02.17.2014 Newsday | LI 7-Eleven stores top performers for chain
By Lisa Du
The top-grossing 7-Eleven in the United States is an unassuming storefront -- whose sign is lit from above by a single lamp -- near the easternmost tip of Long Island in Montauk, where surging demand from tourists and astute business strategies have driven sales.
In fact, Long Island 7-Elevens dominate the top ranks of the chain-store franchiser's U.S. business. Last year, eight of 7-Eleven Inc.'s top 10 locations by sales were in Suffolk County, according to the Dallas-based company. A unit of Seven & I Holdings Co. in Tokyo, it has 208 stores on the Island among about 7,800 locations in the United States.
Before the three-year-old store on Montauk Highway took the top spot last year, the shops on Hospital Road in East Patchogue and off Country Road 39A in Southampton had swapped the number-one title for many years, according to franchisee Chris Stephens, who operates the Montauk and East Patchogue stores. "It's a Long Island thing," he said.
Ubiquitous at intersections and along highways here, 7-Elevens also have cultural significance for many Long Islanders, who see the shops as a repository of childhood nostalgia, including memories of multiflavored Slurpees.
Industry analysts and local franchisees cite some key reasons for the 7-Elevens' success here: inexpensive coffee, sparse competition, choice locations and a long local history that has ingrained daily visits into Long Islanders' habits.
"7-Eleven has been here since the '60s, and they really have a monopoly on the convenience-store market," said Gregg Carlin, a retail real estate broker and senior vice president at CBRE's Melville office. "There are no other chains that do what they do here. Long Islanders are very comfortable with 7-Elevens."
Long Island doesn't have chains such as Circle K and Wawa, which are popular in other large suburban areas, said Don Longo, editor of trade publication Convenience Store News.
Part of the community
In addition, the franchise business model allows the shops to be run by motivated local owners and incorporated into a community, said David Wright, a senior managing director at consultancy The Hartman Group.
"I think if you've got eight out of the top 10 stores in an area, that's a very, very strong market for us," said Margaret Chabris, a spokeswoman for 7-Eleven.
Yet, the stores are still controversial on the East End, where year-round residents are passionate about preserving the bucolic character of their communities. "There's some people who wish [the Montauk store] never happened, but there's a lot of local people who do use it on a frequent basis," said Suffolk County Legis. Jay Schneiderman (I-Montauk).
Donna Clark, a Montauk resident who frequents the 7-Eleven for coffee twice a day, says she has friends who still refuse to set foot in the store. "They don't like the chain-store mentality," she said.
And one recent embarrassment for the chain was the federal raid on 10 local 7-Elevens last summer on charges of exploitation of undocumented immigrant workers. None of the stores implicated was among the chain's top 10.
Benefit of legal limits
East Hampton and Southampton Town have laws that limit the size of commercial buildings and prevent certain illuminated signs, making it difficult for some big-box stores and chain shops to enter the market.
Those roadblocks, however, sometimes work to 7-Eleven's advantage. "It's so difficult to develop supermarkets out there that there's a dire need for convenient shopping, and 7-Eleven obviously benefits from that," said Jayson Siano, a managing principal at Garden City-based retail brokerage Sabre Real Estate.
Retail chains in general do well on Long Island, several retail brokers and analysts familiar with the area said. Some of the top stores in terms of sales in the Panera Bread, Target, Costco, Home Depot and Toys R Us chains are on the Island, those brokers and analysts said. They did not have exact sales figures for the stores.
Representatives from most of the corporations declined to comment, citing company policy not to release the data. Costco confirmed its 10th best store by sales is in Westbury.
Some of the same factors that boost 7-Eleven stores on Long Island also explain the prosperity of those retail chains: an affluent population -- median household income was $87,778 in Suffolk County compared with $51,371 nationally, according to the Census Bureau -- high density, scarcity of land, and strict zoning laws that are prohibitive for new competitors.
"Everybody thinks we're over-stored here, but in terms of retail space per capita we're low, because we don't have as many big-box stores as a lot of other markets" for the population, said Jeff Pliskin, president of Pliskin Realty & Development Inc., which owns and manages shopping centers.
Last year, retail space on Long Island was 43.7 square feet per person, according to real estate analytics service CoStar Group Inc. The average for the 54 largest markets in the nation was 48 square feet per person.
Takeout coffee is big
Business practices that target specific local demand play a part in 7-Eleven's stores here, too. Many franchisees have credited coffee as the biggest draw for customers and the best product in terms of margins. The chain's peddling of coffee actually has its roots on the Island, where 7-Eleven purports to have introduced coffee-to-go to the mass market in the 1960s.
"My dad always called it the liquid gold," Lorie DeFelice, the manager of the Southampton 7-Eleven, said of coffee. The Southampton store, which DeFelice is in the process of taking over from her father, Tom Souhrada, was the third store by sales volume in the chain last year. DeFelice's dad was an early franchisee on Long Island when he opened his first and only store in Oakdale in the '70s and later moved it to Southampton.
Stephens, a Long Islander originally from Oceanside who frequented 7-Elevens in his youth, said he also tries to understand the market for each of his locations. "You really target what's needed from the community and people who're here," he said.
Boogie boards in summer
At his Montauk store he stocks up on boogie boards, beach chairs and sunblock in the summer. In his East Patchogue store, which is next to Brookhaven Memorial Hospital Medical Center, he makes sure to have seasonal holiday products, greeting cards and flowers.
The Montauk shop, which Stephens said had revenue in the low millions last year, has benefited from the increased popularity of the hamlet as a vacation destination. "It's a tremendous location, and sales are incredible" in the summer, Stephens said.
Last summer, the Montauk location served up to 4,000 customers a day, and lines often snaked through the 4,000-square-foot store to the back, where the Slurpee machines stand next to windows with a wide view of Fort Pond. During peak times, Stephens said, he employed 40 workers in Montauk and would sell 4,000 units of nonalcoholic beverages and 2,000 pieces of hot food a day.
Operating year-round and being the only location open 24 hours a day also has helped. Even on a recent blustery and cold weekday, a steady stream of customers filtered through the store around lunchtime, grabbing coffee and snacks. Many were construction laborers doing work on hotels and summer homes in the off-season. One customer said the place was also popular with fishermen year-round because it was open at odd hours.
For some, the appeal of 7-Eleven may also be explained in its sentimental draw for Long Islanders. Smithtown native Lance Pauker, 23, a writer at Thought Catalog -- a culture website targeted at millennials -- recently included the 7-Eleven experience on a blog post denoting the best things about growing up on the Island.
"For young guys, you just load up on weird snacks and make fun of your friends for liking certain foods there," he said. "You associate those experiences of growing up with 7-Eleven, weirdly."