What If McDonalds And Even You Follow The 7-Eleven Business Model?

McDonalds is the number one fast food franchise in the world. 7-Eleven is arguably the number one convenience store franchise in the world, if not, the most popular. There’s no denying that these two franchise companies are very profitable and popular.

But there’s a big difference between the two companies. While McDonalds purely concentrates on serving fast foods, 7-Eleven divides itself between first, selling convenience goods and the second, convenience foods and snacks.

But 7-Eleven didn’t start out this way. The 7-Eleven I grew up with as a young child purely concentrated on selling convenience goods and snacks only. It was just a few years ago when they first started selling convenience foods as well.

According to Franchise Times in their article titled: 7-Eleven Grows Sales to $91.8B in New Franchise Times Top 400, 7-Eleven is now the second largest franchise in the world second only to McDonalds.

According to the article previously mentioned, 7-Eleven is just short of approximately US$ 1.5 billion in sales and they would have exceeded if not matched the sales of McDonalds. The article also mentioned that this may be due to McDonald’s decline in sales.

But what could be 7-Eleven’s winning formula? Could it be that they are still open to customers when all the other food and grocery stores have closed already for the day? It’s a fact that 7-Eleven stores are open 24/7.

Could it be that they have somehow managed to become a stop-over of some sorts for people who are time constricted? This is because with 7-Eleven, you can buy some of your daily grocery needs while also being able to have your meal for the day.

Could it be that 7-Eleven now serves as a hangout for people in a way people cannot hang out in more pricey fast food stores? This is because each fast foods sell their own line of foods only while 7-Eleven can sell any convenience food it wants as long as it sells.

7-Eleven stores for example can sell Western style sandwiches, Asian style noodles and dim sums, your favorite ice cream brands and can even sell their own version of fast food foods that can directly compete with other fast food stores.

In a way, 7-Eleven has the flexibility that McDonalds and other stores do not have currently. That is, the flexibility to sell any convenience goods or foods that consumers want to buy. In the place where I currently live, there are two 7-Elevens within walking distance.

There are also two different and famous fast food stores within walking distance to the place where I currently live. In the past few years, and I mean years, members of my family have never stepped inside these two fast food stores.

Compare this to the 7-Eleven stores where members of my family frequent to buy mostly snacks. It is to be noted that there are also several convenience stores in the area, but they are not open 24/7.

I would also like to emphasize that in the area where I live. Eating in fast foods is not a normal thing and is still infrequent due to the costs, while the food served in the 7-Eleven stores are more attractive price wise and palate wise to the people in the area.

As you can see from my example, the 7-Eleven stores in my area are more suited to the populace which is another advantage of 7-Eleven, they can suit their products according to the needs of the local populace and do not have to force their food products on the local populace.

Let’s assume that in a certain country where there are 7-Eleven stores, the economy dropped to such low levels that the standards of living of the people deteriorated drastically, so drastically that they can never afford much of the products being offered by fast foods.

What would be the probable strategy of fast food companies? They would probably have to raise their prices or offer much smaller portions of their fast food meal offerings. If you were the fast food company boss, what would you pick?

It has been proven time and time again that almost all businesses would rather offer much smaller portions of their products or offer much lesser quality of their products rather than raise prices.

In a way, most companies are left with no other options. They risk losing sales and customers if they either raised their prices or reduce the portion or quality of their products. This is how being stuck with a particular product line can do to you.

If you were 7-Eleven, you wouldn’t be tied to your line of products. You could simply offer cheaper foods that are now more popular with the price range of the consumers. I would stretch this even further: what if 7-Eleven decided to compete with Dollar Stores in terms of pricing.

It would be foolhardy to say that soon, 7-Eleven would overtake McDonalds in the franchise industry to become number one. But as the linked article, the gap is closing and it could be a reality.

But what if McDonalds countered 7-Eleven and used their business strategy of selling both convenience foods and groceries. Seems far fetched? Consider that McDonalds didn’t offer Breakfast Menus and a Salad Meals/Healthy Options before.

Of course, even though McDonalds ventured into other offerings, their main focus was still selling food products. But consider this as well, Happy Meals are the most popular products of McDonalds to children.

And what do Happy Meals contain? Essentially, they contain children’s food like a hamburger and a soda combined with a certain child product such as toys and books. Could McDonalds take a clue from this?

Remember that McDonalds Happy Meal toys for example are themed after the current hottest animated movie from Disney or some other animation company. Why don’t McDonalds for example sell actual merchandise from the hottest animated movie?

I don’t know if you have the same thinking, but whenever my family eats at any restaurant like a fast food restaurant, we make it a habit to buy takeaway food either to give to family members at home or to be eaten later.

The same goes for Happy Meals. Most of the family members in my family are adults now, but we still make it a habit to buy Happy Meals not for ourselves, but for the young children in our household.

It just so happens that the younger children in our family don’t want the toys from the Happy Meals all the time. Usually, they want the hottest toys around which is usually the toys from the top animated cartoons showing on television.

It also happens that the younger children in our family doesn’t particularly want to eat Happy Meals all the time, but would accept a bar of chocolate if you offered it to them. Imagine then if the child happens to be an adult. Wouldn’t both the child and adult not accept the bar of chocolate?

Imagine now that McDonalds have tie-ups with chocolate manufacturers. I know that it would be hard for McDonalds to resist not stamping their logo on the products they sell, but can they compete with Snickers or Oreos when it comes to chocolates?

Back when I was a child, there was a mom and pop food store that primarily serves convenience foods. They primarily sell hot foods that were primarily aimed at breakfast eaters and hot snacks between meals.

They also sell cigarettes and newspapers in their food store. And it worked. Breakfast eaters usually want to read a newspaper when it’s breakfast time and smokers naturally want to smoke after every meal.

I know that newspapers and cigarettes are not popular right now, but in many developing countries, they are still very much popular. This is because both the cheap newspaper and cigarettes go with the cheap hot meals.

When I used to live by myself, I know of a fish shop who doesn’t only sell fish but also fish and chips as well as canned foods and food seasoning. This fish store was super convenient to me. I buy the fish and chips to have something to eat after my shopping.

I buy fish to cook and eat later, and I don’t have to go to another store to buy the seasoning for the fish that I’m about to cook and eat. In a way, this fish shop extracted 3 times more business from me than the other fish shops. This is because the fish shop knows the consumer’s needs.

I have been to several combined convenience goods and foods shops in Australia. I have entered shops owned by mostly first generation immigrants coming from China, India, Indonesia, Korea, Philippines and so on.

And I see a pattern on the convenience goods, services and foods that they offer. They sell convenience goods that can only be found in their original country and they offer money remittance services as well as package delivery services back to their original country.

They also sell foods that can only be found in their original country which usually comes in canned packaging. And lastly, they also sell precooked meals as well as dine-in facilities right in their own stores.

In a way, these shops have zeroed in on their target customers which are usually the first generation immigrants and their second generation children who still have strong ties to their original countries.

Here are two more stores which we all know are huge which also offer food in their stores. There are many people for example who love Costco’s cheap chicken and hotdogs and may just go there just to buy these fast foods.

Some of the people I know also love Ikea’s breakfast meals which are really cheap as compared to their quality and taste. In essence, these two companies are drawing customers in with their cheap food in the hope that these same customers would shop from them.

And by all measures, this business strategy is working for both of these companies. Perhaps one day, both Costco and Ikea would offer products that are meant to be given as gifts for the children left behind at home.

7-Eleven became successful because they have the flexibility to offer what the customer wants instead of being tied up to particular products and work routine. 7-Eleven shops are open 24/7, but could decrease their store hours if the customers don’t want them to be open 24/7.

By not being tied up to particular products, this leaves them free to sell whatever products the customers wants. It can be a particular set of convenience goods or foods. They may offer for example internet services and become an internet cafe of some sorts, the possibilities are many.

It is a good idea to study the 7-Eleven business model for your store.

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