7-Eleven CEO Details Focus on Four Strategic Initiatives
IRVING, Texas — 7-Eleven Inc. is embarking on a multipart effort to solidify the company's role as a convenience channel leader in a changing landscape while making sure consumers get what they want, when they want it and how they want it.
CEO Joe DePinto discussed four key growth pillars during parent company Seven & i Holdings Ltd.'s recent investor presentation: grow proprietary products; accelerate digital and delivery; improve efficiencies and cost leadership; and grow and enhance store network.
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The retailer's store network will build on what 7-Eleven has learned from its Evolution Stores, which serve as experiential testing grounds for customers to try its latest products and innovations. The company used these learnings to develop a New Standard store format, which features a larger footprint and fuel offering as well as investments in digital innovation and frictionless shopping.
Compared to 7-Eleven's existing portfolio, New Standard stores deliver 13% higher same-store sales during their first year of operation and are projected to further increase sales by 30% at full maturity, or four years in, according to DePinto. Accordingly, the model will be a big part of 7-Eleven's growth plans.
"We plan to open 125 of these new stores in 2025, and we are ramping up and growing our pipeline with plans to open over 500 of these new stores by 2027," DePinto said during the investor presentation.
The retailer is approaching its store portfolio strategically. During Seven & i's earnings call for the six months ended Aug. 31 held earlier this month, DePinto shared that 7-Eleven planned to close 444 "underperforming" c-stores in the United States, Canada and Mexico.
"We're also currently marketing a $750 million sales leaseback as part of our debt refinancing plan and this has had strong investor response," DePinto said during the call. "Collectively, together the store closures and sale leaseback will be accretive to 2024 earnings by approximately $30 million and have annualized run rate of $110 million."
Areas of Growth for 2025 & Beyond
As for its other growth pillars, 7-Eleven's focus on growing proprietary products follows positive sales growth during the second quarter of 2024 for fresh foods, beverages and brands, including 7NOW Delivery. DePinto noted that consumers are increasingly seeking out quality food, beverages and private brands at affordable prices.
"To accelerate this growth, we've been investing in our food and beverage modernization program," DePinto said. "This platform offers our customers a wider assortment of hot food and specialty beverages."
The program is currently in 5,000 stores and generating $240 on average per store day in sales lift. An additional 1,900 stores will receive the full program or elements of it by the end of 2024, with 650 more stores slated for the first quarter of 2025.
7-Eleven will lean into offers that provide ongoing, permanent value while utilizing increased media to communicate them to customers, and taking what DePinto called a more targeted local and regional pricing approach to offset any margin impact.
The company will also accelerate personalization in digital and work to grow its 7Rewards and Speedy Rewards programs and increase loyalty. Together, the programs have 97 million enrolled members and have seen merchandise sales from loyalty grow approximately 3% from June 2023 to June 2024.
Finally, on the cost leadership front, 7-Eleven is targeting a $500 million cost reduction by the end of the year through a "disciplined and rigorous" approach.
"And we're continuing to install our proprietary retail information system and fuel dispenser experience in Speedway stores," DePinto said. "These systems will help standardize our store systems across our banners, simplify operations, reduce costs, and most importantly, they will enable item-by-item management so that we can localize our merchandise assortment, which will grow our sales."
Irving-based 7-Eleven operates, franchises and/or licenses more than 13,000 stores in the United States and Canada. In addition to 7-Eleven stores, it operates and franchises Speedway, Stripes, Laredo Taco Co., and Raise the Roost Chicken and Biscuits locations.
7-Eleven is No. 1 on the 2024 Convenience Store News Top 100 ranking.