7-Eleven intends to use growth in sales of fresh foods, its proprietary beverages and private brands to boost its operating income by $113 million year over year, the convenience-store chain’s CEO, Joe DePinto, said during a fourth-quarter earnings call earlier this month.
This translates to 4% year-over-year growth, DePinto said during parent company Seven & i Holdings Co. Ltd.’s call.
- 7-Eleven is No. 1 on CSP’s 2024 Top 40 Update to the 2023 Top 202 ranking of U.S. c-store chains by store count. Watch for the full 2024 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.
“To get there, we are targeting a 26% proprietary product mix in 2024,” DePinto said. “Again, this mix includes our fresh foods, our proprietary beverages, and our private brands. And we’ll do this through accelerated fresh food development and private brand expansion.
“Our proprietary product mix will grow through innovation and through the investments that we are making to modernize our food and beverage offerings in our stores and to focus on execution throughout our system,” DePinto continued. “All are designed to improve the customer experience, drive store traffic, and increase our proprietary and high margin product sales.”
In 2023, Irving, Texas-based 7-Eleven enjoyed improving results in fresh food and proprietary beverages, he said.
“But our plan now is to accelerate, and we’re creating signature products and leveraging offers targeting a 17.5% increase in fresh food sales and a 7.7% increase in proprietary beverages versus prior year,” DePinto said. “And we’re bolstering our private brand lineup. It will complement these other proprietary products.”
He said 7-Eleven is on track to debut 215 additional new private-brand items in 2024.
While 2024 revenues are expected to decline 3.1%, this is due to a drop in the retail price of gasoline, he said.
“This does not affect gasoline margin or gasoline gross profit,” DePinto said. “SEI [7-Eleven Inc.] is also forecasting to grow total merchandise sales 1.8% or $490 million year over year.”
Modernization Program
Through 7-Eleven Inc.’s Food and Beverage Modernization Program, the c-store chain will offer a wider assortment of hot food and specialty coffees, DePinto said. This includes a bake-in-store platform and grab-and-go hot cases, “where the consumer can quickly grab a product, pay and leave,” he said. There also is the c-store chain’s self-serve roller grills and specialty hot beverages.
“Stores with these new platforms have significantly outperformed stores without them,” the CEO said. “And we plan a further rollout of this platform, this modernization program of food and beverage to an additional 2,500 stores in 2024. There are currently in about 5,000 stores.”
DePinto said that in 2023, 7-Eleven worked in the Louisville, Kentucky, market to improve overall operational execution, refresh store exteriors and some of the interiors, and complete merchandise resets “introducing new and local products.”
“We’re bolstering our private brand lineup. It will complement these other proprietary products.”
Since an April 2023 launch, “This effort has boosted merchandise sales and customer traffic, resulting in a 17% increase in fresh foods and a 9% rise in proprietary beverages in the Louisville, Kentucky, market,” DePinto said. “We plan to scale the Louisville, Kentucky, learnings across 4,000 stores in the remainder of 2024.”
In 2024, 7-Eleven plans to achieve the aforementioned 26% proprietary product sales mix “while growing the 7Now delivery business to $725 million in sales and achieving a $350 million reduction in cost through our Cost Leadership Committee,” the CEO said. “Our key financial targets for 2024 are to increase our same-store sales by 0.5%, maintain our merchandise margin, and achieve operating income of $2,930 million.”
Based in Irving, Texas, 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States and Canada. In addition to 7-Eleven c-stores, the company operates and franchises Speedway and Stripes c-stores and the Laredo Taco Company, Speedy Cafe and Raise the Roost Chicken and Biscuits restaurant brands.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.