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The Big Gulp

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In 2009, a new 7-Eleven Commissary and Combined Distribution Center opened in Bohemia, a Long Island town about 55 miles from the city. It provides stores in the region with fresh food. “The more scale we can get off of that distribution center the better,” says Duffy. The company doesn’t operate the center itself—a third party does—but more stores mean more inventory is flowing through Bohemia warehouses, which means that said third-party operator can charge less per item to store owners and still make back its fixed costs, which eventually means more profits shared between stores and 7-Eleven corporate. With most of production and distribution outsourced, 7-Eleven focuses on what it believes to be its strength: figuring out what to sell to rushed shoppers and how to sell it to them.

To that end, I attended a meeting at Jemal’s 28th Street storeroom at which he promised over $1,000 in cash rewards to his staff if they could help earn a high score on the store’s next surprise audit. Once a month, a roving corporate hard-ass—who, Jemal says, graduated from West Point—drops in to ensure things are shipshape, giving the store a cleanliness grade and rating it on a 39-point service checklist. If employees don’t sell suggestively (“Would you like another fill-in-the-blank for only $1?”), they get dinged. Don’t thank every customer for their business? Dinged again. Spots on the bananas? Dingdingding. According to the terms of Jemal’s contract with 7-­Eleven, the company could even take his franchise rights away if he repeatedly scored poorly. Given his hypermotivation, that seems unlikely—but good audit performances will go a long way in determining if 7-­Eleven lets him open a fourth, fifth, or sixth store of his own, and he’d like to open as many as twenty. The mere fact that Jemal could hold a meeting with nine crew members and a journalist in what is ostensibly a storeroom is a testament to how lean his operation already is: It was barely being used for storage at all. After the meeting, three of his employees began arguing vehemently about who was responsible for ordering a few unnecessary bottles of Advil.

New Yorkers, like everyone, enjoy their local quirks, and bodegas are a great source of quirk, from their cats to their strangely worded, handwritten credit policies. But most bodegas are really the same where it counts: Each sells the same assortment of junk food and toiletries as the next—Utz and Wise chips, Breaktime cookies, Scott paper towels. If 7-Eleven can stock those things reliably and cheaply, its total deficiency in the quirk department probably isn’t going to make it any less of a threat to the city’s bodegueros.

And yet: “It’s impossible to get them involved. It’s like getting my grandma to deal with a BlackBerry,” says Jose Fernandez, president of the Bodega Federation of the United States, and former president of the Bodega Association of the United States, when asked if his members will ever widely adopt electronic scanners and computer systems. “They don’t want to deal with computers, they don’t want to deal with ­technology.” We’re sitting in his small, neat office above a thrift store deep in Jamaica, Queens. Fernandez has owned two bodegas: one which he voluntarily stopped running in 2005, and one that crashed in the late nineties because of his complete lack of experience.

“I had to do everything by myself,” he says. “And because of that, I ended up losing my bodega. Because I didn’t have experience, I was buying expensive stuff. I was buying the wrong stuff. I didn’t know how to get a license.” By the time he got his beer and cigarette licenses in order, his business was already doomed. Out of this failure, Fernandez recognized the need for an organization that looks out for bodegueros by helping them navigate the unexpectedly complicated terrain of running a convenience store in New York—which isn’t dissimilar to what 7-Eleven does for its franchisees. With a friend, he launched the Association; then, in 2007, Fernandez started the Federation, which has a more national focus and is funded in part by down-market food giants like Krasdale and Goya.

7-Eleven isn’t trying to put Fernandez’s constituents out of business so much as it is trying to win them over. That’s what the Business Conversion Program is for. In a traditional 7-Eleven franchise store, franchise fees run approximately $200,000 to $400,000. If the company deems you worthy of a franchise, it’ll find you a location so long as you have the money. But stores that already own or lease their own space can buy rights to become a 7-Eleven for just a $25,000 fee. 7-Eleven also offers franchisees loans through its own private program, which could appeal to would-be entrepreneurs at a time when banks are often unwilling to lend.


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