7-Eleven takes big gulp of more healthful fare
Convenience-store chain 7-Eleven is restocking its shelves with an eye toward changing consumer choices.
The New York Times
The chain that is home of the Slurpee, Big Gulp, and self-serve nachos with chili and cheese is betting that consumers will stop in for yogurt parfaits, crudities and lean turkey on whole-wheat bread.
The convenience-store chain 7-Eleven is restocking its shelves with an eye toward health. Over the last year, it has introduced a line of fresh foods for the calorie conscious and trimmed down its more indulgent fare by creating portion-size items.
The change is as much about expanding waistlines as the bottom line. By 2015, the retailer aims to have 20 percent of sales come from fresh foods in its U.S. and Canadian stores, up from about 10 percent currently, according to a company spokesman.
“We’re aspiring to be more of a food and beverage company, and that aligns with what the consumer now wants, which is more tasty, healthy, fresh food choices,” said Joseph M. DePinto, the chief executive of 7-Eleven, a subsidiary of the Japanese company Seven & i Holdings.
Convenience stores have typically been among the most nimble of retailers. In the 1980s, they added Pac-Man arcade games as a way to keep customers in stores longer buying more merchandise. They installed ATMs a decade later, taking a slice of the transaction fees.
More recently, they built dairy cases for milk, eggs, cheese and other staples.
But just as they have taken business from supermarkets, convenience stores have faced increased competition from the likes of Dunkin’ Donuts and Starbucks, which offer a basic menu of fresh foods for consumers on the go. At the same time, a major profit driver for convenience stores — cigarettes — has been in steady decline over the last decade as the rate of smoking has dropped in the U.S.
Fresh foods can help offset some of those losses. The markup on such merchandise can be significant, bolstering a store’s overall profits. It’s also a fast-growing category.
“If you can figure out how to deliver consistent quality and the products consumers want, fresh food is attractive because margins are higher, and it addresses some of the competitive issues you’re facing,” said Richard Meyer, a consultant for the convenience-store industry. “But it’s not easy to do.”
Fresh food has been sold at 7-Eleven since the late 1990s. But much of the chain’s innovation has been limited to the variety of hot dogs spinning on the roller grill or the breakfast sandwiches languishing beneath a heating lamp.
As 7-Eleven refocuses its lineup, it has assembled a team of culinary and food-science experts to study industry trends and develop new products.
Such groups have been around for a while at fast-food restaurants like McDonald’s and packaged-goods manufacturers like Kraft. But it’s a relatively new concept for players like 7-Eleven, which have typically relied on their suppliers to provide product innovation.
“We’re working to create a portfolio of fresh foods,” said Anne Readhimer, senior director of fresh-food innovation, who joined the company in May from Yum! Brands, where she had worked on the KFC and Pizza Hut brands. “Some will be for snacking, some for a quick meal, but we hope everything we offer our guests is convenient and tasty.”
One new menu item just hitting stores is a Bistro Snack Protein Pack, which includes mini pita rounds, cheddar-cheese cubes, grapes, celery, baby carrots and hummus. The meal in a box, similar to one carried by Starbucks, is part of a broader menu with more healthful items under 400 calories.
The company is also taking existing products and retooling them for single portions. For example, customers can now buy mini-sized jelly doughnuts and tacos.
The fresh food comes from 29 commissaries and bakeries that fulfill orders from 7-Eleven. They tailor menu items for specific markets.
In the Miami area, they produce a hot Cuban sandwich with ham, cheese, pickles and mustard. The Turkey Gobbler with turkey, stuffing and cranberry sauce sells in the Northeast around the holidays.
Each store has a data system that allows it to see exactly what is selling, which helps manage waste. Stores can track consumers’ purchase habits over a month, and adjust their orders based on those behaviors.
“In this 28-day cycle, I know I sold 3,563 bananas to customers in this store,” said Tom Ferguson, who owns five 7-Elevens in Las Vegas.