Looking To The Future
By Eric H. Karp, Esq., General Counsel To NCASEF
Since my last column, in which I reflected on the numerous changes to the 7-Eleven system over the past decade, Convenience Store News published its latest report on the Top 100 chains. The title of the report is “TOP 100-Slow Motion,” reflecting the fact that the ranking of the top chains had changed little from the previous year. Here is a summary of some of the data gleaned from that report:
| Rank | Chain | Units |
| 1 | 7-Eleven | 12,577 |
| 2 | Circle K | 5,851 |
| 3 | Casey’s | 2,663 |
| 4 | Cumberland Farms | 1,568 |
| 5 | BP Houston | 1,540 |
| 6 | GPM | 1,515 |
| 7 | Murphy | 1,133 |
| 8 | Quick Trip | 1,060 |
| 9 | Wawa | 1,050 |
| 10 | Kwik Trip | 858 |
Note that 7-Eleven retains its #1 ranking, reflecting its overall 8.5 percent U.S. market share, with 42 percent of the units in the top 10 and 60 percent of the units in the top three.
I also looked back at the same ranking for the year 2016, prior to 7-Eleven’s acquisition of the Sunoco chain in 2018 and the Speedway (Marathon Oil) chain in 2021—then ranked #7 and #8, respectively. Also in the Top Ten in 2016 were Shell, Chevron and Exxon, ranked #3, #4 and #6, respectively. These five chains, all linked to major oil companies, were replaced in the Top 10 in 2023 by chains which have experienced significant growth, most especially Casey’s which was ranked #9 in 2016 and #3 in 2023. On the other hand, the 1st and 2nd rankings in 2016 were 7-Eleven and Circle K, and that remained so seven years later.
While many of the top chains have engaged in growth through consolidation, individual store ownership continues to grow faster than the chains. The percentage of convenience stores operated by chains has fallen by more than 2 percent since 2019. So, the U.S. market, which at the end of last year included more than 152,000 convenience stores, continues to be fragmented and over time has gradually become more so. For example, in 2017, the top ten chains amounted to a little more than 26 percent of the convenience store market, but in 2023 they were just under 20 percent of the market.
The signals thus seem clear that more consolidation is in the future, not just for the convenience store industry in general, but also for the 7-Eleven system in particular. There are two separate and distinct sources and reasons for this conclusion:
- Convenience Store News also recently published its “Industry Report 2024 – A Trying Year.” The report contains a mountain of data which all boils down to what every 7-Eleven franchisee knows about financial results for 2023. As an industry, sales were down 4.7 percent and transaction counts were down 3 percent. But wages were on average up 6.6 percent and total expenses up by 11.3 percent. Inflation was 5.7 percent, down slightly from the year before. And it’s no secret that through April 2024, same store sales in this system have been down for many months in a row. These numbers provide added impetus to merger and acquisition activity within the industry. The smaller operators find it difficult to operate and compete in this environment, and the larger operations have deeper pockets and access to capital.
- The Seven & I Strategic Committee published a report this past spring telling investors that its areas of focus going forward includes an assertive approach to mergers and acquisitions in the U.S. market. Having already spent more than $24 billion to acquire two chains comprising more than 4,800 locations, the parent company of 7-Eleven has made clear that it intends to continue to grow through acquisitions in the United States. This means that some of the chains on the top ten list are among the likely targets for acquisition. While we certainly have no inside information, it bears noting that Casey’s, designated by Convenience Store News as one of the “convenience store chains to watch going forward”, is led by CEO Darren Rebelez, who was employed by 7-Eleven from 2007 to 2014, occupying the title of Chief Operating Officer when he departed. But Casey’s is not the only potential target as 7-Eleven has acquired firms larger than those ranked #4 thought #10 in the Top Ten.
There is no question that the acquisition of the Sunoco and Speedway chains have altered the profile and culture of this system in material ways. My previous column was built around the theme that the only thing that is constant is change. That has proved true, whether you look to history or to the future.
Contact info
Eric Karp can be reached at 617-512-9004 or ekarp@wfrllp.com