Company officials said the two regions where growth would be strongest were California, which had almost 1,300 stores at the end of 2008, and the New York metropolitan area, which had 431 stores at the end of 2008. At least 44 [image-nocss] stores will open this year in metropolitan New York, said the report, more than twice the number that opened last year.
In the longer term, Dan Porter, vice president for real estate and new store development at 7-Eleven, told the newspaper that the company saw the possibility of adding 350 stores in the metropolitan area in five to seven years.The growth plan of 7-Eleven, officials said, reflects relatively strong demand for its products. In addition, they said, the retailer is getting access to desirable retail space that it was not previously offered or that was too expensive. "While the business is not recession-proof, it's recession-resistant, and doing well, given the marketplace," Mike Friedman, a senior vice president of CB Richard Ellis, a real estate services firm that is helping 7-Eleven identify potential store sites, told the paper.
According to Kenneth Barnes, manager of real estate for 7-Eleven's Northeast division, there are 15 sites in the metropolitan area that "the company has had its eyes on for years that have become available for us to pursue in the last year." And he told the paper that the leases it was currently negotiating carried rents more than 30% below the level of six months ago.
According to Barnes, 20 of the new stores in the metropolitan area this year will open under the company's business conversion program (click here for previous CSP Daily News coverage). In New Jersey, southern Connecticut and Long Island, new stores will mostly be in strip malls, while in the five boroughs they will be in walkup locations.
Factors determining the suitability of sites include pedestrian or vehicular traffic, proximity to public transportation and the existence of zoning laws that permit a 24-hour operation and the sale of beer and wine, said the report.
Steven Gillman, a vice president of Northwest Atlantic Real Estate Services, a real-estate brokerage firm in White Plains, N.Y., predicted the business conversion program would help 7-Eleven grow. "This could be a chance for the owner of a deli or small grocery store to sell or get additional capital from 7-Eleven," he told the paper.
Barnes told American Public Media's Marketplace radio show that the reason for 7-Eleven's rapid expansion is because retail rents are down by as much as 30%. "The mom-and-pop tenants that yesteryear we would have competed against are on pretty shaky ground. And landlords appreciate what we bring to the table as a credit tenant more today than they did a year ago. For many people, 7-Eleven is a cheap alternative to restaurants and supermarkets. Its 5,700 stores have done well during the downturn.
Burt Flickinger, with the consulting firm Strategic Research Group, told the radio news program that 7-Eleven is now positioning itself for the economy to rebound. "These are some of the best real-estate prices in nearly 35 years. 7-Eleven knows it can expand, get low rents today and have much more profitable stores tomorrow."
And 7-Eleven is looking to sell its Richmond, Va.-area company-owned stores to franchisees, reported The Richmond Times-Dispatch. It began the process here in 2007 but is making a bigger push now by reaching out to possible store owners.
Of the 96 stores in the Richmond/Petersburg market, the chain has sold about 11 to franchisees. In the Philadelphia market, only two of its 155 area stores remain company-owned. In the Baltimore market, all but nine of the 175 stores have been sold to franchisees. Both markets have been pushing to sell their stores to franchisees for several years.
Larry Draper, 7-Eleven franchise sales manager for the Richmond market, said that once the company-owned stores are sold, it could become more expensive to become a franchise owner. "Once the area is 90% to 95% franchised, the possibility of acquiring a 7-Eleven store without paying what 7-Eleven calls a goodwill premium to [an existing] owner diminishes," he said.
To try to sell the stores, Draper is leading a series of three seminars this month highlighting the business model and franchise system.
The company is also offering military veterans a 10% discount on the franchise fee. The special is being offered by the company in 30 states, including Virginia. (Click here for CSP Daily News coverage.)
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.