We Need To Help Low Volume Store Owners
Each year when spring arrives, I take time to reflect and prune out the old debris of the year past, and like a farmer plant the seeds that hopefully produce a harvest of hope and prosperity. This includes spring cleaning, sorting out my office files, sorting out my e-mail, and planning the course for the year ahead. This year I am taking on a new task, because the one seed I am hoping will take root is an effort to help grow the incomes of low volume stores. The franchisees trapped in these locations often have spent their entire life’s savings on a franchise fee and the goodwill needed to get into the store, and have no place else to go.
In my opinion a low volume store is any store where the franchisee needs to put money in, whether it is one month, two months or many months until the store is sold or eventually succeeds. I also mean stores that are doing less than $3,000 per day, which is less than $1 million per year, whether this is an old store in the system or a new store that has not yet found its customer base. It is exceedingly tough to make a living wage from a store with this income.
It is the nature of the convenience store business that some stores simply do not work for some reason or other, whether it is the traffic pattern, the opening of competition down the block (and up the block) or the actions of the franchisee and staff. We might be unconcerned about these stores until and unless we are the franchisee that ends up in the upside down situation.
As a member of SEI’s National Business Leadership Council, I have met and discussed this topic several times with our corporate management, but we have not made much progress over the two years we have been talking. We discussed how the graduated split from high volume stores is intended to help low volume stores, and how business conversion program stores have an assured gross income and traditional stores do not, and how if you land one of these stores it is the responsibility of the company to help these franchisees and their families.
One of the reasons that entrepreneurs invest in a franchise like 7-Eleven is to take advantage of the strength of the brand, to hitch a ride on the successful franchise format, and to get support and guidance from the franchisor, which has shown ongoing expertise in the field. It is true that 7-Eleven franchisees get the benefit of having an open account, we have some of the best brand recognition and merchandising in the world, and we employ the best and brightest minds in the c-store business to lead us, but we have not solved the problem of how to help our low volume owners.
I used to think that the move to a multiple store system would guide our progress, but low-volume storeowners rarely have enough money to invest to acquire another store. This is quite a shame, because anyone who has worked in the business knows that low volume storeowners who have lasted any number of years tend to be very good storeowners because these stores have to be run extremely well, due to less margin for error, and also less room for experimentation and innovation. Some might even say the multiple store procedure has changed so much it is questionable whether or not low-volume owners would even qualify for a multiple.
Adding to the low volume owner’s frustration is 7-Eleven’s growth and expansion, and the futility the storeowner feels when the Exxon, Shell, White Hen or BCP down the street rebrands to a 7-Eleven and is newer, well-lit, and complete with all of the newest programs the low-volume storeowner needs. It has been said many times that we can compete with another retailer, but we cannot compete with another 7-Eleven that is newer, brighter, with a huge parking lot, and equipped with all of the latest programs like fresh foods and the new coffee program.
Franchisees understand that it is not 7-Eleven’s intention to build an underperforming location, but it is a fact that we have some low-volume stores in the system. According to SEI, some 250 stores are categorized as low-volume stores, and that is not many when we consider all of the 6,000 stores in the franchised system. If you are one of those stores, however, it is at least one store too many.
7-Eleven is now doing much more statistical analysis of store locations, but if we build or develop so many stores so quickly, some have to be a risk. The franchisee already in a low-volume store has no options but to stay in that store, and if he or she is not making a living wage, which differs in many areas, franchisees throughout the system believe the company must be charged with making that franchisee successful.
It is a fact that 7-Eleven is one of the most successful and iconic brands in the world, one that continues to grow in challenging economic times. While I may not always agree with management, I hope that the one seed I am planting this year will grow as long as we continue to talk and focus on this issue.