7-Eleven wins bid to acquire Speedway

[veteran+]

Here in SoCal, in the last 1-2 years I've seen 5 new 7-11's open with Sinclair gas stations. Sinclair is a brand I'm not familiar with but the gas is MUCH cheaper than anything near by, sometimes by .40 or more.

I've generally noticed the 7-11 here are close by each other (a mile or so apart) but all are very busy during the morning and "after work" hours. All that I've been too are very well run and seem to do a good volume.

These stores/stations are located in very busy and highly visible locations.

Yeah, I have seen that as well.

Very clean and well run! They are the cheapest gas around.

Little tid bit:

Sinclair was mostly on the east coast early on. My dad owned 5 stations in NYC. I used to work there as a kid on the weekends and earned lots of tips pumping gas and cleaning car windows.

We used to sell a lot of Dino the dinosaur products!

lol

[mbz321]

This valuation is nuts and 7-Eleven seems to be way overpaying but they are obviously desperate for a deal and desperate to show growth in the US. 7-Eleven is playing catch up for not acquiring as actively in the 00's. The real issue with 7-Eleven is its network being primarily franchised and primarily old run down sites that are in poor neighborhoods, poor condition, dirty, and overpriced. 7-Eleven has been being chased out of markets and relegated only to poor low traffic locations when markets have penetration of legitimate c-store operators with larger newer sites like Quik Trip, Wawa, Sheetz, newer Circle Ks, and others. Speedway was in a similar position, but countered this by running stores with competitively priced products despite not having the newest stores.

Exactly. I live in Wawa territory and 7-11 is definitely the underdog. Old stores that are just meh and very few that sell gasoline. Although I'm still puzzled about what is going to happen to all these old franchised stores as Sunoco is the dominant gas brand (after Wawa) in my region. I've only seen one APlus in my travels that has converted to 7-11 (funny enough, only a couple blocks over is a still operating old 7-11). Now with Speedway in the mix, there is tons of overlap between the three. And many of the Speedway stations are nothing more than a small kiosk to pay at (old Hess sites).

[jamcool]

The average 7-11 is a dump (at least in Phoenix)and the franchisees are in constant battle with the parent company. It makes you wonder by buying Speedway they will dump the problem franchises.

[storewanderer]

The average 7-11 is a dump (at least in Phoenix)and the franchisees are in constant battle with the parent company. It makes you wonder by buying Speedway they will dump the problem franchises.

They can't really dump those problem franchises. They own and control all of the real estate and equipment on those franchise sites. And they have a steady stream of franchisees to come in and take over stores when a franchisee gets mad enough to bolt.

The model is profitable for 7-Eleven to run them this way. If it was more profitable for them to run these as corporate operated sites they would. There are reasons why they use this franchising model. Get the franchisee to "own" the store and work in it 16 hours a day, use their family to staff it too. The right location can be very profitable for the franchisee to do this. You can't do that type of stuff with a corporate operated site. So the franchisee will buy the site, run it for a few years, but ultimately get tired of such an intense schedule, then sell it off to the next franchisee and go pursue some other business interest. Maybe a non-franchise c-store they can run on their own terms (not 24 hours, not with shrink intensive hot food, etc.).

[storewanderer]

Looks like 7-Eleven will be doing about $5 billion in "sale-leaseback transactions" to pay for Speedway.

Interesting as I think one of the ways 7-Eleven has survived over the years in the United States with its lousy operations and old sites is since they own the real estate so they do not have rent expense...

[pseudo3d]

So what I'm curious is how many of these are old sites. When 7-Eleven acquired Sunoco's retail operations (still not integrated fully, despite 7-Eleven products sold at the stores), many of the Stripes stores (at the time of the acquisition) were nice, new stores that were less than a decade old. Since Speedway acquired the Hess stores not too long ago, I imagine they haven't had the chance to weed out outdated stores.

[BillyGr]

So what I'm curious is how many of these are old sites. When 7-Eleven acquired Sunoco's retail operations (still not integrated fully, despite 7-Eleven products sold at the stores), many of the Stripes stores (at the time of the acquisition) were nice, new stores that were less than a decade old. Since Speedway acquired the Hess stores not too long ago, I imagine they haven't had the chance to weed out outdated stores.

Some certainly are. Hess had, over the years, eliminated many of it's smaller stations (most of the ones that simply had a small building that originally was just a place for the employees to stay until they went out to pump the gas, yes that old).

They do still have at least one of those here (at a very busy corner with no real room to expand - they did convert part of the space into a fridge or two of drinks and a small shelf of snacks), and at least one other small one (that has Dunkin now, but just hot coffee and maybe iced coffee, no donuts, maybe 2 coolers for soda), plus some that still have the store between the pumps setup (which are a bit bigger, but still small).

There are also others that were redone over the years with a full store, and those I've seen have gotten most of the Speedway lines (except one that had Dunkin so that rather than the Speedway coffee products, but still has soda, hot dogs etc.).

[storewanderer]

Speedway in the Midwest has some pretty old stations. They have stores, but they are older stores. Many are a decent size (like a 7-Eleven) but some are much smaller. Their newer stations are very nice.

[submariner]

Hi all,

I've split the discussion from the 7-Eleven purchase onwards and adjusted the title. Have fun!

Also, I've been in South Florida a couple days. There's several Speedways here, many with little more than a cashier kiosk. I wonder how 7-Eleven will handle these?

[BillyGr]

Hi all,

I've split the discussion from the 7-Eleven purchase onwards and adjusted the title. Have fun!

Also, I've been in South Florida a couple days. There's several Speedways here, many with little more than a cashier kiosk. I wonder how 7-Eleven will handle these?

Those sound much like the Hess buildings I was describing above (that dated back to when fuel was full service, which has been quite a while here in NY for the most part).

Good question as to what they'd do - might depend on what else is in the area (if, for instance there is one of these small spots and another(s) with larger stores nearby, where they could easily eliminate the small one), and what space the properties have (that is, can they build a more "normal" store on the property).