7-11 expands amid real estate slump
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Kai Ryssdal: A lot of companies have been pulling back during the recession. Cutting costs, laying off workers. But 7-Eleven is going full speed the other way. Marketplace’s Dan Grech has more.
DAN GRECH: Ken Barnes is a real-estate manager for 7-Eleven. He spent all day today driving around Manhattan, scouting new locations.
KEN BARNES: We really are taking a look at pedestrian traffic in front of the location, especially if we’re in an area like the financial district. You know, that’s a key element for a store for us.
7-Eleven plans to open up to 250 more stores nationwide this year. That’s 50 percent more than it opened in 2008. Barnes says the reason for this rapid expansion is simple. Retail rents are down by as much as 30 percent.
BARNES: The mom-and-pop tenants that yesteryear we would have competed against is on pretty shaky ground. And landlords appreciate what we bring to the table as a credit tenant more today than they did a year ago.
For many people, 7-Eleven is a cheap alternative to restaurants and supermarkets. Its 5,700 stores have done well during the downturn. Some analysts call the chain “recession proof.”
Burt Flickinger is with the consulting firm Strategic Research Group. He says 7-Eleven is now positioning itself for the economy to rebound.
BURT FLICKINGER: These are some of the best real-estate prices in nearly 35 years. 7-Eleven knows it can expand, get low rents today and have much more profitable stores tomorrow.
Flickinger says convenience stores are all about location. The average 7-Eleven might pull in $1 to $2 million dollars a year. Find the right street corner, and that revenue can triple.
I’m Dan Grech for Marketplace.
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