National 7-Eleven Franchisee Coalition Questions Benefits of Coffee Promo

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National 7-Eleven Franchisee Coalition Questions Benefits of Coffee Promo

12/23/2019

SAN ANTONIO — The National Coalition of Associations of 7-Eleven Franchisees (NCASEF) is questioning 7-Eleven Inc. (SEI) about the benefits of the retailer's aggressive promotion of its low-priced coffee or other specials offered through its mobile app.

In the contract they sign with SEI, franchise owners are granted control over the pricing in their stores. But, mobile technology has different rules, and NCASEF believes franchisees are largely being bypassed when decisions about the cost of digital promotions are made, the association stated.

"7-Eleven's franchisee council, the NBLC, is told in advance about digital promotions, but they are not an elected body and have no independence from the brand to push back," said Jay Singh, NCASEF chairman and a Texas franchise owner. "Our association represents the interests of all franchisees and should be included in the discussion about how promotional items are priced through the app and how money from the ad fund is being allocated."

According to NCASEF, unlike product promotions that are mostly paid for by vendors, $1 coffee and 49 cent Slurpees are considered "proprietary promotions," by which franchisees are responsible for the costs. Only customers that have downloaded the 7Rewards app qualify for low-priced beverages, and franchisees say the digital promotions do not draw new customers to their stores like traditional advertising does.

In a statement, 7-Eleven said that coffee customers are critical to the company's success, and that $1 coffee is a limited-time promotion that many of its key competitors offer to their loyalty members. "Franchisees see eight more customers per store each day thanks to the 7Rewards loyalty program," the company told Convenience Store News.

According to the release from NCASEF, SEI is in the midst of an aggressive growth strategy, with a goal to have 20,000 U.S. stores by 2027. The company has also been investing heavily in technology and recently announced it has signed up 25 million loyalty members.  At the same time, SEI under-spent its 2018 advertising budget by $4.9 million.

"We are concerned that 7-Eleven is relying on digital promotions at the expense of traditional advertising and marketing that is proven to drive business to our stores," said NCASEF Executive Vice Chairman Michael Jorgensen, a Florida franchisee. "The high-level numbers the company provides us do not offer a transparent view into how our ad money is being spent. Most other franchisors include elected franchisees in decisions involving the money they contribute to their national ad fund. It's time 7-Eleven did the same."

Based in San Antonio, NCASEF is an elected, independent body representing more than 7,000 7-Eleven franchised locations in the United States.

Based in Irving, 7-Eleven operates, franchises and/or licenses more than 69,000 stores in 17 countries, including 11,800 in North America. 7-Eleven ranked No. 1 in the 2019 Convenience Store News Top 100 report.