig's arrival that, that started providing the impetus. cause we started moving. I had somebody that was intrigued with the whole thing and he could cause it to move. The marketing, moved, excuse me, moved with it. But the marketing was even in, 9, 10, 11. The marketing was slow coming with it. And in 11. I brought in a marketing guy who really became a good partner for Craig and me. And, he really helped this start moving forward as well. And, so that once, I had the team in place like that, then, things really started moving extremely well. that marketing, CMO by the way, in that 1112 timeframe also saw some aligned with me on, how we need to line up resources for current and future new and future marketing activities. Current was cable and future was

Jeremy Julian: 31:14

One to one.

Clifford Hudson: 31:14

the whole bit with the, ultimately we, we would say through social media and smartphones and so on, so forth. So he saw that, seemed to see that coming and. Help get things lined up to move that direction. Unfortunately, in like 2015, the company had such a positive run in, in the mid-teens that several of our people got plucked off, very senior,

Jeremy Julian: 31:37

that's how it happens. and just as a reminder for our listeners, I just went and looked it up while you were talking there, cliff is just, the iPhone originally got released in oh seven. So you were talking about texting and communicating back well before the iPhone even came out. And Craig, I'd love for you to talk through what it is that you guys were trying to accomplish, and what did you guys build Again, I know a lot of these stories are in the book, but I'd love to where did you guys start and how did the build go?

Craig Miller: 31:59

Yeah. yeah, taking, really building on close vision, ha having worked, in other industries that were already starting to work, omnichannel retail, right? the concepts were relatively very new for, for the restaurant and chain. Like I said, it was pre mobile, but, but I typically always start, as Cliff did with, the, really th there, there are three things on the business side, and then that, that quickly I frame everything out. How does a business drive sales and how does a business, drive profitability? And, what is the profile of the customer? What drives the customer to, to purchase? and so I start with that, that be, that, that kind of begins to unfold what the tech should look like. and sales in a restaurant, as is we, to, we wanna drive traffic, we wanna drive check, we wanna drive frequency profitability. It was predominantly, labor, and, inventory that we, we would wanna manage. And then of course, the take it down to the next level is kind of efficiency. We wanna get in under four minutes. we wanna streamline the experience for the customer. So I take those and I, that, that kind of really quickly helps me to understand where, how to begin to model the tech in the, in sense of the tech, the techno oval. At that point, there were a lot of industries that were already building these network solutions, right? Distributed solutions. So I knew I had to connect the restaurant with the customer. And then these, the kind of external, channels, and really start to, even before it was called omnichannel, begin to build this kind of, omnichannel approach, adding the digital, connections with the traditional. So it's not about replacing traditional media, it's about adding to the traditional media and for those marketing folks who are listeners, right? It's the, you use TV to pull'em into the top of the funnel and then in, in many cases, and then the engagement because the digital or two way you drive them through. And how do we eliminate the barriers of the physical store so that the, and restaurant, so that the, engaging with a prospect or consumer outside the restaurant, we can continue to drive that engagement all the way through sale on the, when they're on lot. And so that becomes the model. then, because, as Cliff said, the, there the brand was burdened by a lot of 20, 30-year-old technology in the restaurants. I knew the first thing we had to do is to rebuild the backbones. Which was the point of sale in the kitchen, in the kitchen system. before we, we do that, we, nothing, we can't do anything else. The backbone of this kind of data infrastructure. and that was gonna require, and this goes to the change management question, not only getting the board and the executives, Sonic, but franchisees.

Jeremy Julian: 34:49

Yeah, I was gonna ask how, you guys had this huge vision, but if it ultimately either didn't work or the business constituents that are out in the field didn't adopt it, it would've all fallen on

Craig Miller: 34:59

So about, again, 90 days in, laid this picture out for Cliff. Okay, now let's get to it. about three or four months later, I get a call, Hey, I wanna talk about how we should be thinking about this. And Cliff shares, you know what, I get it. I get the, I get what the blueprint looks like, I'm just, and I get the roadmap, but it feels like we're not getting there. It feels like we're still hung up on all this old technology stuff. And I said, cliff, I said, we are, but understand until we get the point of sale as the backbone, and that's gonna require bringing the franchisees and influencing them along the way. that ha nothing else happens. He says, okay, what's your plan for that? I said, we've instituted a, with I think six or seven of the most influential franchisees to a tech council. I'm gonna educate them on the cost of not moving away from this point of sale, how we can move and we will get them on board. They'll in, they'll influence others, and that's gonna take a good six, seven months. and Cliff, said, okay. But, we've got, we're a public company. every quarter we've got investors and analysts saying, we're, when is this gonna happen? and that's, I shared a story with Cliff. it's like renovating a 70-year-old house. I said, first you gotta fix the plumbing before we can start adding the rooms and everything. So that became a, cl it resonated with Cliff, the whole plumbing piece. So we would use, first we gotta get the plumbing in place and the foundation, and then we can start adding a lot of the new 21st century. capabilities on site. that happened, it took about nine months. We had franchisees, we aligned on the new point of sale how we were gonna go forward. Once we did that, the next thing was how are we gonna digitize the stall? and that's where we're working with Bill Claman. we initially said, Hey, I'll go back to my Bank of America contacts to, suppliers who put in, kiosks and ATMs. But that didn't work out because too small wasn't, for restaurants. So we went to a kiosk company, to adapt their solution. That didn't work out. So we eventually just stepped back and said, listen, we know what we need to go build. We're not gonna, we're not, no one else has this, we're not gonna find it off the shelf. And so we said, let's build a prototype. See if we could drive traffic and check to the stall. And we did that. cliff called it the ugly duckling because it really, it was just a prototype to demonstrate the value proposition of a digital connection point in the stall.

Clifford Hudson: 37:30

I called it an ugly duckling to lower the board of a director's expectation.'cause we were gonna take,

Jeremy Julian: 37:37

oh, sorry. Go for it.

Clifford Hudson: 37:38

we were gonna take them to see it. And I thought, somebody's gonna say, that's ugly. I said, let's just take that off the table.

Jeremy Julian: 37:46

most, most Gen one and gen two are pretty ugly until, until it starts to get some adoption,

Clifford Hudson: 37:50

Right.

Craig Miller: 37:52

Yeah. So we quickly, proved out the business proposition, on that. And then went and, scaled that out. So we had point of sale going. We now had, engineering. And manufacturing of the digital touchpoint. And then we worked on, now how do we build the network across everything to connect everything, so we could start to, integrate all the pieces on Cliff's techno. I'll stop there for a minute because the one story I think would be worth talking about, but I'll stop there for a minute, was that was about the time where Mobil started to emerge, and I added Mobil and social to the, to Cliff's techno Oval and Cliff. He certainly knew what that was, but he didn't, he said, I don't understand how that's going to,

Jeremy Julian: 38:38

Of the power of it.

Craig Miller: 38:40

So anyway.

Jeremy Julian: 38:40

gonna ask you, cliff, is really how did you manage a, at the point, a 50 plus year old brand going digital first, because that, like again, you've got the legacy, you've got the history of, the car hops, the drive-in, but you also saw the vision. And I'd love to, to help our listeners understand even that part of the change management, because you had to have a pretty bold vision that says we're going here in the early two thousands to get to where you guys ultimately got to. and I'd love to just hear your thought process on how you did that, because ultimately I think that drove the success because again, technology for technology's sake is worthless, but technology that drives business value for the guests and for your team members is where it's really at. And I'd love to get your understanding of how you cast that vision that says we're taking a 50-year-old brand. Now, 70-year-old brand, but 50 years at the time, and bringing it to the 21st century, because you probably had franchisees that were like, no, we've been doing it just fine this way forever. And you had to manage that both internally and to the board and to the public markets.

Clifford Hudson: 39:42

Yeah, you're exactly right. So as to those, particularly franchise operators who might have been resistant, what, the pitch I used and we used for the most part was look at these points around this techno oval, or as we came to call it, integrated customer engagement, the ice. Wheel, And

Jeremy Julian: 40:03

restaurant has their own acronyms. To your point, Craig, they've always got some different language. Sorry. Every acronym, every restaurant. What's this acronym mean? So sorry, I'll let you keep going.

Clifford Hudson: 40:11

that's alright. when we would review that with franchise leaders, I will, I would always say all the points along there we're gonna have to do anyway. You're gonna, you, we have an antiquated point of sale system, it's at its end of life. We've got to replace it. We've gotta move to software based, systems. And, so this is not an expense, this is not an expense you're going to incur. but for, this plant you got, we're gonna have to do it anyway. And so you would make the point about now the one place where that was not true was we wanted to put in. In place, as Craig has already talked about a video screen in each parking stall. And we wanted that to, to be able to now any number of things, confirm the customer's order, show them paid, not paid, show that the order's coming out over time. As we built then information about customers, we would also promote things to them where they, we knew they had purchased before, and so on and so forth. So we wanted that, I wanted that video screen in the stall. That was the ugly ducking that Craig was referring to a moment ago. that was something that, the, that would not be put in place but for this integrated customer engagement plan. and so what we did with that, because it was instead of a few hundred bucks, it was a couple thousand bucks a stall, we went to vendors. who sold goods to our system and said, how would you like your product to be on that screen? And, all these years later, I would just say it was Coke and Dr. Pepper. That's who we,

Jeremy Julian: 41:54

Say, I'm sure it was Coke.'cause they like to put their logo in front of lots of

Clifford Hudson: 41:57

Yeah. And here we were gonna have a hundred thousand screens every day of the week, with the content that we controlled, with consumers by definition, looking at it, And Dr. Pepper was a little slow, but Coke immediately said yes. And so we were able to go to our operators. it was interesting'cause none of our number of our board members had seen it. And they saw the impact on sales with the ugly duckling, but they were still eh, their average age was, 68 or something. 20 years ago. So they were kinda like, what is this? so then Coke steps up and puts millions of bucks behind it, and our board of directors said, okay, this must be for real, Anyway, that, but it also, that was one impediment with our franchise operators that was erased because vendors were gonna pay for advertising, in essence, on the screens. So this was a, that would've been an impediment. how else did we do this? The biggest thing early on in a slide of hand fashion was too much of our marketing dollars were still spent in local co-ops through to local media. And my reaction was as we move towards more social media and this whole ice apparatus that, having a hundred local co-ops was a loser. And, trying to then, manage that all across the system. So we needed to convince our operators to centralize more of those dollars. and, that came out of a, the opportunity came out of to do that came out of a management, no, a franchise leadership retreat, in which, the leader, the president of our, the chair of our franchise advisory council said we have to do something about new markets. My pitch was, let's move money to national fund, more money to national fund. Let's buy more national cable. Our ad, our new ad agency showed to us and them, the enormous purchasing power to spending more money on national cable instead of local anything. and so in the, in September of 12, after four, three to four months of working on that. The shift had to be approved by two thirds of our franchise operators under, excuse me, under the license agreement. And they approved it in September of 12. And, shifting those dollars to the national fund and for the next several years, spending it on cable television was fantastic for our business. But the big thing it did that was unknown to 99% of the system was it set us up for the future so that as we moved to what I call the techno oval for marketing, as we moved to that, we had 85% of our funds in a national fund that we could control, all across the system with social media and anything else, texting or anything, so these were pieces that we've moved on. To tell our operators It makes sense today. You'll come out ahead and they, they agreed and, yeah,

Jeremy Julian: 45:12

And ultimately we're much more successful because of it.

Clifford Hudson: 45:15

absolutely. I.

Craig Miller: 45:16

Yeah, the, I'd say the, this is key to your point, Jeremy, in terms of you can't, you can't just whole shot this. Right on. So what's really important, I, and I think this is an another good one for your listeners, especially when you go on, you got a complex, strategy and set of initiatives over multiple years. you, the way you know what Cliff is talking about all very, the, these were all very creative out of the box approaches to, at the end of the day, the way you get an operator on board is if it's gonna drive their business, they're gonna listen. And so you have to constantly be demonstrating it, and validating along the way that it's going to, this is gonna continue to grow your business, your sales, your profitability. and so we had to have certain points, and as Cliff said in 12, we knew, we, it was going to be another three years before we would convert all these stores. We had to have something in the strategy to, drive their business. And that those are all points, along the way that you're investing, it's not an expense, it's an investment. and they're learning along the way. I can't tell you how many times the franchisee leadership would turn to Cliff, who initially, was resistant towards things and would look at Cliff and say, we should have done this years ago. And it's a vision. It's the strategy, showing them how you get there and then demonstrating along the way incrementally that the old, that it's gonna continue to, drive value in the business and then they become advocates.

Jeremy Julian: 46:57

now they're pulling instead of you guys

Craig Miller: 46:59

That's right.

Jeremy Julian: 46:59

is oftentimes in a franchise system, it's corporate pushing stuff down versus them saying, no, I want this. How do I get next on the list?'cause it's gonna drive my

Craig Miller: 47:07

and it was always a trade off because the Coke, Dr. Pepper piece, we had gotten to a point, we had proved out technically point of sale they got and they knew, and the economics work for their business. our, some of our leadership would say, Craig, these are pretty expensive. replacements normally cost$700 for a housing, per stall. Now it's gonna cost 26. That doesn't fit the economics of our business. And we have this in our book. you've gotta find ways to make it fit the economics, and at the end of the day, if it's driving sales and profit, so for the initial three years, it was really Cliff turned to our CMO and said, wait a minute. We, we're about to, we, 10 year contract up with some of our vendors when renegotiating, if we can get that, it's gonna build their business and build ours. We can get them to help subsidize this initially until it demonstrates the value to the operator and then the operator can carry the economics. It becomes part of its economics. Those are the different te those are outside technology, right? Those become critical to taking the vision and the strategy to fruition. all of those, the change management and making sure that all, all along the way you're demonstrating that the idea, the strategy is truly, translating to sales and profit period.

Jeremy Julian: 48:29

Which again is a very big tenet of the show. As I, and I've said it multiple times in our conversation today, is technology that doesn't drive business value is worthless. But technology that ultimately is making the guest experience and the staff experience is where it's at. Where again, you can still experience Sonic, I do today in a very similar way to what you might have done 30 years ago. Maybe a little, a little bit more digital, but you can also take it to the next level. So I'd love to. have you guys spent just a couple of minutes as to what was the final resolution? And then people will have to really look through the book because we're at close to an hour now of recording time. and I'd love to get some books sold as well and get people to, to dig into some of those details. But what was the final resolution before you guys launched the product off to r and you guys both, both went about your way, what was that end result of the guest experience? And Cliff, I'll start with you just'cause you had the customer at the center of your oval really. And I'd love for you to walk through what does the guest experience, or what are the possibilities of what the guest experience can look like once you guys put your final stamp on things.

Clifford Hudson: 49:29

the, the thing that I saw occurring for our business once we put all this together was that a customer could order off premises, pay off premises, pull into a parking stall, enter the stall number on their app, and not have to go through a process of ordering through a menu housing if they didn't want to. running the potential that something was misunderstood or miscommunicated in that oral, application. And, And then the waiting time, So on, I developed a phrase and a phraseology that, for this, which was the customer could experience being first in line every time. So that if you think about, how customers would use drive through windows and waiting and or going inside and waiting in a line and so on. Or even at Sonic, if you're, you pull in a lot and it's a full lot, it can, it could take a little longer to get your food. So ordering off premises, paying off premises, pulling into a stall. What happened when we aimed to get food out in a, in four minutes or less? Once we implemented all this before Rourke brought, bought the company and we pulled the trigger, put it in place, March, April of 2018. Was when that occurred. We rolled, made it live in stages across the system, but by August the whole thing was live across the sonic system. And what was occurring was that people that used filet first in line every time people that ordered off premises and paid off premises, pulled in, put a stall number in their app and quote, waited for their food instead of four minute service times, they were experienced one minute and 50 seconds, ma made to order food. And half the time what our goal had been, before that time, even if, operators couldn't, most of them on average, maybe didn't meet the four minutes, but, the average customer was getting, made to order food in a minute and 50 seconds using the mobile order, mobile pay. So this was the transaction side of it that we had envisioned and was in place. Before Rourke brought, bought the company that the other side of the equation, which was to begin getting customer data on these transactions. Who were they? When did they come, what did they buy? et cetera, et cetera. We started getting that information, we started storing that information, but that was really gonna be something, that the algorithms that would develop, that we could develop, was going to take time to say, either about a person or a type of person or a market or a time of day or a product, so on and so forth. When people buy this, they usable, buy that. Okay, that's an obvious suggested sell. Anyway. this was going to take time and we were, starting to develop it and we were taking early on stages of implementation. But the explosive potential of it was really going to be in 19, 20, 21, 22, et cetera as we built it. Now, the fact is, from a usage standpoint, Rourke got the benefit of that anyway.'cause they bought the company at the end of 18, 19, sales were positive. There was some, there was growth. I think by toward the end of the year, 7%, of sales were coming in, through mobile order, mobile pay in 2019. I was no longer with the company, nor was Craig. but with CO hitting in 2020, my, it sped up everything of course, but things just exploded. The use of the app, the use of, mobile order, mobile pay, and most importantly. People feeling more comfortable going to a drive-in just for safety, and by the time COVID had ended and you got 22, 23, a quarter of sales were coming from, they had 5.5 billion of sales then, and 25% of it was coming through the app. So you're talking about more than a billion dollars coming in, through a methodology that five years before for Sonic, did not exist.

Jeremy Julian: 53:55

and the part that I said to Craig prior to you jumping on, is I experience it and, outside of the marketing side, just as a guest experience, methodology, it's incredible. It's incredible because, whether it's just on the beverage side, which again, my 9-year-old will be in the parking lot and she'll know there's a sonic there and she'll, she knows that she can get it in that one to two minute timeframe that she can get her drink, and get her treat on and beyond her way. And The incidents even for us as a family have gone up because you've broken down the barrier to ordering. There's no longer the weight, there's no longer the, I have to have this interaction. it goes all digital. And so congratulations on really seeing the vision cliff for that and really getting to a place where you were able to execute in partnership with Craig and the rest of the people in the business to be able to do that. I know you guys wrote a book. I guess why don't you guys sit and share what is the book? Tell us a little bit about where people can get it and and why even write a book? Why give people the playbook that you guys did, to help people, help people along this?

Clifford Hudson: 54:55

I think, our view was that we had a good story to tell and, it wasn't necessarily completed IE the stage of ice that was really more about building customer data and starting a new marketing world, our own marketing world. we didn't get to experience that, but we felt like we had a good story to lay out from start to finish, put it in the context of the world and industry, put it in the context of COVID and, lay out what we had built, lay out what happened through COVID in a very natural sort of way. But then also, quite honestly, lay out some lament that our plan had not been fully implemented, and the consequence of that was negative. And, but we wanted to tell all constituents, here was the plan, and by the way, as to the new owners, if you wanna get the momentum of the business going again, here's our plan. And, look at the stage three and consider implementing it.

Jeremy Julian: 55:57

and the crazy part is obviously you guys got to a place where, you guys got to a place where you, you hit the ground running right before the acquisition. quite honestly, I still think it would've been there. and Craig, you and I talked about the fact that, restaurants oftentimes are laggards, but the fact that you guys had this vision to put it out there and to execute really hit the market in a time and a place that, is incredible.

Clifford Hudson: 56:18

so Craig came up with the name Bricks and Clicks early on. And, the subtitle we played with for, a couple of years, but, the title of the book, bricks and Clicks, has been the, our kind of working name throughout, and that's the name of the book now, bricks and Clicks, which you can get on Amazon. You could go, it's a, it is a Forbes book publication, and, so you can get it on the, at the Forbes website, Emma's Amazon website, your lo your local bookstore, excuse me, or any book seller online. and, it said, 210 page fast read. It's getting, quite good reviews from people that, are reviewing it. We're really tickled with that and some early brisk sales. but, Craig was really the driver with, between the two of us to write the book. And, a couple years ago we really got on it and followed his structure, et cetera. I think it's a nice book. It's a nice story, not just about technology and business, but there's good human interest elements to it as well.

Jeremy Julian: 57:18

I love it. Craig, is there anything that we missed, sharing in the story other than,

Craig Miller: 57:21

I would.

Jeremy Julian: 57:22

go out and buy the book?

Craig Miller: 57:22

I would just add, again, having worked in dozens and dozens of, of companies leading Yeah. Brand leaders, and many industries. what we achieved with, one starting with Cliff's Vision, all of the challenges. It's a, it's really a complex case study. and we wrote the book in a way that not only tells the story to Cliff's Point, but does it in a way, where it's, engaging, entertaining, but educational. it's a framework and a template that any business could really use. and today, particularly as technology becomes more and more critical to any business, succeeding, there are a lot of, lessons and frameworks in there. Even at the end of every chapter, we have a couple of questions. Your turn. After, at the end of each chapter, that just has the reader say, okay, now for your situation, ask, start with by asking these questions. the, the style of the book is one of, educational as well, and, can be used almost as a playbook or a blueprint for their business.

Jeremy Julian: 58:24

no, and I think that's an incredible reminder and part of why I asked some of the questions the way that I did.'cause I've watched too many restaurants and restaurant executives, fight amongst themselves and not get the desired results that they did. And obviously you guys were able to do that. So thank you guys for distilling that all down, putting it into a book. Thank you guys for hanging out with me today and sharing the story. I'm grateful that, as a consumer, I'm grateful that you, my wallet might not be grateful, my budget might not be grateful, but, grateful that you guys created, created honestly a difference in the restaurant space. And so thank you guys for coming on to our listeners, guys, thank you guys for hanging out with us. And, if you haven't already subscribed, please do share this, episode with your friends and, to Craig and Cliff. Thank you guys again and make it a great day.

Clifford Hudson: 59:02

you, Jeremy.

Speaker 2: 59:05

Thanks for listening to The Restaurant Technology Guys podcast. Visit restaurant technology guys.com for tips, industry insights, and more to help you run your restaurant better.