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Sonic Chairman-CEO Cliff Hudson made some interesting observations about consumer behavior during the chain’s October 20 earnings call with analysts. Consumers are spending less, but rather than gravitating to “Value Menu” or $1 items, they respond better to discounts on regular items, he suggested.

For the fiscal year ended Aug. 31, 2009, Sonic’s systemwide sales rose 0.7% but customer traffic was off 0.7% and its average check fell 3.6%. Keeping customer traffic essentially flat was achieved by “some very specific and more aggressive summer promotional activities,” Hudson said. He pointed to its Route 44 promotion that upgraded beverages to 44 ounces (for no extra charge) on combo-meal purchases. That helped balance losses from some “over-aggressive combo-meal pricing prior to that time.”

Sonic’s $2.99 burger-and-shake promo in August appealed to “customers looking for regular menu items at a special price,” Hudson said. That helps explain the 3.6% decline in Sonic’s average check. It’s not just a reflection of Dollar Menus but of discounting across the board by QSRs. Sonic introduced an Everyday Value Menu earlier this year and it initially captured 10% to 12% of sales. But in the fourth quarter, the budget menu was down to 6% to 7%, Hudson said. “Awareness of the Everyday Value Menu far exceeds the use of it when our customers come online,” said Hudson.

The check decline was “due in part to consumers figuring out how to use the menu,” Hudson told analysts.  “They’re buying fewer items when they go out. But in addition to that, we’ve also pursued some strategies to build our traffic like Happy Hour that have been quite successful and have driven traffic, but they’re doing so with a smaller check.”

The bottom line: Price discounts can maintain traffic in tough times, but the trade-off may be lower checks, because consumers want regular items for less, not just low-price items.