Why U.S. 7-Elevens Are Adopting Japan’s Playbook

The Reputation Problem and Financial Pressures [00:01]

• The company is the world's largest convenience store chain but has a reputation problem in the US, often described as "dirty" with sticky floors and dingy lights.
• Its Japanese parent company, 7i Holdings, is facing pressure due to disappointing financial results, with shares falling over 18% in 2025.
• A Canadian retailer withdrew a $47 billion bid to acquire 7i after a year of negotiations.
• The company is now shifting focus to transformation, aiming to make its US stores more appealing, like its Japanese counterparts.

The US 7-Eleven chain faces significant criticism regarding its store environment and is experiencing financial headwinds, leading to a strategic pivot.

Despite being the world's largest convenience store chain, it has somewhat of a reputation problem, namely in the US, where it was founded.

Historical Context and Current Challenges [01:29]

• Founded in 1927, 7-Eleven pioneered the convenience store concept with long hours and iconic products like the Slurpee.
• A Japanese grocery store signed a franchise deal in 1973, leading to the Japanese company becoming the majority owner.
• In fiscal year 2024, net income dropped about 17%, and nearly 450 underperforming stores were shut down in North America.
• In the first quarter of 2025, both same-store sales and year-over-year traffic were down.
• The US business has not invested or evolved its proposition, facing pressure from investors for returns.

The company's historical success has not translated into current market dominance, with underperforming stores and declining sales highlighting a need for evolution.

In the US, there's a degree to which 71 has rested on its laurels. It hasn't really invested and it hasn't evolved the proposition.

Unique US Market Challenges [02:57]

• 7i has less control over its US businesses because most are franchised, making it difficult to implement consistent changes.
• Competition is fierce in the highly fragmented US convenience store industry, with rivals like Wawa and Casey's offering strong food options and customer service.
• The company focused heavily on expansion, neglecting to evolve the store concept to meet changing consumer needs.
• Industry dynamics have shifted, with dollar stores expanding and key categories seeing sales declines, while grocery delivery undermines convenience.
• The failed mega-merger with the Circle K owner, ATD, due to alleged lack of engagement, adds to the company's challenges.

Implementing changes in the US is complicated by the franchised model and intense competition, compounded by shifts in consumer behavior and past strategic missteps.

But what doesn't always happen is that you don't evolve the store concept and format in a way that's suited to changing consumer needs.

Transformation and Food Focus [04:35]

• 7-Eleven is streamlining operations and finances in preparation for a potential IPO in 2026.
• 7i plans to spin off the business but remain a majority shareholder, driving the current course correction.
• The latest transformation plan from 2025 focuses on turning stores into food destinations.
• Since 2019, efforts have been made to add restaurants, build kitchens, modernize food and beverage options, and accelerate digital and delivery.
• The company owns three fast-food chains: Laredo Taco Company, Raise the Roost, and Speedy Cafe, and plans to open 1300 new food-focused stores in North America by 2030.

The company is undergoing a significant overhaul, with a primary objective of transforming its stores into destinations for food, supported by acquisitions and ambitious expansion plans.

Since 2019, it's been working on adding restaurants, building or renovating kitchens, modernizing food and beverage options, and accelerating digital and delivery.

Leadership and Market Relevance [05:39]

• Steven Dacis became 7 and I's first non-Japanese CEO in May 2025, with experience at Walmart and Japanese food companies.
• Dacis is leading a plan to make US stores more Japanese, starting with food, including introducing iconic egg salad sandwiches.
• Waraba, a fresh food manufacturer, is opening its third US facility in 2026 to support ready-to-eat meals for 7-Eleven Japan.
• The company recognizes it has lost its competitive advantage and needs to evolve to attract customers and increase spending.
• While changes are costly and time-consuming, the company is seeing slightly better spend numbers but not improved foot traffic.

A new CEO is driving a strategy to infuse a Japanese sensibility into the US stores, particularly through food, acknowledging a past decline in competitive edge and the immediate need for reinvention.

7-Eleven has sort of woken up and said, "Hey, actually, we just don't have the competitive advantage that we used to have. We need to change and evolve so that we can get customers back.

Competitive Landscape and Future Outlook [06:45]

• Between July 2022 and July 2025, there was no sustained customer growth at US stores.
• Rivals like Casey's and Wawa have mastered offering quality food at decent prices, a segment 7-Eleven has struggled with in the US.
• The US market is intensely competitive across food service, convenience, and retail.
• The goal is to increase weekly customer spending from $10 to $15 and capture a larger share of wallet.
• A potential IPO in 2026 could help raise money for upgrades and corrections without dragging down other business segments.

The company faces intense competition, particularly in food offerings, and is preparing for a potential IPO to fund necessary upgrades to regain market share and relevance.

The US is a very very intensely competitive market in food service, in convenience, in retail generally. For the convenience players, the battle is like, "Hey, you spend $10 with us every week. How can we get that to $15 and actually take away some of your share of wallet from other retailers?"

Investor Confidence and Strategic Adaptation [07:57]

• The IPO is not a sure bet, especially after the failed acquisition bid and potential economic headwinds.
• The current market is challenging for reinvention, but opportunities exist for differentiation, such as healthier food or new cuisine options.
• Investors are not concerned that 7-Eleven is in trouble but recognize the need for the business to refresh and remain relevant.
• The company is actively pursuing this refresh to stay competitive.

Despite market challenges, the company is not in crisis but is undergoing a necessary self-refresh to maintain relevance, with investors observing its strategic adaptation.

And I don't think investors are concerned that 7-Eleven is in trouble because the fact is it isn't in trouble. It's just a business that needs to refresh itself and to keep itself relevant.