BETTER COFFEE EXPERIENCE AT 7-ELEVEN

CSNews Exclusive: 7-Eleven Revamps Coffee to Attract Younger Crowd

By Linda Lisanti

March 22, 2010 – DALLAS — Since 1964, when one of its franchisees first created grab-and-go coffee, 7-Eleven Inc. has always offered its No. 1-selling proprietary beverage in glass pots. In fact, customers at the chain’s stores pour 1 million cups of coffee from these glass pots every day.

This year, however, that is all about to change.

After more than a year and a half of research and development, the Dallas-based convenience store giant is revamping the way it delivers, presents and markets the coffee category in its stores, as it attempts to attract younger consumers. In an exclusive interview with CSNews Online, Jay Wilkins, 7-Eleven’s category manager for hot beverages, spoke in detail about the retailer’s new coffee strategy and goals.

While the c-store chain has no doubts about the quality and flavor of its coffee — or how it stands up against the competition — Wilkins said there’s no denying that the consumer is constantly changing, just as new trends are always emerging.

“Coffee is an integral part of our business,” he said, noting a high value is placed on the coffee customer since they are frequent visitors and very loyal. “We know we have a relatively good coffee business, but we also know we want to continue to message to and target that younger customer — the Millennials, 20- to 35-year-olds. We want to attract new people to our stores, while also making sure we’re completely respectful to our customers today.”

7-Eleven’s existing shoppers are mostly males in their late 30s to early 40s, but Wilkins said they’re now going after a mix that’s more male/female balanced and younger.

As the company’s research showed, what resonates well with Millennials is different than what resonates with 7-Eleven’s existing customer base, particularly when it comes to coffee. And so, the retailer is changing things up with this mind. The revamp includes:

— Switching from glass pots to urns;
— A new coffee bar with a modernized look and more functional layout;
— Redesigned cups and coffee branding; and,
— Promotions aimed at the younger demographic.

Wilkins told CSNews Online the decision was made to replace its long-standing glass pots with urns because younger customers recognize urns as “a freshness cue.” 7-Eleven also determined the quality of its coffee could be better sustained with urns since they hold product at a more optimum temperature. “It’s not that we want to hold product longer, but we believe we can maintain the quality better,” he said.

As for existing customers, Wilkins said there will always be a few who resist — as is the case with any change. But by and large, he expects the urns to be well received. “I think the biggest hurdle is not whether or not they like an urn; it’s getting them to try it and [overcome] the mindset that ‘I’ve made my coffee the same way for so long,” he said. “Once they try the urn, they’ll see that their coffee still tastes the same.”

In combination with the introduction of urns, 7-Eleven took a look at its coffee bars and asked what would work best in terms of flow. With the help of a design firm, the chain created a new coffee bar to accommodate the urns and condiments. It’s been several years since the physical plan of its coffee bar was revamped, according to Wilkins.

“One of the strengths 7-Eleven brings is the ability to customize coffee the way you like it. Our research shows our customer gives us a lot of credit for that,” he said.

And as the coffee category has expanded with the addition of more beverage choices and condiment options, people are spending increased time at the coffee bar customizing their drinks. For that reason, 7-Eleven’s new coffee bar is laid out so there is less congestion at the condiment station. Plus, in those stores with the highest coffee sales — such as the chain’s Long Island locations — the new coffee bar provides more prep area.

7-Eleven is overhauling the coffee bar’s look as well. The new one is more modern and less utilitarian. The counter where the urns sit is a dark chocolate color called mocha, while the prep stations are a lighter tan color called pinion. Everything has rounded edges, so it’s easier to move around and more people can use the urns at the same time.

“The coffee bars have a nice, fresh look. We’re using more current materials, and all of it has a much stronger appeal to the Millennial consumer,” Wilkins explained.

In terms of the actual coffee, not much will change as of now. 7-Eleven will continue to focus on the small number of blends that drive the business. But with the new coffee bar, store operators now have the flexibility to add urns or remove urns at peak times.

“At the end of the day, we have built some layouts that meet the needs of the consumer from a functionality standpoint,” Wilkins said of the new coffee bar design. “We’re giving the consumer an experience that’s familiar from one 7-Eleven to the next. It’s not cookie cutter, but it’s consistent and more functional.”

The company is already testing the new coffee bar and urns in four of its high-volume Long Island stores, and recently installed the new coffee package in 14 stores along the central California coast. Starting in May, 7-Eleven plans to do an additional 20-store test of the urns and new coffee bar in Long Island’s Nassau and Suffolk counties. Through testing at these high-volume coffee stores, the chain hopes to learn how to best handle traffic flow at the coffee bar, and how customers will use the urns, condiments and counter space.

As for a rollout, Wilkins said installations will be done gradually. The new coffee package will be incorporated into this year’s store remodels, as well as any new builds and acquisitions. “There will a fair number of stores with it by the end of 2010,” he noted.

There is one change being rolled out to all 6,350 7-Eleven stores in the U.S. and Canada: redesigned coffee cups and coffee bar branding. The cups reflect new colors and graphics, with each one carrying the tagline, “Great Coffee. Any Way You Take It.” The new cups are being substituted as 7-Eleven’s stores and distribution warehouse runs through the old cups. The new cups are not in all stores yet, but will be within the next few months.

Customers are sure to notice the changes — and for now, 7-Eleven will rely on word-of-mouth to let consumers know about the coffee revamp, according to Wilkins.

The retailer is, however, doing a host of other coffee promotions targeted to Millennials, including a partnership with Howard Stern’s show, and its new Coffee Cup With a Cause charity program, which began in February and continues throughout the year.

Under the program, 7-Eleven stores nationwide sell limited-edition, 20-ounce coffee cups designed by entertainment and sports celebrities. The cups can be filled with any of 7-Eleven’s hot beverages from coffee to tea to hot chocolate. Proceeds from the cups sold benefit the featured celebrity’s charity of choice. Nicole Richie, Joel Madden and Benji Madden kicked off the program, and this month, 7-Eleven is selling a cup styled by singer-actress Jennifer Hudson to benefit the Boys & Girls Clubs of America.

“Millennials are much more altruistic; they believe in giving back to the community. Coffee Cup With a Cause allows us to do that in a very special way,” Wilkins said, noting the program is off to a strong start and has long-term value for the chain.

Speaking about the revamp as a whole, he added: “It’s about doing things that are a little bit different. We’re really just looking to invite them [Millennials] into 7-Eleven for a great cup of coffee. At the end of the day, it’s still all about that great cup of coffee.”