7-ELEVEN TAKES ON MANHATTAN

Matthew Enis

NEW YORK -- In a celebration highlighting 7-Eleven's recent push into big cities, the convenience store giant last week hosted the grand opening of its first Manhattan location since the company left the Big Apple in 1982.

The 1,500-square-foot store, about half the size of its suburban counterparts, is similar to the stores that have opened recently in Boston, Chicago, Los Angeles, Philadelphia and Baltimore. The urban stores devote a significant portion of selling space to fresh foods, including packaged fresh-cut fruits and vegetables, salads, sandwiches, pitas, wraps, packaged sushi and, of course, freshly brewed coffee, with a minimal grocery selection.

In a city teeming with independent delis, bodegas and outdoor hot dog vendors, 7-Eleven hopes proprietary items, such as Slurpee frozen drinks and a superior roller grill operation, will help set the store apart, said Bob Cozens, vice president of 7-Eleven's Northeast division.

"This grill operation isn't really replicable at an independent store," Cozens told SN, gesturing toward a huge selection of grab-and-go heated items, such as the company's proprietary "Big Eats" hot dogs and chipotle chicken, jalapeno cream cheese and steak, and Monterey jack taquitos.

Under the guidance of Jim Keyes, 7-Eleven's chief executive officer, the chain has boosted the emphasis on fresh foods during the past five years, partly in an effort to emulate the success of the company's Japanese division. In cities such as Tokyo, a sophisticated electronic ordering system allows each store to receive deliveries three times per day from local distribution hubs, tailored to its morning, afternoon and evening rush. In a recent interview with the New York Times, Keyes explained that Japanese consumers use the chain there almost as an extension of their kitchens at home.

Using a similar ordering system already in place throughout 7-Eleven's 5,800 U.S. stores, the Manhattan store will receive daily deliveries from the chain's distribution center in Hauppauge, N.Y., on Long Island.

"Our logistical system is what really sets us apart," Cozens said, noting that even the breads used in the store's pre-made sandwiches are baked fresh each day at a regional commissary.

Retailers can expect convenience operators to continue building stores in alternative locations, said Jeff Lenard, director of public affairs for the National Association of Convenience Stores, Alexandria, Va.

"If you're just looking to locate where the best automobile traffic is, you're looking at yesterday's c-store model," he said. "All of the good street corners, if they're not already taken, are highly competitive, and the cost of real estate has become a huge factor.

"Operators are seeking out new opportunities to open stores, in urban areas or nontraditional places such as hospitals, campuses and airports," he said.

As gasoline sales have become less and less profitable for the convenience channel, chains such as 7-Eleven have increased their focus on higher-margin categories, such as fresh food, Lenard said.

Citing a recently published comment by Jim Tudor, president of the Georgia Association of Convenience Stores, Lenard said that a little more than a decade ago, 7-Eleven debated whether it could make an enhanced coffee program work in its stores.

"Now, some locations are offering sushi," Lenard said. "That's a testament to how far they've come."

7-Eleven is developing three other locations in Manhattan, and the company plans to continue expansion in other major cities as well, Cozens said.