The convenience retail company, which has approximately 7,800 stores nationwide, has launched the effort for a couple of reasons. First, the Dallas-based company's management wants to see leases more in line with current rates. Given many of the locations opened in the late 1980s, when rents were higher, Dan Porter, 7-Eleven's vice president of real estate and new store development says he's aiming for more realistic rates on the next go-around.
Porter tells GlobeSt.com that the company is negotiating 5-10-year deals, triple net, and possibly restructuring some of the long-term leases. "In areas where we might have underperforming stores, we'll try to negotiate for a partial rent reduction, or additional term," he adds. The analysis and negotiation is being undertaken by CB Richard Ellis' Dallas team, which is being led by senior vice presidents Mike Friedman and Will Evans.
Porter says a great many retailers are taking the same steps to review their portfolios, especially in light of an uncertain economy. However, 7-Eleven is going through the process, not because it's pulling back, but because it's expanding. The company's plan is to build 250 new stores in 2009.
The company considers parts of California, Washington State, Colorado and Florida, as well as the New York-New Jersey region, Washington DC and Baltimore, MD and the Dallas-Fort Worth area as prime target areas for growth. Porter says 7-Eleven already has a presence in these particular markets, and is doing very well in them. Furthermore, "these are markets in which we have a full business system in place," Porter says. The system involves daily delivery of fresh food including sandwiches, salad and fruit.
The company is also making a concerted effort to cut back on its owner-operated stores and switch to franchises. One way in which this is being done is through 7-Eleven's Business Conversion Program, which targets locally operated convenience stores.
"What we do is talk to these folks and encourage them to come on board with 7-Eleven," Porter comments. "We feel this is a good opportunity for independent operators in the marketplace to take advantage of our franchise system."