As the world’s largest convenience retailer, 7-Eleven attracts attention whenever it undertakes a significant initiative. But the Irving, Texas-based company has had a particularly fascinating 2024, during which it experienced several peaks and valleys both domestically and abroad.
7-Eleven shot out of a cannon at the start of the year with a major acquisition, only to experience significant financial setbacks as it faced mounting economic challenges brought on by inflation. It’s also in the midst of a takeover attempt by its biggest competitor in North America, as well as facing a potential management buyout and initial public offering.
Here’s a recap of 7-Eleven’s unpredictable and busy 2024.
Taking control of Stripes
7-Eleven kicked off 2024 with a bang when it agreed to acquire 204 Stripes convenience stores across Texas, New Mexico and Oklahoma from Sunoco for about $1 billion in January. The deal, which closed in April, cemented 7-Eleven’s full ownership of both the Stripes and Laredo Taco brands, which it had partially controlled since 2017. It also marked 7-Eleven’s largest acquisition since it bought 3,800 Speedway stores across 36 states in 2021.
About a week after the agreement was announced, 7-Eleven President Stan Reynolds said these locations would add $110 million in store-level forward EBITDA within five years, along with $90 million in operating income. He added that 7-Eleven would leverage its proprietary fresh foods, beverages and private brands to increase and improve the product assortment in these stores.
Anticipating economic challenges and reshifting store focus
Even as it boosted its c-store network in the U.S., 7-Eleven was well aware of the challenges ahead. During parent company Seven & i’s earnings call in April, 7-Eleven CEO Joseph DePinto said he expected inflation to continue tightening consumers’ pockets.
Despite this, DePinto expressed confidence in a few initiatives 7-Eleven was taking on. Those included remodels to store exteriors, merchandise resets and its ongoing food and beverage modernization program, which included 7-Eleven updating its coffee programs and baked goods, roller grill and grab-and-go products.
Ramping up discounted foodservice
7-Eleven wasted little time getting out front with its focus on foodservice and combatting inflation. In July, the company launched four new food items and three beverage options under its 7-Select private label brand. These included chicken nuggets, taquitos and breakfast pizza, as well as new juices and teas.
About a week later, the company rolled out pizza slices and bags of its private label gummies for $1 to celebrate its birthday, also known as Slurpee Day. Unlike in previous years when 7-Eleven’s birthday deals were made available only to loyalty members, these discounted deals were offered to all customers — a sign that leadership was continuing to feel the heat from inflation.
7-Eleven would continue this strategy later in the year with its $5 meal bundle.
Dealing with Couche-Tard’s takeover bid
7-Eleven’s year took an unexpected turn when Alimentation Couche-Tard, parent company of Circle K convenience stores, submitted a bid to acquire Seven & i back in August. Seven & i’s board of directors formed a special committee to review the $39 billion proposal, which it rejected just a few weeks later.
But Couche-Tard didn’t give up. It submitted a revised offer, which Bloomberg reported could be as high as $47 billion, in early October. This offer was then countered by a reported $58 billion buyout proposal from one of Seven & i’s top executives, along with one of the company’s largest shareholders. If accepted, this deal could also take 7-Eleven’s North American arm public.
When Couche-Tard revealed the bid in August, experts said that the chances of a deal commencing were slim. Months later, that sentiment hasn’t changed, especially in the aftermath of the proposed management buyout, which appears more likely.
“That avoids the whole issue as it relates to Japan not wanting a foreign company to own one of their national champions,” said Bruce Windor, a Canadian retail analyst.
Closing hundreds of c-stores in North America
The impact of the economic challenges DePinto discussed in April reached a climax in October, when 7-Eleven revealed plans to shutter 444 convenience stores in North America, including in the U.S., due to underperformance. The retailer also shared at this time that it intends to sell $750 million worth of property in North America via sale-leasebacks due to financial and operational headwinds.
DePinto blamed this underperformance on several factors, most notably “inflation-weary and pressured U.S. consumers and a decline in industry-wide cigarette sales.” He added that although these challenges have hindered 7-Eleven’s sales and merchandise gross profits across its entire business in North America, they’ve been especially damaging to its U.S. segment.
As a result, 7-Elven dropped its fiscal 2024 operating income forecast by nearly 28%, from $2.9 billion to $2.1 billion, DePinto said at the time. He added that 7-Eleven will aim to cut $500 million in operating costs in North America by the end of the calendar year — up from the $350 million in savings targeted earlier this year.
Introducing a new c-store design for the future
Less than two weeks after announcing those closings, 7-Eleven outlined plans to open over 600 large-format, food-focused locations in North America by the end of 2027. The company expects to have 115 of these locations by the end of the year, then build 125 of them next year, 175 in 2026 and 200 in 2027.
These locations will showcase a new prototype the company internally calls its New Standard stores that offer “a larger product assortment and expanded food and beverage offerings” compared to the rest of its locations — as well as in-store seating and electric vehicle charging stations — DePinto told investors at the time.
While it’s unclear how many New Standard stores are currently operational, DePinto said the ones that are open have provided 7-Eleven with an 11% return on invested capital. He added that these locations are outpacing 7-Eleven’s existing store network sales average by 13% in the program’s first year.
“Our new stores are food and beverage forward, and our customers appreciate them, and the stores continue to improve,” DePinto told investors in October.
