15 minute read
Member News
7-Eleven On Entrepreneur’s 2022 Franchise 500 Ranking
7-Eleven is the only c-store chain to make it into the top 10 on Entrepreneur Magazine’s 2022 Franchise 500 list, coming in at No. 9. The two other convenience retailers on the list are Circle K at No. 52 and Farm Stores at No. 473. Taking the top three spots are Taco Bell (#1), The UPS Store (#2), and Popeye’s Louisiana Kitchen (#3).The ranking is based on five key factors: Costs and Fees (franchise fee, total investment, royalty fees); Support (training times, marketing support, operational support, franchisor infrastructure, financing availability, litigation); Size and Growth (open and operating units, growth rate, closures); Brand Strength (social media, system size, years in business, years franchising): and Financial Strength and Stability (franchisor’s audited financial statements).
Advertisement
The 43rd annual Franchise 500 ranking shines a light on the unique challenges and changes that have shaped
the franchise industry over the last year—and how franchisors have adapted and evolved to meet them, according to the publication. “While other convenience stores closed during the pandemic, 7-Eleven was well positioned when COVID-19 hit, having launched a delivery app, 7NOW, in 2018,” Entrepreneur stated. “Not only did the “Sixty-six percent company’s delivery business skyrocket 500 percent in 2020, but it of convenience doubled in 2021 as ‘convenience’ retailers reported came to no longer mean open that their in-store 24/7 and at every corner, but also sales were higher in 2021 than in 2020.” available right there at your doorstep. Today, 95 percent of 7-Eleven stores in the U.S. and Canada offer delivery, with more products and groceries being added all the time, including over-the-counter medicines, pizza, beer, and wine.”
C-Store Retailers & Suppliers Say Sales Improved In 2021
Despite pandemic-related challenges throughout the year, 66 percent of convenience retailers reported that their in-store sales were higher in 2021 than in 2020, the most recent NACS Member Pulse Survey reveals. Only 16 percent
continued on page 12
The National Coalition Office
The strength of an independent trade association lies in its ability to promote, protect and advance the best interests of its members, something no single member or advisory group can achieve. The independent trade association can create a better understanding between its members and those with whom it deals. National Coalition offices are located in Ceres, California. 3645 Mitchell Road Suite B Ceres, CA 95307 855-444-7711 nationaloffice@ncasef.com NATIONAL COALITION OF ASSOCIATIONS OF 7-ELEVEN FRANCHISEES
NATIONAL OFFICERS & STAFF
Sukhi Sandhu
NATIONAL CHAIRMAN 855-444-7711 • sukhi.sandhu@ncasef.com
Joe Rossi
EXECUTIVE VICE CHAIRMAN 312-501-4337 • joer@ncasef.com
Romy Singh
TREASURER 757-506-5926 • romys@ncasef.com
Rehan Hashmi
VICE CHAIRMAN 847-845-8477 • rehan711@yahoo.com
Teeto Shirajee
INTERIM VICE CHAIRMAN 954-242-8595 • teeto.shirajee@yahoo.com
Nick Bhullar
INTERIM VICE CHAIRMAN 626-255-8555 • bhullar711@yahoo.com
Eric H. Karp, Esq.
GENERAL COUNSEL 617-423-7250 • ekarp@wkwrlaw.com
John Riggio
MEETING/TRADE SHOW COORDINATOR 262-394-5518 • johnr@jrplanners.com
Monica Galaviz
OFFICE ADMINISTRATOR 855-444-7711 • monicag@ncasef.com
Shawn Howard
VENDOR RELATIONS ADMINISTRATOR 855-444-7711 • shawnh@ncasef.com
John Santiago
MANAGING EDITOR 267-994-4144 • avantimag@ncasef.com
April J. Key
GRAPHIC DESIGNER lirpayek@gmail.com
The Voice of 7-Eleven Franchisees January/February 2022
©2022 National Coalition of Associations of 7-Eleven Franchisees
Member News
continued from page 10
said that in-store sales decreased in 2021. In 2020, in-store sales reached a record $255.6 billion, according to the NACS State of the Industry Report of 2020 Data. Industry suppliers were equally positive about sales: 63 percent of NACS supplier members said sales to convenience retailers were higher in 2021 relative to 2020; only 9 percent said their sales were lower.
Convenience retailers indicated they are optimistic about prospects in 2022, and most (51 percent) expect strong sales in the first quarter. Part of the optimism could be related to new or expanded offerings: 41 percent said they will offer frictionless/ cashier-less checkout, and 30 percent said they will offer app-based ordering/payment in 2022. Suppliers also are very optimistic about 2022: Three in four (75 percent) believe their sales in the c-store channel will increase in 2022 and 71 percent say they will invest more in the channel this year; only 3 percent will invest less.
The top two issues facing both retailers and suppliers are labor challenges and supply-chain reliability. Overall, 56 percent of suppliers are facing labor challenges, and the top three affecting their businesses are lack of production/front-line employees (cited by 62 percent of suppliers); offering competitive wages (51 percent); and driver shortage (31 percent).
Retailers said they expect both challenges to linger well into or beyond 2022: 40 percent said supply-chain disruptions will no longer be a significant challenge in the second half of 2022, while 7 percent said they will never return to pre-pandemic normalcy. They are even less optimistic about the labor challenges: 24 percent said the labor shortage will no longer be a significant challenge in the first half 2023. Nearly 1 in 3 retailers (32 percent) said the labor challenge “always will be a problem.”
7-Eleven Receives Digital Transformation Award
7-Eleven was recently honored with the Best Digital Transformation Award by Modern Retail, a media brand that covers the ins and outs of the reinvention of the retail industry. The 2021 Modern Re-
continued on next page
tail Awards celebrate retailers that were able to pivot their initiatives to adapt to changing consumer behaviors and needs. Winners this year demonstrated success in transitioning from legacy retail to omnichannel, using technology and social media to drive performance, and evolve their personalization strategy. 7-Eleven transformed its app to provide frictionless experiences such as mobile checkout, a digital wallet and a 7NOW Delivery option. The company launched these initiatives to scale its digital footprint and cater to changing customer behaviors and expectations during the pandemic.
Member News
continued from previous page
National Convenience Store Count Drops Slightly
There are 148,026 convenience stores operating in the United States, a 1.5 percent decrease in the number of stores from a year earlier, according to the 2022 NACS/ NielsenIQ Convenience Industry Store Count. The industry decline was led by a 3.1 percent decrease in single-store operators, which still account for 60.4 percent of all convenience stores (89,336 stores). The decline of single-store operators continues a multi-year trend; single-store operators made up a record 63.2 percent of the industry in 2017. Despite the fourth straight yearly decline in stores, the overall convenience store count is approximately the same as a decade ago (148,126 stores in 2012). With the U.S. population at 332.4 million according to the U.S. Census Bureau, there is one convenience store per every 2,245 people.
In regards to state ranking, Texas continues to have the most convenience stores (15,742 stores), or more than 1 in 10 stores in the United States. The remainder of the top 10 is the same from the year prior: California is second at 12,053 stores, followed by Florida (9,400), New York (7,848), Georgia (6,448), North Carolina (5,690), Ohio (5,537), Michigan (4,819), Pennsylvania (4,629) and Illinois (4,623). Texas is the only state in the top 10 that added stores (+47). Meanwhile, New York (-248),
continued on page 15
Member News
continued from page 13
Florida (-219) and North Carolina (-200) lost the most stores. Alaska (174) has the fewest stores.
Higher Prices Affecting Shopping Behavior
Consumers may already be reeling from higher prices for things like groceries and energy, but inflation has more surprises coming, reported Market Watch. According to S&P Global Ratings, packaged food and household products companies have yet to pass through all of their price hikes, so consumers will likely face more sticker shock before prices stabilize. Additionally, as grocery and gas bills continue to squeeze budgets, it is expected that consumers will likely defer some expenditures and switch to less-expensive brands in the second half of the year.”
The U.S. inflation rate has reached a 40-year high of 7.5 percent. With prices increasing, some shoppers are already tightening their belts with the help private label brands. The S&P forecasts that inflation will ultimately drive shoppers to more closely consider their budgets, and retailers will have to respond with discounts and other measures.
U.S. Wages Increased At Twenty-Year High
Employers spent 4 percent more on wages and benefits last year as workers received larger pay raises in a tight labor market, marking an increase not seen since 2001, reported the Wall Street Journal. The U.S. employment-cost index—a quarterly measure of wages and benefits paid by employers—showed that costs continued
to rise at the highest rate in two decades. The fourth-quarter gain, compared with a year ago, was 4 percent on a non-seasonally adjusted basis, according to the Labor Department. Wages are rising quickly in disparate parts of the economy, from high-paying finance jobs to lower-paying restaurant and manufacturing positions, and employment costs are rising at uneven rates in different industries depending on the demand for labor. Rising pay and benefits are putting more money in workers’ pockets—average hour“As grocery and gas bills continue to squeeze budgets, it is expected that ly wages rose 4.7 percent in December from a year earlier—but not enough to keep pace with rising prices. Inflation recently hit its consumers will likely switch to less- fastest pace in nearly four decades amid expensive brands in the second half supply and demand imbalances for both of the year.” goods and labor related to the COVID-19 pandemic.
Seven & I Pushed To Focus On 7-Eleven
U.S.-based investment firm ValueAct Capital is urging Seven & i Holdings to break up its businesses and focus on its
continued on page 17
NCASEF Appoints Two Interim Vice Chairs
With two officer positions left vacant at the start of the new year, the NCASEF Board of Directors unanimously appointed Teeto Shirajee (left, President— South Florida FOA) and Nick Bhullar (right, President— Southern California FOA) as interim Vice Chairs during its first quarter meeting in Savannah, Georgia in February. Both will serve until formal elections for the positions are held during the fourth quarter Board meeting in the fall.
Member News
continued from page 15
7-Eleven convenience store chain, steps which it said could more than double the company’s share price in the coming years, reported Reuters. ValueAct, which has been urging the Japanese company’s board to take bolder action for months, made its proposal public in early February as investors have become more frustrated with the company’s lagging share price. ValueAct said if Seven & i narrows its focus to 7-Eleven, it could become a global champion in a growing industry, and warned that if its attention remains “scattered” its results will be poor for many shareholders.
ValueAct stated it is among a number of investment firms, including Third Point, Third Avenue Management and Artisan Partners, which have tried to push for changes at Seven & i and have received unsatisfactory responses. ValueAct also warned that competition is heating up by the day and that many competitors—including Amazon and DoorDash—are ramping up plans to sell snacks and groceries in convenience stores.
Amazon Go To Open In Suburbs
Amazon is bringing Amazon Go, its cashierless convenience store, to America’s suburbs, reported Business Insider. The company will open its first suburban Amazon Go store in Mill Creek, Washington over the next few months. Amazon introduced its cashierless Go store in 2016. The store allows shoppers to fill their baskets and then leave without having to go through a checkout aisle. Checkout is automated using an app.
Amazon’s decision to open Amazon Go stores outside city centers and away from working hubs comes as consumers spend less time in the office and more time working from home. At present, Amazon has Go stores in busy cities such as New York, Chicago, and Seattle. The new stores will be similar to other Amazon Go locations, offering mostly grab-and-go food items along with some everyday essentials. The suburban locations will be larger, however, at around 6,000 square feet versus the 1,000 to 2,000 square feet of urban Go stores.
Inflation Causing Increase In Private Label Sales
As inflation rises customers are buying more private label products, and retailers are experiencing double-digit sales growth among their private label lines, reported Modern Retail. Target’s owned brands grew 36 percent in the first quarter of last year, the strongest the company has ever recorded. In March 2021, Kroger reported a record 13.6 percent year-over-year to $26.2 billion sales increase for its store brands.
Private labels have historically grown alongside inflation and economic uncertainty, said Keith Anderson, senior vice president of strategy at Profitero. During the great inflation of the 1970s, private labels grew more prominent as cost-effective substitutes to name brand products. Again in 2008, American households turned to store brands when the economy contracted steeply. For price-conscious consumers, private label products are getting easier to find. In recent years, retail giants have been increasing their private and exclusive brand offerings in an attempt to gain market share in trending categories.
Employers Boosting 2022 Pay Raises
Fueled by tight labor markets, U.S. employers are boosting their original salary increase projections for 2022 as the Great Resignation shows no signs of abating, according to a new survey by WTW (Willis Towers Watson). The survey of 1,004 U.S. companies, conducted during October and November 2021, found nearly one in three respondents (32 percent) raised their salary increase projections from earlier in the year. Companies are now budgeting an overall average increase of 3.4 percent in 2022, compared with the average 3.0 percent increase they had budgeted in June 2021. Companies gave employees an average pay increase of 2.8 percent in 2021.
Employees in the following five industries are expected to see the largest salary increases in 2022 compared with their actual increases in 2021: • Retail and wholesale trade: 2.8 percent to 3.6 percent • Finance: 2.7 percent to 3.5 percent • Life and health insurance: 2.7 percent to 3.5 percent • Energy: 2.6 percent to 3.4 percent • Industrial manufacturing: 2.6 percent to 3.4 percent
According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. Nearly three in four respondents (74 percent) cited the tight labor market for increasing their bud-
Working Together Will Benefit All 7-Eleven Stakeholders
BY SUKHI SANDHU, NCASEF CHAIRMAN
I am deeply honored to serve as Chairman of the National Coalition. When I campaigned for the position, I announced my focus would be on three dynamics that will affect and involve all stakeholders in our 7-Eleven system: unity, communication and relationships, and financial health. Now, with the help of my fellow officers and Board members, we plan to apply these dynamics equally to franchisees (including the National Coalition and FOAs), our vendor partners, and SEI.
I am a firm believer that dialogue, diplomacy, collaboration, and mutual respect get the best results in any situation. As such, the approach of the National Coalition head table during my tenure is always going to be fair and balanced, and we will make sure all opportunities are mutually beneficial for all 7-Eleven partners. We will strive for unity among franchisees, as well as between franchisees and our vendor community and our franchisor. To achieve this, we plan to establish strong and open communication between all parties, which in turn helps strengthen relationships. Simultaneously, we will work to boost the financial health not only of all 7-Eleven stakeholders, but of the National Coalition and FOAs across the country as well.
Perhaps the best example of these dynamics in action is our Board of Directors and Affiliate Member meeting in Savannah, Georgia in February. Attendance by franchisees and vendors was the highest it’s been in years, and SEI upper management accepted our invitation to participate. On the morning of the Affiliate Member meeting, presentations were made by SEI Senior Vice Presidents Jack Stout and Doug Rosencrans. In the afternoon we held workshop groups between franchisees and vendors in which they discussed problems and solutions related to product availability, delivery, and service, among other issues. Afterwards, we held a Tabletop Trade Show featuring 20 exhibitors displaying their latest products and deals.
During the Board of Directors meeting the following two days we had civil discourse on various subjects, from the gross profit split and gasoline commission to delivery
check-in issues and KSR items in stores. We also announced the formation of several committees to overlook and govern certain aspects of the National Coalition— like bylaws, elections, and our annual convention—and to facilitate resource development and problem solving in areas like accounting, facility maintenance, and store logistics. Interspersed throughout the Board meeting were presentations by vendors who showcased some new and upcoming products and promotions, and social events that allowed all parties to mingle and network.
We surveyed attendees after the meeting to get an indication if our new format was successful and what could be improved. I am pleased to report that the responses have been overwhelmingly positive. Vendors appreciated having direct access to Board members, and especially liked seeing SEI upper management at the meeting. Board members enjoyed the interaction with vendors and SEI representatives, saw value in the formation of committees, and liked how the meeting was conducted overall.
So, during this one meeting we had a show of unity and effective communication between franchisees (Board members), vendors and SEI, and robust discussions on how we can improve the bottom lines of all stakeholders. Throughout, communication was open and courteous. In a more direct fashion, vendors financially supported the meeting—and the National Coalition—with their generous sponsorship of the event, and franchisees in turn financially supported the vendors by placing orders on the spot.
This is what we hope to accomplish on a grander scale—to develop a balanced, constructive, cooperative, and mutually respectful relationship between franchisees, vendors, and SEI. In order for our brand to
