DALLAS -- 7-Eleven Inc. said it plans to add 30% more North American outlets and will start selling hot meals to fend off rival chains and supermarkets encroaching on its territory.
The Dallas-based company, bought by Tokyo-based Seven & I Holdings Co. last year, operates and franchises 6,100 convenience stores in the United States and Canada. 7- Eleven intends to raise that number to about 8,000 by 2010, according to CEO Joseph DePinto. We have a gigantic opportunity, DePinto said in an interview with Bloomberg. We're ramping it up.
DePinto, who became CEO a year ago, predicts 7-Eleven will eventually have as many as 30,000 stores in the United States and Canada.
They have a significant challenge, George Whalin, president of Retail Management Consultants, San Marcos, Calif., told the news service. Good real estate is hard to find. Consumers are becoming more discerning about what they buy and eat.
Next year, Dallas-based 7-Eleven plans to sell pasta dishes and meatloaf with mashed potatoes as Americans increasingly opt for prepared meals instead of cooking, pitting the chain against grocers Kroger Co. and Safeway Ltd.
We're really trying to differentiate into a more broad area of convenience, DePinto said. There's a huge opportunity for hot food.
Most U.S. 7-Elevens are in the Northeast, West Coast and Great Lakes regions, as well as Texas and Florida. The chain will first expand where it already has a presence, DePinto said. It has yet to enter Atlanta, Houston, Nashville or Memphis.
The company's closest rival is Canada's Alimentation Couche-Tard Inc., Laval, Quebec. Couche-Tard has about 5,200 outlets in the United States and Canada, concentrated in the U.S. Midwest, Southeast and West Coast. It has bought outlets oil companies have shed, acquiring Circle K from ConocoPhillips in 2003 and purchasing 474 stores so far this year.
7-Eleven has about 4% of the $495 billion U.S. convenience market, more than twice Couche-Tard's share, the report said, citing the National Association of Convenience Stores (NACS).
We see us doing more acquisitions in the short to medium term, DePinto said. He declined to name specific targets.
The company last week agreed to buy 10 McKee Oil Co. stores in Utah. In August, 7-Eleven purchased White Hen Pantry Inc. to offer more fresh food.
7-Elevens average about 2,500 square feet. The company said it adds 20 products at its locations every week and is trying to attract people from different ethnic backgrounds, including Latin Americans. It also wants to sell more of its own brands, aiming to expand private-label goods from 4% to 10% of sales by 201, said the report.
Margin difference, especially on things like water, can be as much as 30%, DePinto said. Private label is a big opportunity for us.
Around 700 stores have been refurbished, with more to come by the end of 2009, the report said. Walls and floors are being replaced, and new lighting, wider aisles and hot grills are being fitted. DePinto declined to say how much he was spending on renovations.
There was a time when no self-respecting person would have walked into one of those stores, Whalin said. The stores are cleaner and better presented. It's a better company than it has been.
Watch for the January issue of CSP magazine for more about 7-Eleven's new growth strategy.
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