7-Eleven Remodels

Nov. 1, 2000
275 Trucks Deliver Fresh Food Daily IN the highly competitive retail food market, convenience stores face many challenges, such as finding reliable transportation,

275 Trucks Deliver Fresh Food Daily IN the highly competitive retail food market, convenience stores face many challenges, such as finding reliable transportation, meeting stringent food safety and quality-assurance requirements, and competing with online, home delivery grocers.

7-Eleven Inc, the world's largest operator and licenser of convenience stores and one of the nation's largest independent retailers, meets these challenges head on. The Dallas, Texas-based chain has introduced new products and merchandising techniques to boost sales. A fleet of 275 refrigerated trucks is operated to ensure a steady flow to the 7-Eleven stores.

"To consumers, convenience stores don't always connote fresh food," says Wes Hargrove, logistics manager for 7-Eleven's central division including Texas, Colorado, and Utah. "However, 7-Eleven is remodeling its stores and streamlining distribution to change that perception."

7-Eleven's efforts have resulted in steadily increasing sales. In September 1999, the company reported a 5.7% increase in US same-store sales for August. August 2000 was the 38th consecutive month of increased sales.

Sales totaled $604.1 million for August 2000, an increase of 7% from $564.5 million in 1999. Sales year-to-date totaled $4.5 billion, an increase of 9.7% above $4.1 billion, the year-to-date total in 1999.

A major factor in the sales boost is 7-Eleven's continual introduction of new products, Hargrove says. The company tracks sales with a barcode scanning system. Slow-moving items are replaced with new products.

Expanded Services Satisfying customers today is much more demanding than in the past, Hargrove notes, and 7-Eleven has continuously upgraded service. Even the 7-Eleven name, which is recognized worldwide, connotes more convenience than it did originally. The name originated in 1946 when stores were open from 7 am to 11 pm. Today the stores stay open seven days a week, 24 hours a day.

"We've gone beyond offering core c-store items such as beer, soft drinks, and cigarettes," he says. "In addition to our well known Big Gulp, Big Bite, Slurpee, and fresh brewed coffee, we now offer fresher milk, fresh foods, and fresh bakery items. They are freshly prepared and delivered every day. We work with Kraft and food suppliers that follow strict standards for cleanliness and quality to provide our proprietary food products."

Joining the competition for customers who use computers, 7-Eleven offers online shopping from some stores. "We call our service V.com, or virtual commerce," Hargrove says. "We are installing computers in stores, so customers can order online for delivery to 7-Eleven. This provides security and privacy compared to home delivery."

Stores in Austin, Texas, and Fort Lauderdale, Florida, offer the new 7-Eleven Internet shopping card, a prepaid card allowing secure, online purchases wherever American Express is accepted. The Internet card can be used for retail purchases at any participating 7-Eleven store in the US. The prepaid card offers the convenience of credit to those who want to use cash.

Transportation Partners Besides business agreements with American Express, Kraft, and others, 7-Eleven has agreements with American Isuzu Motors and five transportation and logistics companies. They are Mitsui Bussan Logistics Inc, Sig Logistics, The McLane Company, Wallace and Carey, and EA Sween. These third-party companies purchase Isuzu trucks, hire drivers, and operate CDCs (combined distribution centers) to consolidate and distribute 7-Eleven's fresh food products.

The 7-Eleven CDCs are in 20 metropolitan areas: Dallas; Austin; Chicago; Los Angeles; Denver, Colorado; Salt Lake City, Utah; Las Vegas, Nevada; San Jose, California; Hauppauge, Long Island, New York; Burlington, New Jersey; Aberdeen and Capitol Heights, Maryland; Orlando, Tampa and Pompano Beach, Florida; Franconia, Chesapeake and Richmond, Virginia; Phoenix, Arizona; and Calgary, Alberta, Canada.

The 275 refrigerated trucks run from these distribution centers to about 4,000 7-Eleven stores nationwide. "Stores get next-day delivery," he says. "We schedule delivery based on the product. Fresh and frozen food is delivered every day, seven days a week."

Consolidation at the distribution centers has resulted in streamlined distribution and longer shelf life. For instance, shelf life of 7-Eleven dairy products has increased from 10 days to 14 days, Hargrove says.

"We've come a long way since opening our first fresh food CDC in Dallas in September 1994," he says. "The Dallas CDC is operated by EA Sween, a convenience store distributor based in Eden Prairie, Minnesota. Drivers deliver to 233 stores in the Dallas Metroplex. Each truck typically makes 12 stops per night. An average stop takes about 14 minutes."

Isuzu Reefer Units 7-Eleven runs Isuzu FSR trucks (23,100 lb GVW) and Isuzu FTRs (25,950 lb GVW). Instead of the standard six-speed manual transmission, they have Allison automatic transmissions. This makes driving easier and eliminates clutch repairs, says Greg Haughey, a sales representative of American Isuzu Motors and the fleet sales manager to 7-Eleven.

Trucks are equipped with Morgan bodies, ranging in length from 19 to 22 feet, and have a mix of Isuzu truck-engine-driven refrigeration units and Thermo King units. About two-thirds of the trucks have the Isuzu Engine-Driven Temperature Control units. The IETC units were developed for 7-Eleven by Isuzu and Zexel Cold System in Japan. Zexel recently was purchased by Thermo King.

"Our most recent generation of refrigeration units is the Thermo King MD-II TCI," Haughey says. "A big advantage of the Isuzu refrigeration unit is that it weighs 600 pounds less than the Thermo King unit, because it doesn't have an engine but is driven by the truck engine. The IETC unit uses a two-cylinder reciprocating compressor."

In addition to offering 600 pounds more payload, the IETC is economical because it doesn't require unit engine service, and it is reliable, Haughey adds. However, 7-Eleven is using the Thermo King MD-II TCI on new equipment while a new generation of the IETC is being tested.

Dual Evaporators Both the Thermo King and IETC units have dual evaporators providing accurate temperature control for two compartments. The 7-Eleven trucks have a chilled front compartment kept at 38ø F and a second compartment for pastries, donuts, and bread kept at 70ø F. Compartments are formed by rigid, movable bulkheads from F/G Products. The Toughboy insulated bulkheads have ribbed surfaces for better air circulation.

Chilled products represent about 40% of the load mix. The remaining 60% includes bread and pastries, which are temperature-controlled to look and taste better, Hargrove says.

"Temperature control is essential to our quality assurance program," he says. "As a HACCP facility, we record temperature when the product arrives, and monitor it throughout storage and distribution." Hazard Analysis Critical Control Point programs are required by the government to ensure food safety.

Trucks are precooled before loading. Drivers record temperature at each stop. Everything is unloaded through the three-panel rear door using a 2,500-lb-capacity hydraulic lift from Maxon. Products from the front compartment are carried aft through a door in the bulkhead.

7-Eleven in Dallas uses a Great Dane 53-ft refrigerated trailer to shuttle between Austin and Dallas. The trailer and delivery trucks have colorful graphics designed by Color Arts in Racine, Wisconsin, showing the 7-Eleven logo and the slogan "oh thank heaven" at the front along with fast-selling items including sandwiches, coffee, the Big Gulp, and Slurpee at the rear.

The logo and products are joined by orange, green, and red stripes running from front to rear.

"Our goal is to draw in more 7-Eleven customers by providing additional services and high-value products," he says. "Currently, we are introducing 25 to 30 new items every week, and discontinuing slow-moving items."

About the Author

Foss Farrar

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