7-ELEVEN EYES FRESH FOODS

7-Eleven, Dallas, will step up its efforts to sell fresh foods, said Jim Keyes, the company's president and chief executive officer, who sees the fresh segment as a big growth opportunity for the c-store operator.The company's use of a proprietary distribution infrastructure, which it has been developing over the last seven years, makes its fresh-food strategy possible, Keyes said at the Credit Suisse

7-Eleven, Dallas, will step up its efforts to sell fresh foods, said Jim Keyes, the company's president and chief executive officer, who sees the fresh segment as a big growth opportunity for the c-store operator.

The company's use of a proprietary distribution infrastructure, which it has been developing over the last seven years, makes its fresh-food strategy possible, Keyes said at the Credit Suisse First Boston Food and Drug Retailing Conference.

"This [proprietary distribution] gives us access to things like delivery of fresh milk seven days a week, which most grocery stores can't even offer," he said.

Daily deliveries now are made to 4,000 7-Eleven stores, he said. This year the company will add another 1,000 stores in Los Angeles and San Diego. There are now just over 5,800 7-Eleven stores in the United States and Canada.

Within the next 18 months, Keyes expects, 7-Eleven will "substantially complete" the work on its proprietary distribution system.

"With a proprietary infrastructure to support daily deliveries, it allows us to do fresh foods," Keyes told the gathering.

He noted that fresh foods are nearly a $400 billion industry. There is "a big niche opportunity for portable fast foods," Keyes said. "The need is why Subway is so successful. But Subway takes time and has limited locations. We can offer that kind of quality with greater convenience and good value."

Keyes said 7-Eleven would test a fresh-foods program in two markets this year by leveraging a successful 7-Eleven brand -- the Big Gulp. "We are going to leverage the Big Gulp image and logo, take it to the food service and call it Big Eats," Keyes said. "We're going to borrow brand equity that 7-Eleven is known for to communicate the quality and value of our fresh-foods program."

Other growth initiatives that the company is pursuing are: growing its financial services offering; introducing more proprietary brands sold in the traditional c-store segment that help the chain differentiate itself; and expanding its international licensees.