The convenience store business is bracing for a new onslaught of competitors and 7-Eleven has its battle plan ready.

With the U.K.’s Tesco bringing its small-format Fresh & Easy Neighborhood Markets to Western states, and supermarkets and Wal-Mart getting set to counter the move, Joe DePinto, president and chief executive officer of7-Eleven, is vigilant, but not worried.

These stores of 12,000-15,000 square feet “don’t really lend themselves to convenience, meaning it’s not so easy to pull up, get in and get out if you have to walk halfway through the store to find what you want,” DePinto said.

Although the new stores will carry fresh foods, “we don’t believe that they are going to be convenient fresh foods.”

But DePinto and his 7-Eleven team respects Tesco. “We know how they operate and how good they are, so we are staying on our toes.”

7-Eleven already has been building up its food business “and we continue to expand our fresh food assortment. Similar to Tesco, we have daily distribution of fresh food to all of our stores,” he said.

“We are currently piloting a hot food test in our Chesapeake market, and we will begin to roll that out nationally later this year and into 2009.”

One of the factors that led to the chain’s expansion into fresh food was the downturn in the tobacco business.

“Ultimately, we are going to build this business for the long term through food and beverages,” he said.

One of DePinto’s efforts has been a “change in the culture” of the company through shifting from a mix of corporately owned and franchised stores to all franchises. Currently in the U.S., there are a total of 6,100 stores and 76% are franchised. By this time next year, DePinto hopes that 85% will be franchised, and all will be by 2012. 7-Eleven is a subsidiary of Tokyo-based Seven and I Holdings Co.

The highest-profile accomplishment in the past year was an extensive cross-promotion with last summer’s “The Simpsons Movie.” A dozen stores were turned into Kwik- E-Marts, the convenience store frequented by the Simpsons, and fictional products from the TV show were sold. The campaign won numerous awards, and resulted in widespread publicity.

The opportunity for 7-Eleven is “how to morph from something more than a gas and cigarettes and beer stop into more of a provider of quick and easy solutions, from products to meals,” said Don Stuart, managing director, Cannondale Associates, Wilton, Conn. “The challenge is, some folks do it better than they do right now.”

— DAN ALAIMO

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