Strategy: Fast-food CEO says Amazon is a growing threat to his industry (SONC)

Sonic's CEO says that Amazon is going to "encroach on anyone's business they can."

Even the fast-food industry isn't safe from the threat of Amazon.

"Amazon is going to try and figure out ... how to use their customer engagement, customer knowledge, and distributions to encroach on anyone's business they can," Sonic CEO Cliff Hudson told Business Insider.

According to Hudson, Sonic is "concerned" about Amazon's potential to eat into the fast-food chain's sales. Amazon has been ramping up its food and restaurant business recently, with its acquisition of Whole Foods and partnership with online ordering service Olo.

The new competitor comes at a challenging time for the restaurant industry, with traffic declining every one of the last 17 months. Customers have an ever-increasing array of choices — not just from chains, but also new delivery options, cheaper and more convenient grocery stores, and grocers' own prepared food.

"There was a time when Whole Foods was just kind of high-end goods," Hudson said. "Now, gosh, the ... Whole Foods near our house has 25% of its square footage dedicated to prepared food."

Amazon is also impacting Sonic and other fast-food chains in less direct ways. With the increased ease of shopping from home, customers are less likely to grab a quick meal on-the-go, instead opting to shop online and either prepare their own food or order in.

Hudson says that Sonic hopes to avoid being beaten at its own fast-food game by the ecommerce giant by making some tech investments itself.

Sonic recently debuted a new app. Next year, the chain is rolling out a new mobile order-and-pay feature specifically made for Sonic's drive-in model. Each customer will be "first in line, every time," as they can pull into individual stalls and pick up their already prepared and paid for meals.

Still, fending off Amazon will take more than an app update.

"It's almost certain to affect our business over time, because they're creative guys," Hudson said.

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