Presidents Message – March 2016

In the Summer of 2015 Joe DiPinto and his senior management team attended the FOASC members meeting and announced the planned remodeling of the Greater Los Angeles zone stores. The program “ETA” (Expand The Assortment) was later added to the remodeling plans. Phase one has since been completed, and the second phase of the remodeling, including the ETA project, will begin soon.

The remodeling projects consist of relocating central sales counters against the wall, new floors, taller vault doors, new exterior store signs (if permitted by local ordinance), new wall coverings and electronic hot foods menu. If a particular store does not need remodeling only the ETA component will take place.

The Greater Los Angeles franchisees are excited about hot food expanding into chicken sandwiches and hot melt sandwiches. We are aware cigarette and beer sales are declining lately so the effort is to replace those lost sales with other items, such as fresh food. The culture of 7-Eleven has been to stock shelves and ring sales with minimal labor. Under those conditions the stores can be managed with a GP of 35% or more. However, with the introduction of sandwiches and hot melts, which will expand to cheeseburgers, the entire operation is more labor intensive. We would therefore like to see a higher GP in these categories. Also, because these are new products launching in the stores, much of the public is not fully aware that they are available. We would like to see aggressive advertising and increased display space so that our guests can be enlightened to the existence of these products and have a fair opportunity for purchasing them. The strategy as it currently exists will have excessive write-off’s which will likely lower overall GP. We are therefore requesting that 7-Eleven corporation assume more of the write-off’s for the initial months following the launch of these new products so that the franchisees, in fear of losing GP, will not be reluctant to have a full display of these new products.