Supply Chain, Frozen Ground Challenges for First Sonic in Alaska
A Rendering of the Wasilla, Alaska, location, projected to open in September.
Courtesy of Sonic
Sonic has inked a new development deal in Alaska, with a transplant from the South.
Larry Clark and Cameron Johnson signed on for a five-location deal and rights to the state of Alaska. Clark, who also owns a security company based in Wasilla, Alaska, said he’s been thinking about bringing the brand to his back yard for a while.
“I grew up with Sonic. I made a joke, my wife wanted a Route 44 Diet Dr. Pepper, and I said I’ll buy you a Sonic, so here we are, I guess I’m a man of my word,” said Clark.
He said the operating group aims to open its first location in September, but there are two big challenges they’re working through before opening day.
“One of the biggest challenges so far is supply lines, getting things set up in a timely manner,” said Clark. “Ninety percent of goods come to Alaska by sea barge from Seattle. And sometimes they can’t make it.”
That means sourcing a lot more storage than a typical Sonic in the lower 48.
“One of the things I’ve been working on is meetings with cold storage vendors locally so we can order adequate amounts of food so we can have it in stock,” said Clark. “I’ve noticed in grand openings here, within one hour, they were out of every product they have except for soft drinks. Which cause them to go buy stuff locally.”
That’s partly supply, but also serious pent-up demand for brands that most Americans drive by every day. And Clark is expecting some serious traffic when they open up. He said they put up a Sonic sign at the first planned location and the community basically went crazy.
“Put the monument sign at 2 p.m. and it went viral in 20 minutes,” said Clark. “By 2:20, it was shared more than 3,000 times.”
He said that happens often in Alaska, where national brands market, but generally have little or no penetration.
“Alaska is very unique, most of the QSRs have all experienced the same thing. Longer honeymoon periods for one, and people will drive hundreds and hundreds of miles for a cheeseburger,” said Clark. “Burger King, when they opened years ago, people were driving nine hours to buy 100 cheeseburgers to bring home.”
He said they would likely hold off on a proper grand opening because just opening the doors almost guarantees long lines and major wait times. And an adjacent military base with a lot of Southern service folks will only amplify that.
That may prove another expansion opportunity for Clark and his group, according to Johnny Jones, Sonic’s vice president of development and construction.
“We think the state has great potential, we have a five-store ADA with Larry that gives him exclusive rights to operate in Alaska,” said Jones. “Then the unique thing is that Larry has a military background and understands how military bases work so there’s the possibility to be on a base, too.”
But between the opportunity and the supply chain challenge is another hurdle for the group: Alaska is basically frozen most of the year.
“Building in Alaska is challenging; we don’t get to build all year, we live in a perpetual state of frozen ground for about nine months. So we have to have everything ready to go, it’s all planned to the minute—everything from getting the foundation in and the plumbing. Making sure that we can get the canopy for the drive-in and signage, we're talking to everyone,” said Clark. “We are shooting for September, I keep telling my builder I’d like to be open Labor Day weekend. He keeps looking at me with disdain.”
It’s a little larger than the average Sonic, too, with plenty of space to get inside during the long, dark winters.
“Sonic started as a drive-in concept, about 20 years ago we started moving to a drive-thru,” said Jones. ”Then in the last 10 years, we’ve giving franchisees the option to build inside diners. We do those more in our colder markets.”
He said despite the oddities of operating in Wasilla, it could be a great market for Sonic even after the honeymoon period.
“If you look at the trade area and the town it’s not that different from where Sonic got it roots. We’ve generally built in smaller communities, if you look at Wasilla, in the 5-mile radius is 30,000 people, so that’s really the bread and butter of Sonic,” said Jones.
Alaska has become a bit of a hot spot for legacy brands looking for white space. The northernmost Subway just celebrated a year in Utqiagvik, Alaska.