7-Eleven Turns QSR

7-Eleven, the 77,000 location convenience store brand known for its Slurpees and Big Gulps, is meeting changes in the marketplace head-on with unique innovations to its 94-year-old brand.

7-Eleven started in Dallas in 1927. Its concept was simple — to be a miniature grocery store where you could pick up essentials like milk and bread at your convenience. As the years went on, 7-Eleven held true to its core branding and became the go-to place for gas, smokes and Cokes. 

Now, convenience stores sales make up 35% of all retail nationwide, with 165 million Americans visiting stores like 7-Eleven every day.

In recent decades, however, consumers have increasingly demanded more convenience and higher quality, pressuring brands like 7-Eleven to take things to the next level. Doing so has led to the explosion of the QSR (quick service restaurant) industry, where customers can get the same experience as a sit-down restaurant at a fraction of the price and speed, conditions only exacerbated by the pandemic.

7-Eleven took notice and capitalized on the opportunity, launching its first Evolution Store in 2019, which adds new offerings like quick service restaurants, bakeries, coffee bars and craft beer filling stations to the brand’s traditional services. There are now eight Evolution Stores nationwide with plans to open another 10 this year.

1851 Franchise spoke with 7-Eleven Executive Vice President and Chief Operating Officer Chris Tanco about how 7-Eleven is maximizing the current state of the QSR industry to change convenience stores as we know it.

1851 Franchise: How did the pandemic affect 7-Eleven? What kind of adjustments were made to ensure franchisee success?

Chris Tanco: Early on, the entire industry saw two big changes in consumer behavior. Many people stopped going into work every day and as a result, we saw a drop off in those pre-work visits when our customers would pick up coffee and a breakfast snack to take to the office. We discovered that while our customers were making fewer trips to our stores, they were buying more items, and the average basket size increased significantly as people looked to spend less time outside of their homes. Many people felt safer going to their local 7-Eleven than they did a crowded big-box retailer. We also saw an increase in visits later in the day as people working from home got antsy in the afternoon and used picking up a drink or snack from 7-Eleven as a reason to get out of the house.

During the pandemic, we made several adjustments to our business and stores to ensure Franchisee success. We put the safety of our employees, Franchisees and customers first by enhancing health and safety measures, enforcing social distancing and encouraging employees who had fallen ill to stay home with pay. We made sure that a steady supply of products stayed available for customers, so they could get what they needed, making 7-Eleven a go-to destination for essentials like toilet paper, soap, hand sanitizer, over-the-counter medicine and various pantry items. We also made sure that our Franchisees remained financially stable by providing $185 million in Franchisee COVID-19 support, adding 90,000 jobs to meet increased demands, investing in clean and safe stores, funding sales acceleration promotions and more.

1851: How do you feel about the convenience store segment’s reaction to the pandemic?

Tanco: While we didn’t foresee a global pandemic in 2020 and the ways it would change the way people interact across the world, we did anticipate that technology would ultimately play a greater role in everyday convenience. Since we were classified as an essential business during the pandemic, we found our customers shopping at 7-Eleven for groceries and other household items to avoid the large crowds at big-box stores. We’re anticipating that customers will continue to rely on 7-Eleven for a variety of everyday essentials long after the pandemic has passed. We see this being the case for both in-store and digital shoppers and are fully prepared to innovate and adapt with our customers’ changing needs for years to come. 

The pandemic most definitely accelerated some of the plans we had in the pipeline such as delivery, mobile checkout and more that we don’t see going away with redefined levels of convenience. Through our proprietary 7NOW delivery app, we offer best-in-class delivery of food, convenience household essentials and groceries to our customers in around 30 minutes or less. Mobile checkout, available at 3,000 participating 7-Eleven locations on the East coast and across the country, offers our customers a seamless and touchless way to pay and the ability to control their end-to-end shopping experience. And with the 7-Eleven Wallet in the 7-Eleven app, members can load funds, get exclusive offers, redeem rewards and pay using their loaded funds. These innovations offer added convenience that customers are soon going to expect from all retailers.

1851: 7-Eleven is expanding into the QSR space with the launch of another Evolution Store and locations with in-store restaurants. What was the motivation for doing this and what are the end goals?

Tanco: 7-Eleven has always thrived off of innovation and taking advantage of opportunities in front of us — just look at our history of offering groceries from an ice dock during hours when local grocery stores were closed. That spirit of innovation has stayed with 7-Eleven throughout the years, and we continue to evolve to cater to customers’ rapidly changing needs. Today, we see that need – and opportunity – in the QSR space. Every Evolution Store includes one of our restaurant concepts – Laredo Taco Company or Raise the Roost Chicken & Biscuits – and consumers’ positive responses have exceeded all our expectations. That’s why we will continue to raise the bar for convenience at our Evolution Stores.

1851: Are there risks associated with breaking into the QSR space? How is 7-Eleven heading off those risks?

Tanco: Consumer feedback has been positive with the addition of more food options from 7-Eleven stores. Since QSR growth has been in place at 7-Eleven before the pandemic fueled a change in our customers dining habits, the risk and challenge for us was not how to break into the QSR space, but when and how to expand most effectively for our customers. We have successfully done so by adding to the roster of stores with on-site restaurants and by introducing an even more convenient dining experience for our guests, especially with our drive-thru Laredo Taco Company location in Dallas.

1851: What do you see for the future of the QSR space? Why is now the time for 7-Eleven to break in?

Tanco: These days, customers are looking for a one-stop shop for all their needs, and 7-Eleven checks off all the boxes — whether that be food and beverage, fuel for their car, household essentials and more. While there is a battle for market share in the QSR industry, I believe 7-Eleven is well-positioned to enter the competition in a big way. Throughout COVID-19, we saw an increase in traffic as customers choose to stop at their neighborhood 7-Eleven stores over big-box retailers for convenient and safe shopping. Their dining habits have changed too, and we saw that first-hand in our own on-site QSRs. COVID-19 brought us to this inflection point, and we are taking advantage with more aggressive growth in rolling out our restaurants across the country, and we plan on opening nearly 150 restaurants this year.

1851: What does the next year look like for 7-Eleven franchising?

Tanco: For the remainder of this year, we plan on continuing with our aggressive growth, including completing our acquisition of 3,800 Speedway stores. With significant growth comes more opportunities for current franchisees to franchise more stores. At 7-Eleven, we are focused on giving the customer what they want, when and where they want it. We will continue to use that mentality to drive us forward and meet customers where they are.