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The Big Bite on QSRs

In fact, according to Lankford’s calculations, just five out of every 100 franchisee-applicants who meet the initial qualifications are ever awarded stores.

Many of 7-Eleven’s outside applicants have never worked in a convenience store, are college-educated, and are leaving well-paying jobs to pursue the dream of owning their own business.

“I’m finding people from all kinds of backgrounds,” Lankford says. “They’ve had success in their life, but they’re looking for a change.”

One of the largest stores in the Dallas subgroup was franchised last year by just that kind of investor. Retired NFL player Donald Mitchell holds a business degree that he always assumed he’d use to climb the ladders of corporate America after his football days were over.

“Owning a convenience store never crossed my mind,” Mitchell says. “Then a few years after I stopped playing, I started thinking about how to best invest some of the money I made.”

Mitchell says that as he explored opportunities, 7-Eleven shined.

“The level of support they offer franchisees is unparalleled,” he says. “They put investors like me with no convenience-store experience into a six-week intensive training program before we ever set foot in a store. Then once we’re in the store, the computer system is there to help guide your decisions. Having that kind of infrastructure, it’s the only way someone like me could ever be successful off the bat.”

Since Mitchell franchised the store, sales are up almost 30 percent. In June, he was honored for having the largest sales increase of any store in his territory during the last quarter.

“Buying a 7-Eleven was one of the best decisions I ever made,” Mitchell says.

And he might soon be buying a second store. Part of 7-Eleven’s new growth strategy includes aggressively purchasing existing stores from gas companies who want out of the c-store business. 7-Eleven most recently purchased 29 Shell stations in the Dallas area.

And it’s also pursuing the little guy. Through the company’s Business Conversion Program, existing convenience stores can be changed over to 7-Elevens for a $25,000 franchise fee.

“Independent store operators can leverage the 7-Eleven brand for their backcourt solution with a system that provides ongoing support, proprietary products, and a retail-information system to better manage and grow their business,” Phelps says.

All in all, the company wants to increase the number of franchises nationwide to more than 7,000 by 2010.

Neither Mitchell nor Ngyuen says he was surprised when 7-Eleven was recognized as the No. 1 franchise opportunity according to Entrepreneur magazine’s 2008 rankings.

“Last year I made double the money that I made as a manager,” Ngyuen says. “And that was in just the first 10 months.”

Total start-up costs for 7-Eleven franchisees are usually around $150,000. Mitchell says he plans to make that back in the first two or three years of ownership.

Sometimes I will give a customer a whole sandwich to try. It’s a $2 investment that might help me gain a customer for life.”

“With our system you don’t have to have a lot of money to own your own business and live the American dream,” Lankford says.

More of the Unexpected

As for the brand’s long-term plan: “In the next five or 10 years, we’re going to be more of a convenience café,” Lankford says.

By offering a broader assortment of prepared foods, 7-Eleven wants to be not just your pit stop for lunch, but your go-to for dinner.

“You’ll be able to buy a ready-made lasagna and salad, everything you need for dinner,” Lankford says. “We’re fulfilling the needs of the ever-increasing number of time-crunched Americans.”

The company also believes that through its now fully franchised system, consumers will be more likely to find what they’re looking to buy at nearby 7-Eleven stores.

“Franchisees often live in their store’s neighborhood,” Lankford says. “They track your tastes and carry what you want.”

According to Lankford, the 7-Elevens of the future will look more like the prepared-foods section of a high-end local grocer.

“Nice wines, fresh-baked pizza—it’s not what you think of when you think of convenience stores,” Mitchell says. “But it is what they’re becoming.”

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Lina Wright is a Dallas-based business writer.