Strengthening Our Partnership For Success

Sukhi Sandhu, NCASEF Chairman

Recently, I and the NCASEF officers had a productive meeting with SEI leadership to discuss several pressing issues that have been weighing on franchisees and our system. To my knowledge, this meeting was historic as it marked the first time all NCASEF officers have sat down with SEI’s executive team for a direct and candid conversation about the challenges we are facing. Now more than ever, collaboration and open communication between franchisees and SEI is essential so we can work together on developing long-term, sustainable solutions.

Across the retail industry sales and foot traffic have been declining in 2024, and 7-Eleven hasn’t been immune to these trends. As such, franchisees are feeling the pinch. Our store operational costs are rising and our revenues are not keeping pace, creating a financial squeeze that’s impacting our net income. It’s a situation that calls for urgent action—not only from SEI, but from all franchisees and our supply partners, as well. The truth is we are all part of the same ecosystem, and if one part is under strain, it affects all stakeholders.

One of the significant challenges facing franchisees today is the rising cost of labor. Market-driven wage increases have hit many areas hard—for example in California, where the minimum wage for fast food restaurants has surged to $20 an hour. This puts franchisees in the difficult position of competing for labor at much higher costs, without a corresponding increase in revenue to offset these expenses. Therefore, we need to explore ways to manage operational costs while also finding new opportunities to drive revenue.

To begin, the “Quality Visits” with area leaders should focus on both business growth and franchisees’ net income. These visits should be centered around meaningful discussions to grow foot traffic and top-line sales, while considering the financial health of franchisees.

In addition, leveraging existing programs is key to driving both revenue and customer loyalty. We need to maximize the potential of 7Rewards, 7NOW, fresh foods, and 7-Select private brand items. These initiatives enhance customer engagement, increase margins, and drive sales. Fresh foods and private brands, in particular, offer substantial margin growth opportunities, which is why they are a priority for our stores. The 7Rewards program, in particular, is a powerful way to build customer loyalty. When customers see the value in staying loyal to 7-Eleven, they’re more likely to make repeat visits, which increases foot traffic to our stores and creates opportunities for higher sales.

The 7NOW program is necessary because it allows us to compete in the rapidly growing e-commerce and delivery space. As consumer demand for delivery rises, 7NOW positions us to meet this need thanks to the proximity of our stores and our 24/7 operations. To make 7NOW more profitable, franchisees, SEI, and vendors must work together. Vendors, who benefit from increased sales through 7NOW, can help by offering us the lowest price of goods. Further profitability can be achieved by reducing the fixed costs of the 7NOW equipment maintenance fees, supplies, and delivery fees. Through these efforts, the 7NOW program can become a more sustainable and lucrative venture for everyone involved.

Franchisees are also looking for programs and products that can help drive foot traffic without adding to our labor costs. Working with SEI, we could explore options that allow us to attract customers without further straining our already limited resources. One example would be deploying more lottery kiosks to eliminate the labor requirement from that category. Another low labor, revenue generating option is to add skill games to stores in municipalities and states that allow it.

Retail theft has also become a growing concern that is affecting our bottom lines. In certain regions, like California, franchisees find it nearly impossible to prosecute shoplifters and dishonest employees caught stealing due to legal constraints. This “new normal” of increased theft is contributing to higher audit variances and added stress to franchisees’ bottom lines. However, one way franchisees can help alleviate this challenge is by becoming more involved in local and state legislative affairs. Working with lawmakers to advocate for stronger laws that deter criminals can be a key step toward reducing theft and protecting our stores, employees, and customers. We also need support from our franchisor and their Government Relations Department to provide resources and expertise in helping us build stronger relationships with our elected officials.

Disposable income among our customer base has decreased, so they’re purchasing less and looking for value wherever they can find it. We need to introduce new, budget-friendly products and categories that resonate with today’s consumers. Exclusive items and better cost structures from our vendor partners can help give us a competitive edge, driving both sales and gross profits. Since vendors are a critical part of the 7-Eleven ecosystem, we need their continued support in providing products that can appeal to customers while keeping costs manageable for our stores.

But offering great deals alone isn’t enough—we need to ensure that customers know about them. This is where marketing plays a vital role. We need effective marketing strategies to spread the word about our deals, promotions, and value-priced items. By highlighting these offers through targeted campaigns, we can attract and retain new customers, reinforcing the perception that 7-Eleven is a destination for value. From social media to in-store signage and radio ads, every effort must be made to showcase the savings we offer and build customer loyalty in this competitive landscape.

We should also be on the constant lookout for new, exciting products. I encourage you all to attend your local FOA trade shows, our annual NCASEF convention, the 7-Eleven Experience, and industry events like the NACS Show and the Sweets and Snacks Expo. At these events you could potentially find the next big-ticket items—which could be national or regional—that would help drive more foot traffic and sales to your stores. Attending trade shows is also a good way to educate yourselves on industry trends and to explore new categories and revenue sources.

Due to inflation and the rising cost of goods, our booked inventory is now higher than it used to be, and in most cases, it’s financed. With interest rates also being higher than in recent years, this has become an increased expense we must contend with. Therefore, it is important that we manage our inventory carefully and increase our turnover rate. We need to eliminate slow-moving and dead items from our shelves, and focus on stocking products that are consistently selling in order to lower our total booked inventory. While this requires action at the store level, we also need the support of SEI’s category managers and merchandisers to help identify and remove underperforming products and introduce new, high-potential items.

Along with managing inventory more efficiently, it is vital to ensure that all revenue-generating equipment in our stores remain fully operational to minimize downtime and prevent disruptions in service. Regular maintenance and timely repairs are essential to keeping key revenue-generating equipment—such as Slurpee machines, coffee stations, and hot food equipment—running smoothly. A significant challenge we face is the unavailability of parts, which delays repairs and negatively impacts both store productivity and the customer experience. Maintenance service providers often struggle with parts supply chain issues, causing further delays. To alleviate this, we need to have critical parts readily available so that repairs can be made swiftly, ensuring that equipment is back up and running as quickly as possible.

Additionally, our Retail Initiative System and IT networks must always be efficient, as any downtime directly affects sales and customer satisfaction. If equipment fails, it can result in customers being unable to purchase their favorite products, ultimately hurting revenue. By prioritizing the maintenance and readiness of all our revenue-generating equipment, we can avoid these costly disruptions and provide a seamless experience for our customers.

To move forward, we need to take a balanced approach where all 7-Eleven stakeholders can prosper together. Co-prosperity is the key—if we can grow top-line sales and gross profits, we can reinvest in our stores, offer competitive wages to our employees, and SEI could budget for capital investments like new, revenue-generating equipment, improving the physical plants of stores, and simplifying store processes. All of this would ultimately create a better experience for our customers and grow our net income.

 I and the NCASEF officers have been communicating these challenges to SEI, and I appreciate that SEI leadership has been receptive to hearing about the difficulties we’re facing on the ground. We’re encouraged by SEI’s willingness to work with us on these issues, and we’re hopeful that we can develop actionable solutions that will have a real impact on franchisee profitability and store operations.