Alan Beach - convenience...“More landlords are looking at food as an anchor to create sizzle for their centers.” ~ Cynthia Murphy, SVP CBRE Mall Leasing. Restaurants & food tenants

Alan Beach7-Eleven, Inc.

The Numbers, Part II:Categories & Foodservice

Low Income40%

Middle Income40%

High Income20%

US Households

• Income < $50,000• 49% Homeowners• Decrease in discretionary

share of wallet• No discretionary spend

• Income > $100,000• 83% Homeowners• Income +$46,000 since

2007• 10yr 401k gain +$360,000• 101% of growth in

discretionary spend

• Income $50,000 -$100,000

• 68% Homeowners• Income +$12,624 since

2007• Discretionary spend

$3,162

Source: Deloitte “The great retail bifurcation”

Source: Deloitte analysis of various annual reports

1.) Offer (Product/Quality)2.) Price3.) Service (Staff/Tech.)

• Fast, friendly, frictionless

You’ve got to be good at two and the best at one!

How do you become a destination?

Gap Closing Between Eating out and Staying Home

Source: Bureau of Economic Analysis

Premium Food Becoming Anchor Tenants

“More landlords are looking at food as an anchor to create sizzle for their centers.”

~ Cynthia Murphy, SVP CBRE Mall Leasing

Restaurants & food tenants occupy 20 to 40% of shopping centers, up from 10 to 15% in 2008

Trendy Food Halls Promote Social Eating Environment

• # of food halls predicted to double by 2019 (Currently 100+)

• Diverse range of culinary tastes means customized to me

• Common areas and liquor licenses create social atmosphere

Source: Eater.com

Competition and Slow Traffic Affect Restaurant Performance

Source: Jeffries

Value-Focused QSR’s Outperforming on Traffic

Source: Jeffries

Per Store/Per Month Previous Current Change

McDonalds (U.S. SSS) 1.7% 4.1% 2.4pts

(U.S. Franchised) 3.0% 7.0% 4.0pts

Burger King (System Wide SSS) 1.7% 3.6% 1.9pts

(System Wide total) 7.0% 11.2% 4.2pts

Wendy’s (N.A. SSS Company Owned) 2.7% 2.3% (0.4pts)

(N.A. SSS Franchised) 1.4% 2.4% 1.0pts

Taco Bell (System Wide SSS) 2.0% 3.0% 1.0pts

KFC (System Wide SSS) 3.0% 4.0% 1.0pts

Pizza Hut (System Wide SSS) (1.0%) 1.0% 2.0pts

SSS = Same Store Sales

QSR Sales Change

Source: Company 10K’s

McDonald’s Returning to Core Offer – Winning on Value

Q3 ’17 Same-store-sales

4.1% vs. 3.6% est.

Source: McDonald’s 10Q

Dunkin’ Uses McDonald’s Value Menu Playbook

• Three-tiered pricing

• Available all day

“We are excited to offer the value of quality products at compelling prices.”

~ Tony Weisman, CMO

Taco Bell Entering Value War With $1 Fries Taco Bell has sold 53m orders since January, 1/3 of

orders has included fries since launch

Source: Business Insider

Fast-Food Pizza Offers Convenience and Tech. Integration

2%

2%

2%

3%

6%

13%

0% 2% 4% 6% 8% 10% 12% 14%

McDonald's

Wendy's

Panera Break

Shake Shack

Papa John's

Domino's

2017 3Q Same-store sales change YoY

Pizza chains are outpacing other restaurants by touting fast, convenient service

Source: Bloomberg

• McDonald’s to remove foam cups & trays in every location

• 100% recycled fiber-based packaging globally by 2020

McDonalds Continues Social-Purpose Trend

Source: Business Insider, CNBC

Sonic Starting Summer EarlyHalf-price frozen treats after 8 p.m. started early this year, beginning the first week of spring

Source: FoodDrive

Tobacco34.1%

Pack Bev

15.8%Beer8.5%

Center Store9.9%

Foodservice22.5%

Other9.2%

Sales

Tobacco17.1%

Pack Bev

20.1%

Beer5.5%

Center Store12.4%

Foodservice33.9%

Other11.0%

GP$

12.4% for stores selling beer 8.2% for stores selling beer

In-Store Contribution

Source: CSX

Smokes

CokesGas

Our Business Model

2017 Sales $ Margin $ GM%

Prepared Food $34,292 $19,440 56.69%

Commissary $2,538 $922 36.33%

Hot Disp Beverages $6,989 $4,587 65.63%

Cold Disp Beverages $3,663 $1,865 50.91%

Frozen Disp Beverages $2,357 $1,473 62.50%

Foodservice

Source: CSX

2017 YOY Sales % Change GP$ % Change GM% Pt Change

Prepared Food 3.7% 4.2% 0.5%

Commissary (3.8%) (5.1%) (1.4%)

Hot Disp Beverages 0.7% 2.2% 1.5%

Cold Disp Beverages 0.3% 2.7% 2.5%

Frozen Disp Beverages (0.6%) (1.9%) (1.2%)

Foodservice

Source: CSX

36 Month Foodservice Sales Growth

90

100

110

120Ja

n-15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov

-17

Prepared Food 110

Commissary 101

Frozen DB 108

Total FS 110

Cold DB 109

Hot DB 105

Source: CSX

36 Month Foodservice GP$ Growth

Prepared Food 110

Commissary 86

Frozen DB 95

Total FS 104

Cold DB 97Hot DB 99

80

90

100

110

120

130

140Ja

n-15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov

-17

Source: CSX

Foodservice Category YOY Sales Change Per Store/Per Month National NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)

Prepared Food 3.7% 1.8% 11.0% (1.4%) 7.8% 4.3% 4.7%

Commissary (3.8%) (6.7%) (1.5%) (10.2%) (8.7%) 12.1% 10.3%

Hot Dispensed 0.7% 0.7% 1.5% 0.1% 2.3% 1.3% 4.6%

Cold Dispensed 0.3% 6.0% (3.2%) 0.1% 1.2% (1.1%) 1.3%

Frozen Dispensed (0.6%) 6.5% (10.2%) (13.9%) (6.5%) (10.5%) (0.6%)

Source: CSX

Foodservice Category YOY GP$ Change Per Store/Per Month National NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)

Prepared Food 4.2% 2.4% 6.5% (2.6%) 9.1% 7.7% 6.2%

Commissary (5.1%) (4.8%) (7.5%) (12.9%) (7.7%) 8.7% 10.3%

Hot Dispensed 2.2% 1.5% (2.8%) (1.8%) 5.6% 5.1% 8.8%

Cold Dispensed 2.7% 2.7% (6.9%) (0.9%) 2.4% 4.1% 3.8%

Frozen Dispensed (1.9%) 2.6% (11.8%) (6.4%) (8.5%) (14.7%) 1.7%

Source: CSX

ProliferationAdoptionInception Ubiquity

Time

Gro

wth

S Curve Phases

Foodservice InnovationProliferationAdoptionInception Ubiquity

Time

Gro

wth

• Fine Dining• Ethnic Markets• Ethnic Aisle

• Farmer’s Markets

• Specialty Grocers

• Food Trucks• Chef-casual

• Hotels• Casual chains &

QSR• Traditional

Grocery• Colleges

• Convenience Stores

• Drug• Dollar• K-12 Schools

Source: Datassentials & Anheuser-Busch

US Households Embrace Healthy BFY Trends

% of US Households that said the below claims are important

Source: Nielsen Homescan Shopper 2017

• Sweetgreen raised over $100 million (in ten years) and opened 20 new locations (in 2017)

• Salata to top 100 locations by 2019• Chopt has 54 locations• Greenleaf focusing on branding tailored to Millennials and Gen Z• Honeygrow opened 30 locations in 5 years, is focusing on frictionless ordering

Salad is the New Pizza

Source: FoodDrive

89.3

%

6.2%

4.4%

0.0%

95.0

%

4.0%

1.0%

0.0%

59.6

%

35.4

%

4.3%

0.7%

42.8

%

49.6

%

4.6%

3.0%

24.7

%

66.0

%

5.0%

4.4%36

.1%

36.3

%

18.9

%

8.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Convenience Food Drug Mass

Cigarettes OTP Beer Pack bev Salty snacks Candy

C-Stores Gain Share in the Top 6 Categories

Source: Nielsen

Per Store/Per Month Sales $ GP$ GM%Cigarettes $46,555 $6,980 14.99%

Packaged Beverages $25,544 $11,230 43.96%

Beer $16,901 $3,853 22.80%

OTP $8,574 $2,570 29.98%

Salty Snacks $7,040 $2,719 38.62%

Candy $5,531 $2,804 50.69%

Milk $2,789 $853 30.59%

General Merchandise $2,350 $1,109 47.20%

HBC $2,125 $1,139 53.18%

Alternative Snacks $2,037 $984 48.27%

Top Ten Merchandise Categories

Source: CSX

Per Store/Per Month Sales % Chg GP$ % Chg GM% Pt ChgCigarettes 2.4% (0.7%) (0.47)

Packaged Beverages 0.4% 0.4% 0.03

Beer 1.1% 0.6% (0.11)

OTP 11.2% 9.2% (0.54)

Salty Snacks 5.6% 7.9% 0.82

Candy 2.6% 5.9% 1.59

Milk 7.4% 6.5% (0.25)

General Merchandise 6.4% 5.7% (0.31)

HBC 2.5% 2.8% 0.17

Alternative Snacks 2.0% 2.8% 0.39

Top Ten Merchandise Categories, YOY Change

Source: CSX

Per Store/Per Month Sales $ GP$ GM%Packaged Sweet Snacks $1,661 $659 39.67%

Wine $1,518 $441 29.02%

Packaged Ice Cream/Novelties $1,495 $696 46.56%

Ice $1,141 $703 61.66%

Edible Grocery $1,078 $488 45.21%

Publications $976 $115 11.76%

Other Dairy $699 $313 44.76%

Automotive Products $663 $324 48.89%

Packaged Bread $534 $155 28.99%

Non-Edible Grocery $383 $162 42.40%Source: CSX

Next Ten Merchandise Categories

Per Store/Per Month Sales % Chg GP$ % Chg GM% Pt ChgPackaged Sweet Snacks 7.1% 6.1% (0.40)

Wine 5.0% 5.9% 0.24

Packaged Ice Cream/Novelties (2.6%) 0.0% 1.23

Ice 0.2% (1.0%) (0.73)

Edible Grocery (0.9%) 2.1% 1.33

Publications (5.5%) (12.2%) (0.90)

Other Dairy (0.5%) (2.6%) (0.98)

Automotive Products 4.7% 5.6% 0.45

Packaged Bread (6.5%) (8.5%) (0.62)

Non-Edible Grocery (3.9%) 2.6% 2.69Source: CSX

Next Ten Merchandise Categories, YOY Change

36 Month Category Sales Growth

90

100

110

120

130

140Ja

n-15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov

-17

Cigarettes 105

Salty Snacks 111

Beer 106

Total Merch 110

Pack Bev 116

OTP 138

Candy 109

Source: CSX

36 Month Category GP$ Growth

Cigarettes 110Salty Snacks 110

Beer 105

Total Merch 114Pack Bev 117

OTP 132

Candy 109

90

100

110

120

130

140Ju

l-14

Sep-

14

Nov

-14

Jan-

15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov

-16

Jan-

17

Mar

-17

May

-17

Source: CSX

36.9%35.9%

34.3%32.9%

31.5% 31.0%

28.6%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

2011 2012 2013 2014 2015 2016 2017

Shar

e of

Insi

de S

ales

Cigarette Share of Inside Sales

Source: CSX

0.4%

3.3%

15.4%

80.9%

0.0% 25.0% 50.0% 75.0% 100.0%

Fourth Tier

Sub-Generic/PL

Branded Discount

Premium

Sales Contribution

Syndicated Cigarette Sales

-15.8%

8.8%

-6.5%

-3.3%

-10.8%

7.6%

-2.6%

0.8%

-20.0% -10.0% 0.0% 10.0%

Sales Change Units Change

Total Units:(3.5%)

Source: Nielsen

Subcategory Monthly Sales Monthly GP$ GM%

Premium $37,659 $5,506 14.62%

Branded Discount $7,191 $1,121 15.59%

Sub-Gen / Private $1,539 $282 18.32%

Fourth Tier $166 $26 15.66%

Cigarettes $46,555 $6,980 14.99%

Total YoY % Change 2.4% (0.7%) (0.47)

Cigarettes by Subcategory

Source: CSX/Nielsen

Cigarette State Tax Increase States: ‘07 to ‘18Year # of States States2007 10 states AK, CT, DE, HI, IA, IN, NH, SD, TN, TX2008 7 states + DC HI, MD, MA, NH, NY, VT, WI, DC

2009 14 states + DC + PR AR, CT, DE, FL, HI, KY, MS, NH, NJ, NC, PA, RI, VT, WI, DC, PR

2010 6 states + GU HI, NM, NY, SC, UT, WA, GU2011 3 states CT, HI, VT2012 2 states IL, RI2013 2 states MA, NH2014 2 states OR, VT (Both increased 13 cents)2015 9 states AL, CT, KS, LA, MN, NV, OH, RI, VT2016 6 states CT, LA, MN, OR, PA, WV2017 5 states + PR CA, CT, DE, MN, RI2018 1 state (so far) OR

No increases in 10 years: CO, GA, ID, OK, ME, MO, MT, ND, NE, VA, WY

“The FDA is envisioning a world where cigarettes can no longer create or sustain addiction, and where adults who still need or want nicotine can get it from alternative and less harmful sources.”

-Scott Gottlieb MD, FDA Commissioner

• Heat-Not-Burn (iQOS) technology looks for US launch pending FDA application process

• FDA will determine role of flavors in appealing to youth smokers, as well as their role in harm reduction products like vapor

• Discussion around lowering nicotine standards in combustible cigarettes opened by FDA on 3/15

• FDA will evaluate warning labels on their effects

FDAFuture of Tobacco is Harm Reduction

Consumers Will Continue to Switch From Cigarettes to OTP

Source: fda.gov

0.8%

1.9%

11.5%

28.7%

57.1%

0.0% 20.0% 40.0% 60.0%

Pipe/CigaretteTobacco

Papers

E-Cigarettes

Cigars

Smokeless

Sales Contribution

Syndicated OTP Sales

-11.7%

-5.0%

21.7%

15.2%

-1.1%

-5.9%

-2.5%

51.1%

14.1%

4.8%

-20.0% 0.0% 20.0% 40.0% 60.0%


Total Units:8.5%

Source: Nielsen


Smokeless $4,897 $1,140 23.28%

Cigars $2,461 $883 35.88%

E-Cigarettes $985 $328 33.30%

Papers $165 $82 49.70%

Pipe/Cigarette Tobacco $66 $21 31.82%

OTP $8,574 $2,570 29.97%

Total YoY % Change 11.2% 9.2% (0.54) pts

OTP by Subcategory

Source: CSX/Nielsen

Vaping the Fastest Growing OTP Subcategory • Vaping benefits from

evolving tobacco consumer, who is willing to trade up to higher price points

• Growth in c-store coming from closed system, pod based devices

• The vaping industry and retailers await key decisions from FDA, and focus on growth in the short term

3.1%

5.9%

6.2%

7.8%

9.7%

10.9%

26.8%

29.6%

0.0% 20.0% 40.0%

Enhanced Water

Iced Tea Ready-To-Drink

Other PackagedBeverages

Juice

Sports Drinks

Bottled Water

Alternative

Carbonated SoftDrinks

Sales Contribution

Syndicated Packaged Beverage Sales

7.3%

3.1%

-0.1%

-5.1%

-5.2%

-2.5%

3.1%

-5.7%

9.1%

3.5%

3.1%

-4.5%

-3.8%

0.6%

3.5%

-3.4%

-10.0% 0.0% 10.0%


Total Units:(2.3%)

Source: Nielsen


Carbonated Soft Drinks $7,566 $2,549 33.69%Alternative $6,852 $2,755 40.21%Bottled Water $2,782 $1,538 55.28%Sport Drinks $2,485 $1,058 42.58%Juice/Juice Drinks $1,986 $904 45.52%Other Packaged Beverages $1,572 $631 40.14%Iced Tea RTD $1,503 $683 45.44%Enhanced Water $798 $313 39.22%

Packaged Beverages $25,544 $11,230 43.96%Total YoY % Change 0.4% 0.4% 0.03 pts

Packaged Beverages by Subcategory

Source: CSX/Nielsen

Energy Growth Tapers Off – BFY Trends Take Hold

Sparkling Water Presents Big Growth Opportunity

Innovation in RTD Coffee

Philadelphia Sugar Tax Revenue Misses Mark

1. Berkeley, CA2. San Francisco, CA3. Oakland, CA4. Albany, CA5. Philadelphia, PA6. Boulder, CO7. Seattle, WA

7 Million Americans Living with Sugar Tax

On Jan 1, 2017 Philadelphia implemented a 1.5 cent per ounce tax on sweetened drinks

Inside PhiladelphiaCarbonated Soft Drink sales down 55%

Just Outside PhiladelphiaCarbonated Soft Drink sales up 38%

Source: Vox, CNBC

Growth in Private Label Packaged Beverages

Source: Nielsen

0.1%

2.0%

5.4%

5.6%

7.7%

8.2%

8.4%

16.9%

45.7%

0.0% 20.0% 40.0% 60.0%

Non-Alcoholic

Malt Liquor

Micro

Super Premium

Popular

Budget

Flavored Malt

Imports

PremiumSales Contribution

Syndicated Beer Sales

8.5%

-4.0%

5.8%

22.2%

-2.2%

-3.6%

4.9%

8.6%

-3.3%

2.5%

-4.5%

3.8%

23.1%

-1.7%

-3.3%

3.6%

10.4%

-4.5%

-10.0% 0.0% 10.0% 20.0% 30.0%


Total Units:0.4%

Source: Nielsen


Premium $7,758 $1,316 16.96%Imports $2,848 $580 20.37%Flavored Malt $1,414 $410 29.00%Budget $1,378 $239 17.34%Popular $1,303 $234 17.96%Super Premium $952 $196 20.59%Micro $908 $227 25.00%Malt Liquor $330 $78 23.64%Non-Alcoholic $9 $2 22.22%Total $16,901 $3,853 22.80%

Total YoY % Change 1.1% 0.6% (0.11) pts

Beer by Subcategory

Source: CSX/Nielsen

Craft Levels Off – Super Premium and Mexican Beer Surge

Super premium• Sales up 23.7% • Units up 23.1%

Imports• Sales up 10.6% • Units up 9.2%

FMB• Sales up 3.6%• Units up 4.9%

Source: Nielsen

• Wine growth rates have slowed to 1.3% in ‘17 compared to 2.6% in ‘16

• The largest wine segment at 55% (excluding boxed) of volume is under $8 wine

• Under $8 segment had negative growth YoY

• The $15-$19.99 price segment drove an overall wine increase with double digit growth in ‘17

Wine Volume Grows for 25th Consecutive YearOff-premise wine makes up 78% of total US market, mid-priced wine leads to growth

Source: Nielsen, Brager

3.9%

5.4%

12.8%

15.5%

24.4%

38.0%

0.0% 20.0% 40.0%

Non-Chocolate Bars

Rolls/ Mints/ Drops

Novelty/ Seasonal

Gum

Chocolate Bars

Bagged/ RepackedPeg

Sales Contribution

Syndicated Candy Sales

-5.4%

-7.1%

1.7%

-6.6%

-8.4%

4.8%

-4.5%

-6.3%

6.4%

-3.7%

-6.4%

5.7%

-10.0% -5.0% 0.0% 5.0% 10.0%


Total Units:(2.2%)

Source: Nielsen


Bagged, Repacked Peg $2,105 $1,014 48.17%

Chocolate Bars $1,348 $649 48.15%

Gum $860 $436 50.70%

Novelties Seasonal $707 $330 46.68%

Candy Rolls, Mints, Drops $298 $153 51.34%

Non-Chocolate Bars $213 $112 52.58%

Total $5,531 2,804 50.69%

Total YoY % Change 2.6% 5.9% 1.59 pts

Candy by Subcategory

Source: CSX/Nielsen

‘ 17 Units –Bagged Peg

Candy

Candy Growth in Novelties/Seasonal & Non-Chocolate

4.8%

‘ 17 Units –Novelties, Seasonal

1.7%

Source: Nielsen

• Focus shift to what products don’thave — free-from labels

• Manufacturers, in a collaboration with Partnership for a Healthier American, commit to making 50% of their individually wrapped products <200 calories by 2022

• Smaller packaging, new product innovation

• Smaller brands pinpointing trends being bought by larger manufacturers

Candy Manufacturers Continue to Move Towards Health

3.6%

4.1%

4.8%

5.2%

9.5%

13.1%

16.4%

17.8%

25.5%

0.0% 10.0% 20.0% 30.0%

Pretzels

Poporn Ready-To-Eat

Crackers

Mixed

Puffed Cheese

Nuts/Seeds

Other SaltySnacks

Tortilla CornChips

Potato ChipsSales Contribution

Syndicated Salty Snack Sales

-3.6%

-2.3%

-1.1%

-2.2%

-1.8%

-4.8%

-1.2%

-2.6%

-0.7%

0.4%

4.4%

1.7%

0.3%

9.3%

-3.3%

5.2%

4.9%

6.0%

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%


Total Units:(2.1%)

Source: Nielsen

Salty Snacks by SubcategorySubcategory Monthly Sales Monthly GP$ GM%

Potato Chips $1,797 $633 35.23%Tortilla Corn Chips $1,255 $389 31.00%Other Salty Snacks $1,155 $453 39.22%Nuts/Seeds $919 $422 45.92%Puffed Cheese $670 $204 30.45%Mixed $364 $156 42.86%Crackers $337 $164 48.66%Packaged Popcorn $287 $98 34.15%Pretzels $256 $113 44.14%Total $7,040 $2,719 38.62%

Total YoY % Change 5.6% 7.9% 0.82 ptsSource: CSX/Nielsen

Bold Flavors, BFY Trends in Salty Snacks

4.3%

7.0%

28.3%

60.3%

0.0% 40.0% 80.0%

Granola/YogurtBars

Other AlternativeSnacks

Health/Energy Bars

Meat Snacks

Sales Contribution

Syndicated Alternative Snack Sales

-6.7%

-6.4%

-2.9%

0.3%

-8.6%

-2.8%

-1.8%

4.0%

-10.0% -5.0% 0.0% 5.0%


Total Units:(2.0%)

Source: Nielsen


Meat Snacks $1,229 $534 43.45%

Health/Energy/Protein Bars $577 $297 51.47%

Other Alt Snacks $143 $62 43.36%

Granola/Fruit Bars $88 $40 45.45%

Total $2,037 $984 48.27%

Total YoY % Change 2.0% 2.8% 0.39 pts

Alternative Snacks by Subcategory

Source: CSX/Nielsen

Protein Rich Meat Snacks Dominate Alternative Snacking

Innovation occurring through:1. Small batch, craft approach2. Premiumization of core products3. New flavors/ proteins4. Clean labeling

• Revenue up 42%• Highest growth (75%) – Dry fruit snacks• Largest categories—chocolate candy & salty snacks ($31M each) and non-

chocolate candy ($27M)

Private Label Driving Amazon Sweets & Snacks

Regional Category YOY Sales ChangePer Store/Per Month National NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)

Cigarettes 2.4% (2.9%) (1.9%) 0.2% 0.7% 2.9% 2.8%

Packaged Beverages 0.4% 0.2% (0.6%) 1.5% 3.4% 1.8% 5.3%

Beer 1.1% 1.2% 1.2% (2.5%) 1.1% 2.9% (0.8%)

OTP 11.2% 19.7% 7.2% 9.6% 9.7% 8.2% 14.8%

Salty Snacks 5.6% 0.3% 5.1% 7.4% (2.9%) 5.5% 6.0%

Candy 2.6% 1.9% 2.2% 4.7% 2.8% 1.2% 5.0%

Milk 7.4% (4.0%) 9.3% (11.3%) (1.4%) 0.6% (4.3%)

General Merchandise 6.4% 11.2% (5.7%) 12.8% (2.0%) 0.0% 6.1%

HBC 2.5% 0.7% (0.9%) 4.1% 1.4% 0.1% 6.2%

Alternative Snacks 2.0% (0.5%) 0.6% 6.7% 0.1% 5.1% 1.2%Source: CSX

Regional Category GP$ YOY Change Per Store/Per Month National NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)

Cigarettes (0.7%) (2.7%) 7.0% (2.9%) 0.1% (1.7%) (1.5%)

Packaged Beverages 0.4% 1.9% (0.2%) 3.8% 4.3% 1.0% 7.5%

Beer 0.6% (0.5%) 2.9% (0.6%) 3.5% 2.1% (0.3%)

OTP 9.2% 15.9% 8.9% 8.2% 11.5% 7.2% 14.5%

Salty Snacks 7.9% 3.7% 8.7% 5.8% (2.9%) 6.6% 5.4%

Candy 5.9% 8.5% 3.9% 5.2% 3.5% 1.7% 4.7%

Milk 6.5% (10.8%) 6.9% (5.2%) (3.4%) (2.3%) (6.9%)

General Merchandise 5.7% 12.1% (0.8%) 10.7% (2.1%) (0.2%) 5.3%

HBC 2.8% 1.0% (3.0%) 4.1% (3.3%) 0.6% 4.7%

Alternative Snacks 2.8% 9.7% 0.1% 2.2% (3.2%) 4.3% 1.3%Source: CSX

Jan-Dec 2017 TopQuartile

BottomQuartile Diff.

Cigarettes $67,598 $36,583 1.8x

Packaged Beverages 30,124 15,282 2.0x

Beer 16,899 15,362 1.1x

OTP 10,973 6,376 1.7x

Salty Snacks 7,845 3,605 2.2x

Candy 6,695 3,434 1.9x

Prepared Food 39,623 11,139 3.6x

Hot Dsp Beverages 10,259 1,959 5.2x

Cold Dsp Beverages 4,814 2,408 2.0x

Core Category Sales

Source: CSX



Cigarettes $9,930 $5,601 1.8x

Packaged Beverages $12,510 $5,548 2.3x

Beer $3,170 $3,425 0.9x

OTP $3,000 $1,474 2.0x

Salty Snacks $2,993 $1,342 2.2x

Candy $3,347 $1,527 2.2x

Prepared Food $21,604 $5,462 4.0x

Hot Dsp Beverages $6,558 $877 7.5x

Cold Dsp Beverages $2,531 $915 2.8x

Core Category GP$s

Source: CSX



Cigarettes 14.69% 15.31% (0.62) pts

Packaged Beverages 41.53% 36.31% 5.22 pts

Beer 18.76% 22.30% (3.54) pts

OTP 27.34% 23.12% 4.22 pts

Salty Snacks 38.15% 37.24% 0.91 pts

Candy 49.99% 44.48% 5.51 pts

Prepared Food 54.52% 49.04% 5.48 pts

Hot Dsp Beverages 63.92% 44.76% 19.16 pts

Cold Dsp Beverages 52.57% 38.03% 14.54 pts

Core Category GM%

Source: CSX

• Units down, sales up• Inflation driven increases• Impact of channel blurring & e-commerce

• Huge shifts in sub-categories• Premium vs. Value (private label)

• We need to solve new consumer needs, not duplicate each other

• We need to get better data to better understand our consumer

Common Themes

1.4%1.1%2.7%3.4%

5.4%5.7%6.2%6.7%7.0%

8.9%12.4%

16.0%16.8%17.7%

26.5%29.0%30.2%

33.5%69.2%

0.0% 20.0% 40.0% 60.0% 80.0%

OtherHealthy options

Good beer/alcohol selectionFreshness of products

Quality fountain or frozen beveragesGood food

Good merchandise selectionQuality coffee

Good sales, discounts and promotionsThe store is well stocked find what I’m looking for

Services such as ATMs, carwash, lotteryClean restroom

Safe shopping environmentLow food and merchandise pricesClean inside and outside of store

Low gas pricesFriendly staff

Quick service (In and Out Quickly)Location (close to home, work or sales route)

What is Most Important to Satisfy Shoppers?

Source: NACS Convenience Tracking Program, n= 10,000What are the 3 most important things that this store MUST deliver for you to be satisfied?

What if location was irrelevant? Amazon/Walmart Click & Collect

Amazon’s “Instant Pickup” Offers Snack & Beverage Orders in 2 Mins or Less

Locations: Los Angeles, Boston, Atlanta, Berkley, California; Columbus, Ohio; and College Park, Maryland

Walmart Grocery Click & Collect Open 24 HoursOklahoma City: Shoppers order online or w/ app and pick up 24 hours using 5 digit code

Orders staged in 20 x 80 ft. standalone building

• Online alcohol delivery accounts for $776m in revenue across 221 businesses (Avg. $3.5m per company)• Annual growth rate of 10.6% from ‘13 to ‘18

• Most popular alcohol to be purchased online is Wine

• Drizly #1 retailer with online sales of $12m in 2017, up 62% from 2016• Serves 70 markets

Online Alcohol Delivery Expanding

Source: IBIS World, Digital Commerce 360

Where/when do shoppers decide to purchase?

48.8% 42.5% 8.7%

Premeditated OnsiteEn Route

How are you delivering on past shopper experience—what are you famous for?

• Unaided brand awareness

• Historical brand promise

• Coupons

• Radio• Billboard• Pole signs• Banners• Geofencing

• Pump toppers• Video screens• Outside/Inside signs• Beacons

Source: NACS Convenience Tracking Program, n= 10,000Where did you decide to purchase your main item?

Decision to Purchase by Category – All Firms

Category Premeditated En Route Onsite

All Categories 48.8% 42.5% 8.7%

Cigarettes 61.6% 34.7% 3.6%

Prepared Food 47.0% 40.1% 12.9%

Source: NACS Convenience Tracking Program, n= 10,000Where did you make the decision to purchase your main item?

Promotion Awareness Trend

25.3%27.4%

22.7%

17.0%

21.7%

2013 2014 2015 2016 2017

22 out of 100 peoplenoticed a promotion

Source: NACS Convenience Tracking Program, n= 70,000Did you notice any items on promotion/sale here today?

Promotion Engagement Trend

37.8%38.7% 38.3%

36.0%

33.4%

2013 2014 2015 2016 2017

7 out of 100 people noticed and bought

Source: NACS Convenience Tracking Program, n= 70,000Did you buy any items on promotion/sale here today?

The Message Is Lost In the Perpetual Noise

When will you consume your purchase?

79.8% 80.2% 80.7% 83.4% 83.5%

63.6% 64.6% 64.7% 64.6%

83.2%

0%10%20%30%40%50%60%70%80%90%

2009 2010 2011 2012 2013 2014 2015 2016 2017

83.5% 83.4%

Immediately

83.3%

Source: NACS Convenience Tracking Program, n=126,000

1. Offer (Product/Quality)2. Price3. Service (Staff/Tech.)

• Fast, friendly, frictionless

You’ve got to be good at two and the best at one!

How do you become a destination?

Alan Beach7-Eleven, Inc.

Documents

Alan Beach - convenience...“More landlords are looking at food as an anchor to create sizzle for their centers.” ~ Cynthia Murphy, SVP CBRE Mall Leasing. Restaurants & food tenants