On July 6, Convenience Store News reported "7-Eleven's U.S. Retail sales were $8.513 billion in 2010; a 3.1% increase from 2009. U.S. Store Count in 2010 was 6,586; a 5.5% increase from 2009".
It's not good to have a 5.5% in stores, but only have a 3.1% increase in sales... Breaking this down:
Avg. per store sales in 2010 equals $1,292,600. This is DOWN 0.22% from the 2009 per store average of $1,322,700.
7-Eleven corporate is "heavy with cash, and low on debt" - so they are in a position to hide sales declines simply by opening new stores - which only put an increased burden on existing and new franchisees in the system by making it more difficult for them to earn a decent living. Meanwhile, 7-Eleven is making money on all of these franchisee's backs.
Consider an average store generates about a 36% gross margin, and that this gets split with 7-Eleven. Based on the 2010 sales average, this results in a U.S. average store Franchisee gross income of $232,600.
From this gets subtracted Payroll Expense, Inventory Shortage, Credit Card Fees, Equipment Maintenance Fees, etc. etc. - totaling (if your lucky) approximately $200,000.
This (again, if your lucky) leaves the franchisee with about $30,000 a year for their work - this after them having invested approximately $150,000 in franchise fees (not including merchandise costs) to become a "partner" with 7-Eleven.
Consider some recent quotes from Franchise Owners Advisory Council (FOAC) Board Members from around the country:
* "A single store no longer generates enough profit to allow the franchisee to earn a decent living."
* "In recent years, SEI has had their way with every initiative they have ever wanted to
implement. I, along with the thirty-eight FOA presidents that represent our members,
have spent time and money traveling to great locations around the country to discuss
these initiatives. We have let SEI know of our displeasure with little to no response, nor
any concern for our bottom line. It has become quite obvious that SEI is more interested
in improving their bottom line by removing cost from their side of the ledger and moving
these costs to our side."
* "7-Eleven has made many promises of cooperation of involving franchisees in business decisions,
but these promises have continuously been broken."
* "Maintenance Contractors brought in by 7-Eleven has been a disaster for franchisees setting us
back years from where we had been."
* Business Transformation, or BT as it’s known, has not yet yielded the improved gross profit as
promised. And now after one year, it is up to the franchisee to make it profi table as SEI has no
intention of stopping the roll out to other markets in the future. I can’t understand their reasoning,
as it has only placed another burden on stores to put away and rotate more products that our vendors
had done in the past. Is it just more control of your purchasing at any cost?"
