A Less Than Smooth Conversion To ExxonMobil Gas
For some time SEI has been converting its 7-Eleven gas to major brands, such as ExxonMobil, in stores across the country. SEI said the reason behind this conversion is a widely known gas brand will bring more customers to our pumps and into our stores. As of this date, 7-Eleven stores in areas of Texas, Florida and California have been converted, and currently, a conversion is being rolled out to about 40-plus Illinois stores in our area around Chicago.
As part of conversion, the gas company is paying to install new gas pumps and digital signage in the converted stores. In some cases they are also offering to upgrade to diesel as part of the conversion. That is all well and good, but it appears SEI has not fully taken into account how this conversion affects franchisees. The major downside to this conversion is fuel becomes non-integrated, and stores will have two POS, our standard 7-Eleven registers, and an ExxonMobil “controller” just for gas. The problem is that the non-integrated fuel system (dual system) is adding multiple extra steps at the point of sale and on the back end.
Prior to the switch to ExxonMobil gas stores used the 7-Eleven POS to process gasoline and merchandise transactions. Now we have to use an Exxon controller for gas authorization, AND our 7-Eleven POS for accepting cash or processing a credit card transaction. Many of us, in essence, have gone from operating an integrated store to running a non-integrated store.
Unlike acquisition stores, existing gas franchisees bought a simplified model when they franchised their gas stores. We all paid some sort of gas fee, and we expect some ROI from the gas side of the operation. The current gas commission model is barely a breakeven model, and this most recent change shifts additional burden to the franchisee side. It’s a different story if you purchased a store newly acquired by SEI that already sells ExxonMobil gas (not that it makes it right), because you know what you’re getting yourself into. If you’ve had your store converted, you have no choice, and you’ve pretty much been blindsided by the effects of the change.
Now it takes double the time to complete a gas transaction, because there are more steps inside the store. End of Shift (EOS) and End of Day (EOD) are also more time consuming because now we have multiple steps. Prior to this, we did EOS and EOD at one register. Now we have to do it on two systems—the 7-Eleven system and the ExxonMobil system, which is called Passport. It also takes more time to do the Cash Report.
Gas variations and chargebacks never happened with the integrated system, but now they are becoming more common. For example, with an integrated system, if a customer comes in and buys $20 worth of gas, the store would ring $20 on Pump 5 and put the $20 in the register. Now, with a non-integrated system, when a customer comes in to purchase $20 worth of gas we take his money and we have to go to the ExxonMobil controller and authorize the pump. Then we have to walk to the 7-Eleven register and ring up $20 worth of gas and put the money in. What happens if my clerk decides to put the $20 in his pocket or if he makes a mistake? In the integrated system, there was a zero percent chance of having a variation.
We don’t make enough money on gas to compensate for gas variations. We make 1.5 cents per gallon commission. If I sell 1,000 gallons, I make $15. An average store in Chicago will sell about 3,000 gallons per day. That’s not a lot of money in commission—about $45. Another point of discontent is that SEI will make adjustments on the Cash Report without notifying us. If we have a gas variation they just go ahead and make an adjustment.
Furthermore, with the dual register system, the speed of service we provide our customers has decreased. It takes more time to run two registers, plus the ExxonMobil SpeedPass doesn’t work, so that’s a big hassle for the new ExxonMobil customers coming into our stores. SEI is aware of these issues and is committed to a fix in 2018, but won’t give us a specific date.
In the meantime, this conversion is costing us. Our franchisor says the inconvenience is temporary. SEI should say, “We understand that it’s costing you, but we’ll compensate you.” They should say, “Until you are fully integrated in 2018, we will compensate you X amount each month.” Why should we have to ask for that? SEI knows it is costing us and should make us whole.
I am suggesting we work together to take care of the bugs in the existing stores before we roll this out across more markets and also make sure that there is no negative effect financially on the franchisees and no material change in our gasoline operation and relationships. SEI made a unilateral decision to convert our gasoline, so they should either compensate us until they fully integrate us, or delay the rollout until they can integrate ExxonMobil’s system with ours. SEI’s job now is really not to go backwards but to go forward. It is to create the kind of “simplified” store operation that we know will align with our principles of “Servant leadership.”