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7-Eleven trying out a new recipe

ORLANDO — The buzz among 7-Eleven managers was the new hazelnut-flavored Slurpuccino, but the bigger menu changes were the artisan bread sandwiches.

Really. Lurking among the high-calorie, high-fat grilled hot dogs and Szechuan beef egg rolls, 7-Eleven will be stocking sandwiches made from fresh foccacio, Asiago and multigrain breads. It's the Dallas-based convenience store giant's latest attempt to win converts searching for quality fresh foods in grab-and-go form.

The chain unveiled an array of new sandwiches Wednesday along with more than 300 new products to 548 Florida store managers gathered at its annual marketing conference in Orlando. The company is pouring $1-billion into renovating all stores. About a third are done so far. While the new store exteriors don't look much different, it is the first comprehensive overhaul of the chain since 1992.

"Our fresh food offering establishes a point of difference for us over the other convenience stores," said Joe DePinto, chief executive officer of the chain with 5,200 U.S. stores. "And at a $3.99, they are good value for people used to paying $7 for the same sandwich at a fast casual restaurant."

One of the few chains angling for new customers to augment the convenience store industry's loyal core customer — an 18-to-34 male buying such no-sales-growth products as tobacco and beer — 7-Eleven's ever-expanding fresh food lineup is made possible by the chain shipping fresh-made goods daily from its Orlando commissary and bakeries to 130 stores in the Tampa Bay area. Most of it is thrown out at the end of the day if it doesn't sell. The chain also introduces new labeling next month that includes sell-by dates to ensure freshness.

So far it's working: In the past three years, fresh food sales at 7-Eleven grew by almost a third to 10 percent of the chain's sales. Tobacco products have been nudged out of the top three. Still, beer remains the cornerstone of the business even though an exploding array of bottled water and carbonated soda, and sports, energy and vitamin drinks vie for cooler space.

While much of the fare at 7-Eleven sounds familiar, this is a much different company since its Japanese owners took it private almost two years ago and put DePinto in charge.

The company is converting most stores to franchises, either by selling them to managers or acquiring small mom-and-pop chains and rebranding them. Converted stores can choose their own gasoline brand. It's a strategy that is being used by rival Circle K, too, as independent gas stations look for ways to make their mini-marts more competitive against the big guys.

Gas remains 38 percent of the business at 7-Eleven, much less than rivals. But with gas prices soaring, the company is getting squeezed from two directions.

Pinched customers are faced with cutting back spending or trading down to pay higher gas prices. That's one reason the chain is adding more store brand products that cost less, such as Inked, its own $1.99 alternative to $2.19 Red Bull energy drink. In test mode are value-priced foods that can be heated with convection ovens or microwaves, green and oolong teas and new types of gourmet coffee to keep up higher-priced rivals.

So far, 7-Eleven's profits have not risen with the huge gains in gas prices. "We made about 12 to 13 cents a gallon profit when gas was $1.50 a gallon, and we make 12 to 13 cents a gallon today," DePinto said. "If we lowered our margins, we'll lose money. If we raise them, competitors will take our business."

Mark Albright can be reached at albright@sptimes.com or

(727) 893-8252.

About 7-Eleven

5,400: U.S. stores

24,400: International stores

7-Eleven Inc. is privately held. It became a subsidiary of Seven-Eleven Japan Co. Ltd. in Tokyo in 2005.

>>FAST FACTS

New to the shelf

Among the 300 new store products unveiled Wednesday

to 548 Florida 7-Eleven managers:

• Hazelnut-flavored Slurpuccino that debuts this fall after following the first no-cal, milk-free latte Slurpee, which goes on hiatus later this spring.

• A $9.99 "premium" private-label wine brand called Sonoma Crest that Wine Enthusiast labeled a best buy, and a $1.49 carton of 20 fresh-made Brownie Bites.

• Coming this summer: Slurpee flavors linked to new movie and video game releases such as AMP Energy Drink (Ironman), Full Throttle (a Guitar Hero game) and green Radiation Rick (Incredible Hulk).

7-Eleven trying out a new recipe 03/05/08 [Last modified: Wednesday, March 5, 2008 11:55pm]

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