7-Eleven is reinventing its food business to be more Japanese [video] | Hacker News Reader

7-Eleven is reinventing its food business to be more Japanese [video]

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105 pointsindigodaddy79 comments

7-11 in Japan is a way of life.

I've been to an American 7-11 once or twice in my life. (I didn't want to go back.)

In Japan, I went at least once daily - sometimes twice per day. They almost function the role of a NYC bodega, but with more and fresher food options. In addition, they often have a stack of microwaves run by the staff, allowing for inexpensive, fresh, and warm meals.

7-11 here in the States tends to be a great place to get stabbed and/or purchase illegal drugs, in my experience.

Here their parking lots are used to stage large illegal street racing competitions.

7-11 used to have really great fresh brewed coffee. It been about 10 years since I moved and no longer go there. But it used to be the best gas station coffee around imo.

When I was there last I had an egg salad sandwich almost every day.

Tamago sando! The hot dog bun version is a little odd to me.

the hot dog bun is a perfect carb vessel for “salad”-like fillings. unlike traditional bread slices, the hot dog bun has fewer open sides, and acts more like a cup to hold the contents. though it may look a bit odd, it truly is peak salad sandwich performance.

I just want those ham and cucumber sandwiches in the US. That's the first thing I get whenever I land in Japan.

7-11, Family Mart, and Lawson are the holy trinity of konbini (convenience stores)

I stayed in Japan for two months and some days I don't feel like sitting down for food. I go to a a grocery store (or supermarket) and grab food there to take home. If there's none along the way, I go for konbini.

Is the US equivalent of 7-11 something more like WaWa?

It could be something regional. For instance Wisconsin has Quik Trip gas stations, which tend to have fairly large convenience stores, some with fresh groceries.

Wisconsin has Kwik Trip locations, quick trip is a different store.

Wawa is like 7-11 revamped to have a Michelin star.

>they often have a stack of microwaves

you mean sometimes they don't?

and in some countries they never have them?

The franchisee of 7-11 in Japan was so successful they eventually bought the mother company from the American owners and now 7-11 is a Japanese company.

What was more surprising to me is the realization by corporate that 40% of the in-store SKUs in their US stores (in a given location) only sold through 1 or fewer units per month. That means if a franchise store got shipped a box of 12 units of a SKU, it might take a year or more to sell that box through.

What kills me is they're possibly just realizing this in 2024. What on earth has the corporate analytics team been doing all this time to not make that sort of opportunity cost screamingly obvious? Even if the margin is good, you're moving no volume.

I realize that it's probably cleaning products and other shelf stable items, but that just blew my mind.

> What on earth has the corporate analytics team been doing

7-11 is franchised with a ton of autonomy given to franchisees (relative to other franchises) so as long as the fees keep coming in, corporate doesn't care.

Also, corporate is owned by a Japanese company so it's likely to be kind of "old-fashioned" in a way, and the US entities are a whole ocean away.

The Japanese franchise was successful _because_ they measured their sales. They were pioneers in the field. Story goes that in the 80s and 90s the register had a row for customer type, so each sale was attached to “school boy” or “middle aged male”, etc.

Potentially it's items that move very very low volume but provide significant value by being available? For example, 7/11 in Japan sells underwear and shirts, with a bit of a selection even. No one is buying these except in an emergency, but having it there is a lifesaver. I also wouldn't be surprised if the average 7/11 location moved less than 1 unit a month of some of the whiskies they have available.

However surely this is a small fraction of all the products they sell.

>Potentially it's items that move very very low volume but provide significant value by being available?

That doesn't matter, and exactly why corporate brought it up. Again, opportunity cost.

I asked my nearest 7-Eleven manager (I never go to convenience stores, so I just went in to the closest one) about how many customers he gets a month, and he said about 8,000. How many SKUs? About 2500. So for 40% of his SKUs, of the 8000 customers that walk in, 1 of 8000 is willing to buy a specific one of those 1000 items (at that elevated price) from that store. That's 1000 SKUs that could be at least partially replaced with something with far better sell-through. Shelf space isn't free. Backroom space isn't free. That's dedicated square footage, he's paying a lease on every single month, forever, for stuff that doesn't move.

The guy isn't running a convenience store out of the goodness of his heart. There's a supermarket 3 blocks away selling the same items for far less money, so it's not like he's selling something you can't get just a 3-minute further walk (or 1-minute drive) away.

I asked him about slow selling items. "Oh, you saw the video too?!" He was fully onboard with corporate support to not just get much better sell-through (and ergo, revenue), but having a reason for more people to come into the store, especially on a regular basis, and not simply getting things because, "they happen to already be here."

This location in particular WASN'T with a service station out front (inner city location). So for the manager, a way to get more regular customers, that are coming in to buy things they want -- possibly if they can't get it as easily (or at all) nearby -- is a HUGE potential win for him. That might help him get hundreds more customers every month, which might buy other things as well.

>What on earth has the corporate analytics team been doing all this time to not make that sort of opportunity cost screamingly obvious?

This is assuming there is an analytics team / department. I think people in tech may be surprised how Tech hasn't really caught on in many of the industry, especially those that are not Fortune 2000.

Interesting. 7-11 is one of the example's in Rumelt's book on strategies[1]. In the chapter on 'pivot points' (by his definition, areas where effort yields significant reward) he outlines that 7-11 focuses on different things in Japan vs China. In Japan, they believe that the customer is easily bored and requires their stores to stock many choices, and carefully track which are rising and falling in popularity in each area, to avoid them seeking out novelty at competing stores. In China, they focus on attracting customers by having Japanese-style "spotless interiors and white-gloved service", a much more pleasant experience that traditionally found in stores in China.

I was wondering what this said about the US customer. But it sounds like the US operation was just not as well run and needs to catch up.

[1] Good strategy, Bad Strategy, 2012

Not sure of the structure in Japan and China, but US 7-11s are franchised and thus the individual owners have a huge effect on the base level of service and upkeep. There are many stereotypes that it wouldn’t be appropriate to get into here, but the quality of individual stores can vary a lot.

They are also known as a place to buy huge sodas, tobacco, and energy drinks, but many other convenience stores also provide those.

They are franchised here as well, although the holding company owns multiple stores. The overall quality, including the operating hours to the chagrin of the franchisees, is ruthlessly maintained through their contracts and lawsuits though.

https://www.japantimes.co.jp/news/2022/06/24/business/seven-...

The US contracts might be more relaxed or the holding company might not have enough control due to the sheer size of the US market. In Japan, most stores get deliveries more than twice a day, have inspectors show up unannounced, need to make daily reports in some cases, etc. Not much room for leeway.

> In China, they focus on attracting customers by having Japanese-style "spotless interiors and white-gloved service", a much more pleasant experience that traditionally found in stores in China

In Asia, 7-11, Circle K, GS25, etc are all "upscale"ish outside of JP/SK/TW.

They can't compete at the price point that a local bodega or street vendor in Dongguan, Diliman, or Da Lat so they segment themselves as slightly more upscale. Sort of like how Target differentiates itself from Walgreens and CVS.

The whole point is that because they're Japanese/Korean/Taiwanese they are much more "luxury" than a local brand.

A friend from Japan said 7-11 was an upscale store there. It features the top products in every category, and is maintained in an organized and clean japanese way.

7-11 and convenience stores in general in Japan (the other big ones are Lawson and Family Mart) are vastly superior to American offerings. Almost every American who goes to Japan seems to comment on this.

It's not just Japan, it's largely Asia in general (e.g, Taiwanese 7-11's and Korean 7-11's are also so far above their US counterparts in terms of offerings/feel).

(A fun trivia fact is that like 7-11, Lawson also originally started in the USA. They only recently-ish returned stateside with locations in Hawaii (IIRC).)

I'd say in Korea 7-11 is the worst of the top 3 options though (GS25, CU and 7-11)

I mean, sure. I don't even think 7-11 is the top in Japan, but this is all opinion (ish).

My only real point was that they are categorically above their US counterparts, and that it's not just a Japan-specific thing.

I'd be surprised if there is any place where 7-11 is worse than in the US given how bad they are in here. Having lived most of my US time in PA I always either drove longer or waited for a Wawa to shop because all 7-11s were pure garbage.

The Asian equivalent of a trashy and cheap American 7/11 or Circle-K would be street vendors or a hyper-local general store/bodega with a bare minimum amount of goods.

In much of Asia (JP, SK, and TW excluded), convenience stores like 7-11 are similar luxury wise to what Target is in the US.

7-11 in Canada is just as bad.

I remember that lots of communities didn't want 7-11s in their area, because they showed up as red blotches in the crime maps.

With that in mind, I've never noticed a difference between the various brands of Japanese convenience stores. Lawson / Family Mart / 7/11 all seem the same to me. The only thing that ever stood out about 7/11 was that I could use their ATMs to take money out of my American bank account circa 2002 when I lived there. (The post office also worked.)

Heh, I used to joke that 7-11 was my bank of choice for this reason.

I mean Seven Bank is a major bank in Japan.

I know, I used to live there.

The joke was the ATM at every 7-11 with the line of foreigners every Friday night. ;P

Probably because most Americans live in lower density cities. Fresh food distribution is a lot harder in low density areas, and that is probably why 7-11 focuses on microwavable wings and hotdogs in the US.

A good NYC bodega is as stacked as a 7-11 in Tokyo. Really good fresh baked goods and they'll cook up anything you want for you too.

But 7-11s in Japan seem better than American convenience stores in similar density areas (from my experience)

This makes sense for rural and maybe exurban areas, but not for urban and most suburban areas.

My guess is that the lack of foot traffic changes the clientele in the states.

> A good NYC bodega is as stacked as a 7-11 in Tokyo.

No. And it isn't as clean, orderly and organized either.

Yup. The quality and price for food was shocking, especially compared to the US.

I feel like the parent company is going to have an interesting time of it when convenience store wages collide with stocking and food prep processes more complicated than "load hotdog roller then studiously ignore for the entirety of shift", especially in the markets that are currently served by 7-11.

Are you saying that low paid workers don’t have the cognitive capacity to do more than cook hot dogs?

I'm saying over the course of the last 5 years performance in the service industry writ large has gone off a cliff. Example: fast food restaurants routinely sport sanitation scores that would have cost the franchisee their restaurant a decade ago. Your guess is as good as mine as to root causes. Specific to 7-11 the franchise has a storied multi-decade history of seedy establishments and desperately sketchy food offerings. Where the franchise expects to recruit a new cohort of motivated individuals is something of a mystery.

Indirectly related: before visiting Thailand I heard that 7-Elevens were everywhere (they were) and a core part of daily life for locals and tourists alike. I expected them to be more like the Japanese model, but was surprised that they all had a very limited number of salty snacks, energy drinks, and toiletries - similar to the US.

Other than a nice selection of tourist-friendly pre-paid mobile plans, I couldn't really understand (or validate) the "important" role they played.

Anyone have a perspective on this?

Maybe it’s the fact they’re air conditioned, and an easy respite from 100 degree/100% humidity summer heat? At least that’s what it was for me as a tourist.

7-Eleven’s will vary. Some are closer to the Japanese model, but in my experience the ones in the typical PTT/Amazon coffee/KFC clusters are more like their US counterparts than not. Edit: should add except for an absence of overall sketchiness

Cheap, safe to drink bottled water was my reason for making the daily pilgrimage while backpacking through Thailand.

711 food in the US is sugar saturated to a comical degree. This store will hurt you. I think there are grounds for class action. That's what happens when you track and then promote the most addictive products of the company inventory

When I was in the US i went to Dunkin Donuts once. I didn't know it's possible to stuff so much sugar into a single coffee (to be fair I bought a fancy one, but well I was there for the experience).

The video mentions at least twice that gas is one of the two main revenue sources of 7-11 in USA.

A: How common is this? 7-11s don't serve gas where I've seen. B: Is this accurate re profits? My understanding was that gas stations make their money from the convenience store vice fuel. (This is in direct contradiction)

Unrelated: Is it normal in marketing to refer to customers as "targets"? (See around 75% through the video for one example)

In my (midwest) experience maybe in cities 7-11s are primarily convenience stores, but once you drive out into the suburbs/country they’re always gas stations. Until I started living in cities I wasn’t even aware there _were_ convenience store 7-11s!

The weird ones are in the lower density American suburb/urban transition area where many of the 7-11s are setup as if they could have gas pumps but don't and act as drive-up convenience stores/small groceries.

In some places they do, such as the northeastern United States, but it seems like it might be more of a partnership with a gas provider branded as 7-11.

It's a commonly believed lie that gasoline is not profitable. It is the main profit center for all gas station chains.

That may be true of chains, but for ~20 years a close family friend owned an independent gas station with a small convenience store and they made 4-5x more in the store than the ~1c per gallon of gas they sold. The margins on Soda, candy and cigarettes were absolutely massive.

> The video mentions at least twice that gas is one of the two main revenue sources of 7-11 in USA.

Definitely. 7-11 is nationwide with thousands of locations and the majority of those found outside huge, built-up metros sell gas.

> Unrelated: Is it normal in marketing to refer to customers as "targets"? (See around 75% through the video for one example)

Yes. I worked at a place where we called them "military aged males." /s

> Unrelated: Is it normal in marketing to refer to customers as "targets"?

She was talking about "ad targeting", not the customers as targets: "In the morning we will target our customers with a message about Coffee and Donuts".

There's actually a cool 200 page manga about 7-Eleven entering the Japanese market and experimenting to make it work. It's called "Project X: Challengers - Seven Eleven" https://www.amazon.ca/Project-X-Challengers-Seven-Eleven/dp/...

I am so here for bringing konbini life to the U.S.

7-11 spam musabi is amazing if you’re ever on one of the Hawaiian islands

Yes, this!

i also recommend the “Musubi Cafe” on oahu. they have a few locations.

First thing I noticed iced in Hawaii. The hotdogs and roller items were replaced with spam+rice or other spam meals at the local 7-11.

Also that McDonald's had spam-based menu options too.

it's kind of disappointing that they're focusing on food in this. I get that it's a quarter of their revenue, but one of the things that makes japanese convenience stores so convenient is that you can do more than just buy stuff. like, they often have printers and scanners if you need to make a copy of something or print something off. or if you're a tourist and you're taking the train someplace and have too much luggage, you can get it shipped to the hotel at your destination via 7/11. that's the kind of thing I would love to see in a convenience store.

7-11 (the corporation) is owned by one of its own Japanese franchisees, Seven & I Holdings.

https://en.wikipedia.org/wiki/7-Eleven

7-11 JP is so good the food is 90% there compared to restaurants and the desserts legit beat some Michelin star stuff. They deliver fresh daily and some desserts can't even make it overnight without coagulating!

Their frozen food is second to none. I’d say especially their spaghettis are much better than what you can get at a serving rate store.

Some of their collaborations also work out really well — especially the desserts with Pierre Hermé.

I wish all 7-eleven stores worldwide were like the Japanese ones. The stores in Asia generally are okay, like same concept as the Japanese ones, just varying degrees of less good.

The stores in the US and Canada are just useless. Terrible. I don't know why, given the Japanese parent owns them all and I've never met anyone who has visited a Japanese store who prefers the American format.

I spent so much time on an imageboard called 711chan, as a teen. It's actually still around: 711chan.wtf.

Wanting to contribute to leh /i/nsurgency nonsense was kind of how I got into programming. Not related to TFA, but that's what it made me remember.

Have warm memory of 7-11 in Japan. Basically they had only cash machine that I could use to withdraw some money as all other in the area refused my cards. Sort of saved my life in a way.

If people didn't know, 7-11 is owned by a Japanese company.

This made me curious how much smokeless tobacco products like vapes and Zyn offset the losses they talked about in combustible tobacco products.

The narrator’s vocal fry was so excruciating I couldn’t get through the video.

Please bring the salmon jerky.

As we all know, “gas station sushi” enjoys a special place of trust in American culture.

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