Gulp! 7-Eleven unseats Subway as top franchise

By Nichole L. Torres

updated 10:50 a.m. ET Jan. 18, 2008

It's a new year and a new No. 1.

After knocking on the door and being in the top 10 an impressive 16 times, 7-Eleven Inc. has claimed the top spot of Entrepreneur's 29th Annual Franchise 500 for the very first time.

If you think you know the famed retailer because you hit 7-Eleven for your morning coffee and muffin or a Big Gulp after work, think again. There are new developments a-brewing at 7-Eleven Inc. that are pushing it into the stratosphere. Its store base has grown — specifically with a push toward having more franchisee-owned stores and fewer corporate-owned ones.

"Our big reason for that is our franchisees have a vested interest in being successful," says Joseph DePinto, president and CEO of 7-Eleven. "They know their customers, and it's about delivering great customer satisfaction and the products our customers want. Our franchisees do that extremely well."

There are currently 5,580 7-Eleven franchises in the U.S. and 25,062 abroad. In fact, a new 7-Eleven opens somewhere in the world about every four and a half hours, says DePinto. The company boasts a proprietary IT system that helps franchisees determine their specific in-store product assortment and makes a pipeline of new products available on a weekly basis.

Franchise 500 Top-ranking franchises Following are the most attractive franchise opportunities for 2008, according to Entrepreneur magazine: 1. 7-Eleven 2. Subway 3. Dunkin' Donuts 4. Pizza Hut 5. McDonald's 6. Sonic Drive In Restaurants 7. KFC 8. InterContinental Hotels Group 9. Domino's Pizza 10. RE/MAX Source: Entrepreneur.com

Franchisees benefit not only from exclusive brands, but also from the economies of scale that being part of a huge network entails. Still, it's the local flavor that gives 7-Eleven its soul.

"We're a very nimble retailer," says DePinto. "Although we're a global company, we act and operate our stores as if they're local. So [franchisees] can take advantage of local trends and local products that customers want."

In fact, after seeing a demand in the Latino market for a beer mixed with clam sauce and tomato juice, the franchisor partnered with Anheuser-Busch to develop Chelada brand beer.

"We tested it in our stores, and it's been selling really well," says DePinto. Another successful match was with Citibank, which provides ATMs in 7-Eleven stores. It's those kinds of partnerships that help give 7-Eleven its cachet. "Partnering with other organizations allows us to develop programs and products to create innovative items we can bring to customers that they can't get anywhere else," says DePinto, who has been at the helm of the company for two years.

It was a strategic partnership with 20th Century Fox Film Corp. and Gracie Films, creator of "The Simpsons," that led to a juggernaut of publicity last summer. To promote the long-awaited release of "The Simpsons Movie," 7-Eleven turned 12 stores throughout the country into Kwik-E-Marts, the name of the famed fictional convenience store in the show. To complete the transformation, 7-Eleven even worked with vendors such as Cott Beverages and Malt-O-Meal to bring fictional products like Buzz Cola and Krusty-Os cereal to life.

"It was astounding," says DePinto. "There were lines coming out of those stores, and some of their volumes were unbelievable." He says the overall promotion was much greater than they anticipated, but that they "had plenty of product and everybody had a lot of fun."

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