7-Eleven By The Numbers


As I write this, SEI is gearing up for a series of so-called Town Hall Meetings across the country, the apparent purpose of which is to somehow convince existing franchisees how wonderful it is to be a franchisee and why franchisees should be grateful for the franchise agreement they have, notwithstanding the pervasive control the company exercises over every aspect of store operations. When I think of that pervasive control, my mind drifts to some of the lyrics of one of my favorite Sting songs:

“Every breath you take
Every move you make
Every bond you break
Every step you take
I’ll be watching you.”

I have good reason to believe that these Town Hall Meetings will also attempt to demonstrate the advantages of the 7-Eleven franchise agreement and system over other similar systems. Attendees should beware of these apples and oranges comparisons. Moreover, they should be suspicious of a company deep into the preparation of a new 2019 franchise agreement, which has refused to negotiate or meaningfully collaborate with its own Franchise Agreement Committee or any other group of franchisees, yet claims not to have made any final decisions regarding its terms and conditions. SEI is treating the terms and conditions of the new franchise agreement with the same kind of secrecy it applies to its supply chain contracts but should only be reserved for nuclear launch codes.

Beyond the hype, the PR and the manipulation of expectations on the part of franchisees and prospective franchisees, the numbers tell a very different story. So here is part of the story told by the numbers as reported by SEI in its franchise disclosure documents and by its publicly held parent company, Seven & I Holdings, in its financial and securities reporting. I visit their website often, because it contains a lot of information that SEI would prefer you not have. See: http://www.7andi.com/en/ir/index.html


  • $164.4 Million—That’s how much SEI’s gross margin from fuel rose from 2013 to 2016, notwithstanding a $3.88 billion or 27 percent decrease in fuel revenue. How do you increase gross margin dollars with declining fuel revenue? The answer is obvious: increase prices at the pump.
  • 9.61 Percent—This was SEI’s gross margin on fuel as a percentage of revenue in 2016, which has risen from 5.53 percent in 2012 to 6.28 percent in 2014 to 8.42 percent in 2015, before jumping again to 9.61 percent last year.
  • 29.4 Percent—The increase in fuel sales for the first six months of 2017 over the same period of time the year before. Contrast this with an 11 percent increase in gallons pumped over the same timeframe.
  • 20.91—SEI’s margin on fuel sales measured in cents per gallon for the six months ended June 30, 2017, up from 19.2 cents during the same six-month period the year before.
  • 44.8 Percent—The percentage of SEI’s total revenue derived from the sale of gasoline products for the six months ended June 30, 2017, up from 39.2 percent for the same period the year before. These numbers, of course, do not include results from the 1,100 Sunoco gas stations, the closing of which was expected to occur by December 31, 2017.

Do you need any more proof that SEI is gradually becoming a gasoline company than its pricing strategy emphasizing gross margin over gallons?


  • 86.9 Percent—The percentage of domestic stores that are franchised, the highest percentage perhaps in the recent history of the company, up from 79.3 percent in 2012. As of December 31, 2004, 60 percent of the stores in the United States were franchised. In this space, we repeatedly opined that SEI is jettisoning company stores in order to flee the consequences of rising minimum wage costs and declining merchandise gross margins, exacerbated by overpriced fuel prices in gasoline stores. In its message to investors, the parent company explicitly ties increase in profitability to an increase in both the percentage of franchised stores and gasoline gross profit.
  • 28.87 Percent— The gross margin percentage of all company-owned stores in 2016, down from 32.29 percent in 2010.
  • $198 Million—This is the decline in company store gross margin dollars from 2013 to 2016, a decrease of 21 percent.
  • 1.5 Percent—This is the amount by which same-store sales increased for the six-month period ended June 30, 2017 over the same period the year before. As of June 30, 2016, the same-store sales increase was 3.2 percent over the previous. Thus, the increase was more than cut in half.
  • 7.1 Percent—This is the amount by which SEI’s operating income increased during the same period of time that same-store sales were increasing by only 1.5 percent.
  • 34.4 Percent—The merchandise gross profit margin for all U.S. stores for the six months ended June 30, 2017, down a full 1/2 of 1 percent over the same six months in 2016. For that same six-month period ended June 30, 2017, total SEI store sales were $1,518,799,000. This latest gross profit margin decline resulted in a loss of $7.6M in gross margin at the store level.
  • 47.6 Percent—The percentage of SEI’s total capital expenditures devoted to existing stores in 2015 for refurbishment, remodeling and equipment replacement. That percentage dropped to 29.9 percent in 2016 and 22.2 percent in 2017.
  • 63 Percent—This is the percentage of the total capital expenditures of the parent company devoted to SEI as projected for 2018. This in part reflects the $1.1 billion investment in the Sunoco stations, but pales in comparison to reinvestment in franchise stores, which have greater and greater challenges in competing with modern and gleaming new stores operated under other brands, such as Wawa, Race Trac and others.
  • $2.9 Million—The price agreed to be paid by SEI on average for each Sunoco station.
  • $21,975—The average projected property and equipment capital investment in existing stores that was budgeted in 2016. That’s 7/10 of 1 percent of the amount that SEI is spending on average to acquire the Sunoco stores.

If you attend one of these Town Hall Meetings, please keep these numbers in mind. Ask good questions. Do not assume that anything you are told is necessarily true. Support your local FOA and the National Coalition. Stay united. Protect your investment.