Sonic plans to open three EchoPark locations in 2020, including a store in April in Tampa and one in Atlanta by the end of the year. Another store in an undisclosed location is slated to open midyear, and more EchoPark openings are possible this year should profitability come faster than projected at newly launched stores, Dyke said.
Sonic executives want EchoPark to grow to 25 or more locations in five years. In December, EchoPark opened its first California store — in Signal Hill near Long Beach — and sold more than 450 vehicles in its first 45 days. Its average franchised store sells 100 used vehicles a month.
"For us to open with that kind of pace well ahead of our goals shortens the length that it takes to get these stores up and running and profitable," Dyke told analysts in a call last week.
Rajat Gupta, a J.P. Morgan analyst, said EchoPark growth could provide an additional $6 billion in revenue. That, plus growth on the franchise side, could make $20 billion in revenue achievable by the end of the 2020s, he said.
"Execution is going to be key for continued profitable growth at EchoPark, and management needs to overcome potential constraints around replicating the current success across new stores — particularly with increasing competition and higher price transparency, evolving and dynamic strategies at peers, ability to procure the right mix of inventory and above all, maintaining operating culture at new stores," Gupta wrote in an email to Automotive News.
Dyke said Sonic may even be able to hit its $20 billion revenue target earlier than the end of the decade.
"We thought it was important to give people an idea of, look, here's the potential of this company, but not to put something out there that we couldn't hit," he said.