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 $6,980 14.99%
Total YoY % Change 2.4% (0.7%) (0.47)
Cigarettes by Subcategory
Source: CSX/Nielsen
Cigarette State Tax Increase States: ‘07 to ‘18Year # of States States2007 10 states AK, CT, DE, HI, IA, IN, NH, SD, TN, TX2008 7 states + DC HI, MD, MA, NH, NY, VT, WI, DC
2009 14 states + DC + PR AR, CT, DE, FL, HI, KY, MS, NH, NJ, NC, PA, RI, VT, WI, DC, PR
2010 6 states + GU HI, NM, NY, SC, UT, WA, GU2011 3 states CT, HI, VT2012 2 states IL, RI2013 2 states MA, NH2014 2 states OR, VT (Both increased 13 cents)2015 9 states AL, CT, KS, LA, MN, NV, OH, RI, VT2016 6 states CT, LA, MN, OR, PA, WV2017 5 states + PR CA, CT, DE, MN, RI2018 1 state (so far) OR
No increases in 10 years: CO, GA, ID, OK, ME, MO, MT, ND, NE, VA, WY
“The FDA is envisioning a world where cigarettes can no longer create or sustain addiction, and where adults who still need or want nicotine can get it from alternative and less harmful sources.”
-Scott Gottlieb MD, FDA Commissioner
• Heat-Not-Burn (iQOS) technology looks for US launch pending FDA application process
• FDA will determine role of flavors in appealing to youth smokers, as well as their role in harm reduction products like vapor
• Discussion around lowering nicotine standards in combustible cigarettes opened by FDA on 3/15
• FDA will evaluate warning labels on their effects
FDAFuture of Tobacco is Harm Reduction
Consumers Will Continue to Switch From Cigarettes to OTP
Source: fda.gov
0.8%
1.9%
11.5%
28.7%
57.1%
0.0% 20.0% 40.0% 60.0%
Pipe/CigaretteTobacco
Papers
E-Cigarettes
Cigars
Smokeless
Sales Contribution
Syndicated OTP Sales
-11.7%
-5.0%
21.7%
15.2%
-1.1%
-5.9%
-2.5%
51.1%
14.1%
4.8%
-20.0% 0.0% 20.0% 40.0% 60.0%
Sales Change Units Change
Total Units:8.5%
Source: Nielsen
Subcategory Monthly Sales Monthly GP$ GM%
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 $2,570 29.97%
Total YoY % Change 11.2% 9.2% (0.54) pts
OTP by Subcategory
Source: CSX/Nielsen
Vaping the Fastest Growing OTP Subcategory • Vaping benefits from
evolving tobacco consumer, who is willing to trade up to higher price points
• Growth in c-store coming from closed system, pod based devices
• The vaping industry and retailers await key decisions from FDA, and focus on growth in the short term
3.1%
5.9%
6.2%
7.8%
9.7%
10.9%
26.8%
29.6%
0.0% 20.0% 40.0%
Enhanced Water
Iced Tea Ready-To-Drink
Other PackagedBeverages
Juice
Sports Drinks
Bottled Water
Alternative
Carbonated SoftDrinks
Sales Contribution
Syndicated Packaged Beverage Sales
7.3%
3.1%
-0.1%
-5.1%
-5.2%
-2.5%
3.1%
-5.7%
9.1%
3.5%
3.1%
-4.5%
-3.8%
0.6%
3.5%
-3.4%
-10.0% 0.0% 10.0%
Sales Change Units Change
Total Units:(2.3%)
Source: Nielsen
Subcategory Monthly Sales Monthly GP$ GM%
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 $11,230 43.96%Total YoY % Change 0.4% 0.4% 0.03 pts
Packaged Beverages by Subcategory
Source: CSX/Nielsen
Energy Growth Tapers Off – BFY Trends Take Hold
Sparkling Water Presents Big Growth Opportunity
Innovation in RTD Coffee
Philadelphia Sugar Tax Revenue Misses Mark
1. Berkeley, CA2. San Francisco, CA3. Oakland, CA4. Albany, CA5. Philadelphia, PA6. Boulder, CO7. Seattle, WA
7 Million Americans Living with Sugar Tax
On Jan 1, 2017 Philadelphia implemented a 1.5 cent per ounce tax on sweetened drinks
Inside PhiladelphiaCarbonated Soft Drink sales down 55%
Just Outside PhiladelphiaCarbonated Soft Drink sales up 38%
Source: Vox, CNBC
Growth in Private Label Packaged Beverages
Source: Nielsen
0.1%
2.0%
5.4%
5.6%
7.7%
8.2%
8.4%
16.9%
45.7%
0.0% 20.0% 40.0% 60.0%
Non-Alcoholic
Malt Liquor
Micro
Super Premium
Popular
Budget
Flavored Malt
Imports
PremiumSales Contribution
Syndicated Beer Sales
8.5%
-4.0%
5.8%
22.2%
-2.2%
-3.6%
4.9%
8.6%
-3.3%
2.5%
-4.5%
3.8%
23.1%
-1.7%
-3.3%
3.6%
10.4%
-4.5%
-10.0% 0.0% 10.0% 20.0% 30.0%
Sales Change Units Change
Total Units:0.4%
Source: Nielsen
Subcategory Monthly Sales Monthly GP$ GM%
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-$19.99 price segment drove an overall wine increase with double digit growth in ‘17
Wine Volume Grows for 25th Consecutive YearOff-premise wine makes up 78% of total US market, mid-priced wine leads to growth
Source: Nielsen, Brager
3.9%
5.4%
12.8%
15.5%
24.4%
38.0%
0.0% 20.0% 40.0%
Non-Chocolate Bars
Rolls/ Mints/ Drops
Novelty/ Seasonal
Gum
Chocolate Bars
Bagged/ RepackedPeg
Sales Contribution
Syndicated Candy Sales
-5.4%
-7.1%
1.7%
-6.6%
-8.4%
4.8%
-4.5%
-6.3%
6.4%
-3.7%
-6.4%
5.7%
-10.0% -5.0% 0.0% 5.0% 10.0%
Sales Change Units Change
Total Units:(2.2%)
Source: Nielsen
Subcategory Monthly Sales Monthly GP$ GM%
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 $5,531 2,804 50.69%
Total YoY % Change 2.6% 5.9% 1.59 pts
Candy by Subcategory
Source: CSX/Nielsen
‘ 17 Units –Bagged Peg
Candy
Candy Growth in Novelties/Seasonal & Non-Chocolate
4.8%
‘ 17 Units –Novelties, Seasonal
1.7%
Source: Nielsen
• Focus shift to what products don’thave — free-from labels
• Manufacturers, in a collaboration with Partnership for a Healthier American, commit to making 50% of their individually wrapped products <200 calories by 2022
• Smaller packaging, new product innovation
• Smaller brands pinpointing trends being bought by larger manufacturers
Candy Manufacturers Continue to Move Towards Health
3.6%
4.1%
4.8%
5.2%
9.5%
13.1%
16.4%
17.8%
25.5%
0.0% 10.0% 20.0% 30.0%
Pretzels
Poporn Ready-To-Eat
Crackers
Mixed
Puffed Cheese
Nuts/Seeds
Other SaltySnacks
Tortilla CornChips
Potato ChipsSales Contribution
Syndicated Salty Snack Sales
-3.6%
-2.3%
-1.1%
-2.2%
-1.8%
-4.8%
-1.2%
-2.6%
-0.7%
0.4%
4.4%
1.7%
0.3%
9.3%
-3.3%
5.2%
4.9%
6.0%
-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
Sales Change Units Change
Total Units:(2.1%)
Source: Nielsen
Salty Snacks by SubcategorySubcategory Monthly Sales Monthly GP$ 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 $2,719 38.62%
Total YoY % Change 5.6% 7.9% 0.82 ptsSource: CSX/Nielsen
Bold Flavors, BFY Trends in Salty Snacks
4.3%
7.0%
28.3%
60.3%
0.0% 40.0% 80.0%
Granola/YogurtBars
Other AlternativeSnacks
Health/Energy Bars
Meat Snacks
Sales Contribution
Syndicated Alternative Snack Sales
-6.7%
-6.4%
-2.9%
0.3%
-8.6%
-2.8%
-1.8%
4.0%
-10.0% -5.0% 0.0% 5.0%
Sales Change Units Change
Total Units:(2.0%)
Source: Nielsen
Subcategory Monthly Sales Monthly GP$ GM%
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
Jan-Dec 2017 TopQuartile
BottomQuartile Diff.
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
Jan-Dec 2017 TopQuartile
BottomQuartile Diff.
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.