UNIVERSAL CITY, Texas — Most U.S. 7-Eleven franchise owners have raised wages beyond their state or local minimum wage mandates but still face chronic understaffing, according to the results of a new National Coalition of Associations of 7-Eleven Franchisees (NCASEF) survey.
The group conducted the 17-question survey in June 2021, with 422 respondents.
“This survey proves what our franchisee members have been telling us for a long time. They can’t find enough people to work, and they are working too many hours themselves,” said Jay Singh, chairman of NCASEF, an elected, independent body representing the interests of more than 7,400 7-Eleven franchised locations in the United States.
“What is most telling is that only 13% of franchisees who responded said overnight operations were financially profitable to them as franchise owners,” he said, “because the economic environment we find ourselves in has changed, but the royalty structure for 7-Eleven franchisees hasn’t.”
Franchisees who said overnight operations were unprofitable were asked how four factors affected profitability:
- Increased labor cost (27.25%).
- Lack of an available, qualified and reliable workforce (11.05%).
- Lack of customer traffic during overnight hours (10.54%).
- Declining customer count due to newer competitive stores near your stores (0.26%).
Fifty percent cited “All of the above.”
Ninety-seven percent of respondents said they have had trouble staffing their store over the last year; 96% said they (or their designee) had worked more shifts than they typically work during the last 60 to 90 days. Nearly 50% reported they (or a designee) had worked at least 10 overnight shifts during the last 60 days because they didn’t have enough staff.
Twenty percent of respondents said they are able to offer a competitive wage to their employees based on their current contractual gross profit split with Irving, Texas-based franchisor 7-Eleven Inc. The company’s franchise agreement requires that franchisees pay a graduated gross profit split in exchange for their right to operate. For some franchisees, the portion of the gross profit split, or royalty, can be greater than 59%, NCASEF said.
Ninety-two percent of respondents said they had increased their hourly pay rate over the last year, and 89% said they have raised their hourly pay rate beyond what their state or local minimum wage law requires. Yet, 97% say they have had trouble staffing their store during that same time.
And 96% said it has become more difficult to staff their store just over the past 60 to 90 days; 90% of respondents said they have lowered their standards for new hires because of the state of the labor market.
The national coalition survey also asked franchisees if they are currently taking advantage of the recruitment tools 7-Eleven has made available to franchise owners, and 90% of respondents said they are “utilizing the recruitment tools such as Hire Right, which 7-Eleven provides.”
“These tools are helpful, but franchisees are still being forced to raise wages in order to find and retain high-caliber workers. Unfortunately, many franchisees can’t afford to compete with other employers,” Singh said.
General Counsel Eric H. Karp said this survey shows franchisees are being squeezed by the staffing crisis and the terms of their agreement. “7-Eleven could help its franchisees first by sharing with us their extensive data on franchisee profitability in general, and overnight profitability and employee expense in particular. Then the corporation needs to agree to hold a collaborative and amicable meeting to find solutions to these intractable issues,” he said.
Universal City, Texas-based NCASEF is a trade association for U.S. 7-Eleven franchise operators. Founded in 1973, it is comprised of 41 separate independent franchise owner associations collectively with more than 4,400 7-Eleven operators as members.
Click here to for the full results of the NCASEF survey.