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7-Eleven Franchisees Report Chronic Understaffing Issues Despite Increasing Pay Above Minimum Wage Levels
National Coalition Survey Finds Staffing Crisis Worsened this Spring
San Antonio, Tex., July 12, 2021 – Results of a recent survey of U.S. 7-Eleven franchise owners conducted by the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) finds an overwhelming majority have raised their wages beyond what is mandated by their state or local minimum wage, but still face chronic understaffing. The 17-question survey of 422 respondents was conducted in June 2021.
“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 U.S. “What is most telling is that only 13% of franchisees who responded said overnight operations were financially profitable to them as franchise owners. That’s 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 these four factors impacted 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 store(s) (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. Ninety-six percent said they (or their designee) had worked more shifts than they typically work during the last 60-90 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.
Further survey results show:
- Just 20% of respondents said they are able to offer a competitive wage to their employees based on their current contractual gross profit split with 7-Eleven, Inc. The company’s franchise agreement requires 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%.
- 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 is mandated by their state or local minimum wage. Yet, 97% say they have had trouble staffing their store during that same time.
- Ninety-six percent said it has become more difficult to staff their store just over the past 60-90 days. Ninety percent of respondents said they have lowered their standards for new hires because of the state of the labor market.
(Full results of the survey are available HERE.)
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. Ninety percent 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.”
With the arrival of summer and fewer coronavirus mandates, more customers will be coming into 7-Eleven stores and other retailers. The National Coalition says its franchisees always want to offer excellent service and keep up with the company’s new initiatives, like fresh food, but are struggling without reliable, trained associates in place. Franchisees face the prospect of reducing their already shrinking profits to support higher labor costs—even as their store-level operating expenses are increasing.
“We hope the Federal Trade Commission is taking note of the heavy-handed way SEI is handling this situation with its franchise owners as part of its review of the Franchise Rule,” Jorgensen said.
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