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QSR Feature
The Big Bite on QSRs

“Parents will pick their kids up from school and stop by here,” Ngyuen says. “They may spend just $10 on snacks for three, four, or five kids. They say there’s no other place where they can feed that many for $10.”

In fact, you can get a small Slurpee or fountain soda at Ngyuen’s 7-Eleven for less than $1. A small coffee or cappuccino will cost you $1.09. A Big Bite is $1.19 (that includes the chili and cheese toppings). And the average price for a sandwich is just more than $3.

“You can get a whole meal here for $4,” Ngyuen says. “You can get little at Starbucks for that.”

And we haven’t yet mentioned promotions. Some of the most popular in the past year have included two Big Bites for $2, a quarter-pound Big Bite and a Big Gulp for $1.99, and “Buy a coffee, get a free banana.”

“I think nowadays Subway knows,” Ngyuen says as he points down the street, “7-Eleven is competition.”

7-Eleven knows for certain McDonald’s does. The world’s largest chain of fast-food restaurants designed a summer promotion to help their franchisees win customers from convenience stores—they were urged to sell soft drinks for just $1.

“We believe customers do see the value that 7-Eleven offers, especially in these tight economic times,” Phelps says.

McDonald’s refused to comment about its promotion or why it was conceived, but industry analysts say many fast-food customers order a burger and then head to a convenience store for a drink—not just because of price, but variety, too.

“A typical 7-Eleven store carries about 300 kinds of drinks in its vault,” Phelps says.

It’s no wonder McDonald’s and some of its fast-food rivals have also recently started introducing bottled beverages to better compete.

Fresh Faces

Food isn’t all that’s fresh at 7-Elevens across the country, so are more than a thousand of its franchisees. Although the company began selling stores in the ’60s, it wasn’t until 2007 that it announced it would become fully franchised.

“We now know that having business partners with the entrepreneurial spirit outperforms the system of having corporate-paid store managers,” says Tim Lankford, 7-Eleven’s franchise sales manager.

It’s a lesson the company learned from its Japanese subsidiary-turned-parent company Seven & i Holdings Co. In the mid-’70s, the Japanese group purchased and opened its first franchise in the island nation. By 1991, it franchised more than 4,000 stores throughout the tiny country (which is roughly the size of Montana). And when 7-Eleven, its then franchisor, was in financial turmoil that same year—Seven & i Holdings Co. purchased a controlling share of the company.

“They grew strong and wealthy by franchising stores,” Lankford says of the corporation that now has more than 12,000 franchises throughout Japan, “and they wanted to see the same happen here.”

In 2007, 7-Eleven Inc. announced it would not only franchise all of its company-operated American stores, it would also open an additional 1,000 locations in the U.S.

Ngyuen, who at the time was a 7-Eleven manager, says he quickly heard rumblings the store he’d been running for more than a decade would soon be one of the nearly 200 made available to franchisees in Texas.

“Right away I thought, ‘Wow, that could be a great opportunity for us,’” Ngyuen says, an immigrant who spoke little English when he first started with 7-Eleven 22 years ago.

All corporate stores in Utah, Colorado, Texas, Virginia, and Florida were initially offered to managers like him.

“I knew if I bought it, I would make it an even better store,” Ngyuen says. “When I came to this country from Vietnam, I could have never dreamed of owning something like this.”

About 75 percent of available stores were franchised by existing store managers. The rest were made available to anyone. That is anyone who can pass a math-based exam, put together a comprehensive business plan, and impress in a series of interviews.

“The rigorous multi-step process can take four to six months,” Lankford says. “It tells us whether or not the candidate has the business sense, the people skills, the determination, and perseverance to own a 24-hour operation.”

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