7-Eleven franchisees say a ‘dire’ labor shortage is threatening their ability to keep stores open overnight
- Owners say reopening many 7-Eleven locations 24-hours isn’t feasible with the current worker shortage.
- The service industry is struggling with a shortage of critical labor.
- The chain has instructed owners to return to 24/7 service in May after more than a year of nightly closures.
A major group of 7-Eleven franchisees says a national labor shortage is threatening their ability to operate stores 24 hours a day, seven days a week.
The National Coalition of Associations of 7-Eleven Franchisees (NCASEF), which represents about 7,200 US locations, sent a letter to corporate leaders Monday saying the shortage of workers and higher operating costs have led to a “very dire” situation.
Staying open for longer hours, as the company has instructed owners to do by May 24, isn’t feasible, they said. 7-Eleven did not immediately respond to a request for comment.
While 7-Eleven stores are typically open 24 hours a day, the company in March 2020 recommended nightly closures from midnight to 5 a.m. for cleaning. “7‑Eleven stores are essential in communities across the nation and we will continue to keep our doors open, just not 24/7 at all locations,” 7-Eleven president and CEO Joe DePinto wrote at the time.
The service industry is facing historic difficulty staffing stores. Nearly half of all US restaurants say they are “severely understaffed,” and even getting applicants in the door has been a struggle in some cases. Some chains are turning to large-scale hiring events to screen swaths of candidates at once, with perks like cash just for showing up and drive-thru interviews at some stores.
Now, with a return to pre-pandemic hours planned for May, the franchisees say finding staff for overnight shifts is “extremely challenging,” and overnight sales do not necessarily cover the costs of labor. If franchisees are unable to find staff for these shifts, they have to cover them themselves, which can be stressful and even bad for their health, they say in the letter.
“We are already feeling the squeeze,” NCASEF Executive Vice Chairman Michael Jorgensen wrote. “The 7-Eleven Franchise Agreement allows the corporation to keep more than 50 percent of the gross profits of each sale. As labor and other direct store operating expenses keep increasing, franchisees are earning less and working more. One possible remedy for franchisees is to raise retail prices, but that creates a competitive disadvantage in the marketplace, which can adversely affect sales and profits.”
Franchisees are also pushing for changes to the franchise agreement that better fit the store’s current emphasis on prepared meals as opposed to its convenience store roots.
“7-Eleven wants to be a place that customers think of for fresh food, but our Franchise Agreement is based on a convenience store model, not a quick-service restaurant model. The structure of the agreement is flawed. We need a contract that makes this model workable and profitable for franchisees,” Los Angeles-area franchise owner Jas Dhillon said.
The chain is venturing more into quick-service food, with a Texas drive-thru serving tacos and Slurpees, and other collaborations with Laredo Taco Company.
“Because of today’s extremely tight labor market, many franchisees will struggle to safely maintain a 24-hour schedule, and the company needs to acknowledge that,” Jorgenson said. “Franchisees have nowhere to turn except to 7-Eleven for relief from crippling labor conditions and unfair contractual terms. The corporation knows the pressure we are under, and their recent public statements mischaracterize the truth about franchisee income.”
Extracted from Business Insider