7-Eleven NNN Investment Opportunities You Should Know
Investors who seek optimal opportunities for NNN lease investments may be yet to consider 7/11 stores. Although 7/11 is prominent for its Slurpee drinks, many individuals may not realize it’s the most extensive convenience store business in the world. It’s ranked among the top ten franchisors and has about 69,000 stores in 18 countries; over 10,000 franchise stores in North America.
According to Statista, the United States convenience store industry generates $650 billion annually from 153,000 stores, with more than 50 percent of the sales from motor fuel. Convenience stores usually stock various everyday items, including confectionery, soft drinks, tobacco products, toiletries, magazines, newspapers, over-the-counter medications, beer, ice cream, groceries, and snack foods. Other leading convenience stores in the United States include CST Brands, Casey’s, Speedway, and Circle K.
The convenience store industry remained impervious to the tough economy and thrived during the coronavirus pandemic. A survey showed that 60% of convenience store owners in the US recorded an increase in in-store sales during the pandemic, while only 30% recorded a decrease. In 2020, several convenience store business owners adjusted their product mix and emphasized grab-and-go meals and take-home meals to increase patronage. In this article, you’ll find all you need to know about 7/11 NNN investment opportunities.
About 7-Eleven Stores
7/11 came into existence in 1927 when an employee of Southland Ice Co, Joe Thompson, started selling eggs, bread, and milk, along with ice blocks. Thompson later bought the company and changed the name to Southland Corp. The company’s first stores were called Tote’m as customers were known to “tote” away their buys. The name changed again when business hours extended from 7:00 am to 11:00 pm. Although 7-Eleven stores are now available 24 hours daily, the name remains.
7/11 NNN investment opportunities come in two ways. The first option is becoming a franchisee, and the other involves purchasing an existing store or a new one. The franchise fees range between $100,000 and $1,000,000, depending on some factors like business licenses, supplies, permits, initial cash register funds, bonds, down payment on the store inventory, and the store you choose.
7-Eleven and the franchisee will split significant costs. For instance, the company pays for building maintenance, real property taxes, specific equipment rent or purchases, building acquisition or rent, particular equipment replacement, select utilities, and more. The franchisee is responsible for business licenses and taxes, insurance, indemnification, inventory and cash shortage, workers’ compensation, payroll, miscellaneous store expenses, store supplies, and other taxes aside from real property taxes.
Advantages of Investing in 7-Eleven NNN Properties
Corporate Support
7/11 corporate settles several expenses and features a royalty system.
Name Recognition
7-Eleven is a prominent brand business, and customers understand what they stand to gain from patronizing the store once they see the name.
Streamlined System
7-Eleven has a streamlined franchise system that enables you to start operating the store quickly — generally, within three-six months.
Lower Initial Investment
While 7-Eleven remains a significant investment, it requires a lower initial capital than several other franchises.
Investing in 7-Eleven NNN Properties
Instead of getting a franchise deal, you can choose to buy 7-Eleven real estate for sale. In a triple net lease, the tenant has to pay most of the expenses, including building insurance, property taxes, rent utilities, and most common area and structural maintenance costs.
7/11 net leases are considered excellent NNN investments for numerous reasons, including their superb profits record, ability to perform excellently in both recessions and good economies, and industry-leading market shares. The 7/11 brand is dominant in the NNN investment sales market due to the corporation’s underlying high-quality real estate, the credit rating (investment-grade), and reasonable price limits for individual businesses.
Most of their properties are in urban locations with good demographics due to reasonable median household income and population density. Also, most of them are in popular corner areas with traffic counts exceeding 25,000 daily, convenient access, and high visibility.
Another advantage is that the United States subsidiary, 7-11 Inc, assures all 7-Eleven business lease agreements, whether the property is a franchise-owned or corporate store. Besides, the chain’s store relocation rates are among the lowest in the industry.
Due to their low maintenance and profitability, 7/11 net leases are constantly in high demand and hardly remain available for sale for long.
Types of 7/11 Stores
7/11 business locations are divided into two major categories: convenience stores without gas pumps and those with gas pumps.
Non-gas Convenience Stores
The non-gas convenience stores are usually smaller, with about 1,000-3,000 square feet in retail condo spaces, community shopping centers, retail strip centers, or single-tenant parcels of about 0.5-0.75 acres. The leases are typically structured for about 10 to 15 years and feature 10 percent to 15 percent rent escalations every five years.
Each lease structure varies, but most 7-Eleven convenience-store-only properties are “modified” triple net leases, implying the tenant is responsible for every landlord cost.
You can also find 7/11 NNN investment opportunities that are double net, where the landlord bears the cost of parking lot maintenance and structural and roof repairs. In this case, the tenant is responsible for insurance, property taxes, interior maintenance, and repairs (HVAC maintenance and repair may be paid by either the tenant or landlord, depending on the lease). Most investors prefer locations close to schools, other retailers, and major employers.
Convenience Store with Gas
With 7/11 properties with gas pumps, this company prefers signing a corporate ground lease at popular corner locations, including power center sites of about 0.8-1.25 acres or community shopping centers. The gas site leases are about 20 years with 10 percent to 15 percent rent escalations every five years on basic terms with extension options.
These leases have a complete NNN structure, implying that the tenant pays insurance, property taxes, maintenance, and repairs. Several 7-Elevens with triple net leases have proof of financial longevity and existing sales, placing their price point at over $3 million.
The company has over 10,000 properties in North America, giving you a wide variety of 7/11 NNN investment opportunities. You can select according to your standards for profitability, i.e., a good location with a corporate, 15-year modified triple net lease, and excellent demographics.
Final Thoughts
Keep in mind the most significant factor that determines a desirable 7-Eleven store — location. Get a professional 7-Eleven net lease advisor to help identify and secure the best 7/11 NNN investment opportunities.
