Recap of ZLC Meeting – Thursday May 11th – Brea, CA

As we are aware, GP % is down in the month of April. This GP decrease varies from 1 – 6% in each store. If the store has the low 1-2% it is because of the $2 per pack excise tax on tobacco. We have increased the retail $1.75. So stores are losing $0.25 per pack contributes to the low GP. We have communicated with 7-Eleven that we believe there should be a minimum $0.25 retail to offset the lower GP.

The reasons for the decrease in GP above 2% is as follows:

1. Many stores have reported incorrect retail increase on cigarettes. For example, if the store has 100 packs, cost went up $2/pack which is $2,000 and retail went up $1.75/pack which should be $1,750 but many stores reported retail as 0. This mistake has been caught and corrected.
2. The Value 2-Pack cigarette retail was not been corrected last month, but it is being corrected in the month of May. The store will see higher profit depending on amount of 2-pack cigarettes in the store. 7-Eleven will automatically correct, the franchisee is to do nothing.
3. If he store got a delivery on the Friday, March 31^st (the day before the cigarette excise tax went into effect)
4. McLane has the right cost, but incorrect retail price. That will also be corrected by 7-Eleven during the month of May.
5. If the store has placed pre-book orders at SEE, the cost has been corrected but the retail has not. Another fix 7-Eleven will take care of in May.
6. Despite our disagreement, maintenance cost has gone up.