Hi, just quick follow up - does anyone know who pays the rent while in a franchise agreement? Thank you,
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Anyone Runnig A 7-eleven?
Started by akumabito, 2008-04-24 19:34
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38 replies to this topic
#27
rufanuf
Senior Member Posted 2010-02-20 08:30:16
Hi Gil,
I was intersted in your figures document...I think the thousand customers a day is pretty optimistic anywhere except the busiest of streets in Bangkok...although equally I would of felt that the 50BHT spent a customer was surprisingly low. If me and my partner had a 7/11 in a Hua Hin soi we are looking at, i would ot recon' on more than 150 to 250 customers a day based on passing traffic, but my suspiscion is that the average spend would be much higher, as a good percentage of the passing traffic would be farangs, and they would be on long stay vacations. But then further issues come into the consideration....if the customer profile has a high percentage of farangs, would they not spend even more if the stocking profile better suited their needs (ie a selection of wines not just beer, a selection of western snack foods, more extensive than just Lays!) so on and so forth...so you see it seems very much like a double sided argument for many fo the opportunities that would rpesent to farang with a Thai business partner who would be running the shop. Brand recognition is one thing, but Im not sure if you get the stocking profile and presentation of your goods right it's that important. #28
gilbreth
Advanced Member Posted 2010-02-20 18:25:40
Hi, thank you for the note. Actually, most of those figures come straight from CP Group. I was also surprised at the low 50 baht spend per customer, until I sat and watched for about 30min. Gum, mints, coffee, energy drinks, etc., seem to comprise the majority of Thai customer spend. It is the rare farang who stocks milk, egg, 6 tall boys, tuna, etc., bringing up the total. I understand your point about product mix, but I am not interested in changing their "system" or their replenishment system. I would assume that they mandate the product mix anyway.
Best, Gil #29
RAZZELL
Platinum Member Posted 2010-03-18 19:35:28
Just a couple of "dumb" points.
1 - Who pays for the "refurb" of a store? Does it come out of the franchise fee? 2 - If you were married, could the franchise be "held" in a business with a "farang" shareholder or does the company have to be 100% Thai-owned. 3 - What sort of "criteria" do "franchisees" need to fulfil? Age? Experience? Education? Most importantly $ investment  ?4 - Anyone know any more about the financing as mentioned by "gilbreth"? Many thanks  RAZZ #30
roquefort
Newbie Posted 2010-03-23 23:06:41
Hi, based on a recent post in The Nation, 7-Eleven is offering financing for privately run franchises. I wanted to re open this thread, but also close some loops by developing the attached profit model. I do not want to address any other side issues (e.g., exclusivitiy, wife's education, etc). I simply wanted to try to figure out if this is a good investment. Can anbody shed light on the attached? I am only considering Type C, the Type B seems to be "buying a job." I own several businesses here in Thailand, and from what I can see, this seems like a great payback (13 months) with big upside if one can get a fairly decent location. Could anyone in the know review the attached and point me in the right direction if I am missing something? Can I assume that CP let's you keep all incremental profits since a franchise has paid the "store management fee?" I will be pleased to send the soft copy for any constructive comments! Thank you much! Hi Gil The gross margin seems quite low for this type of business at 27%. Is that because you are forced to buy stock from 7/11 at inflated prices? Also the opex seems quite high at 200,000/month if it doesn't include rent. As an accountant I'd be interested in a soft copy of your model Finally do you know if all the fees are payable up front and how long the Type C agreement lasts? Thanks #31
Damaz6052
Senior Member Posted 2010-03-24 23:28:49
May I ask why you need to be part of a franchise? Dont you think the location you mentioned would be ok with your own convenience store name? Shore,you dont have their group buying power but look at other positives. We had a private mini-mart at our petrol station. Sales about 10k per day, maybe 15-20k on the weekends. Profit about 20k+ per month. A few years ago 7/11 approached us about putting a franchise on our our site. We ended up with a "company run" store where we take a percentage of sales as profit, with an option to buy in any time within the next ten years. We have nothing to do with the day to day operations of the store & no costs for development of the property. Sales are about 2mil baht per month (not including bill payment services) (roughly a five to six fold increase on our privately run mini mart) and we are paid about 40k per month in "rental". For those interested, there are many threads concerning 7/11's in this forum and business forum above on TV. Just use the TV search function with 7/11,seven eleven & petrol station etc. as key words. TV member chang_paarp is very knowledgable on the mini mart business & small business in general. A search of his posts in this forum will also deliver a wealth of information of people looking for comparissons between franchises & do it yourself operations. Cheers, Soundman.  When you say petrol station do you mean one with pumps etc? #32
soundman
Loud Member Posted 2010-03-25 22:01:22
Correct, one with pumps (bowsers).
#33
torrenova
Platinum Member Posted 2010-03-27 09:00:36
what is them secret to have a 5/6 fold increase ? I would have to say that "brand recognition" has a major effect on sales in the minimarket game. I completely agree with this. There is a Thai guy in Buriram who I have known for 18 months or so and who has a non branded mini mart. I often sit with him for a couple of beers and we chuck business ideas around. Quite recently he moved to the end of a row of shop houses from the middle to gain a better lease and more development potential. I ran through numbers with him on many things and did some comparisons with 7/11 and what sticks out is the simple fact that because of the homogeneity of 7/11 stores and their product range, people head there and will make additional purchases at prices which are over those which they could get elsewhere. Additionally, you cannot just copy 7/11. For instance, say a particular 7/11 is doing massive trade on a certain slush drink, you cannot just put the same machine in your store and sell exactly the same thing for 75% of the price because few if anyone will come. In Thailand, 7/11 has achieved a sort of upmarket quality status. However, I was was amazed at just how much money rolls in from what on the face of it seems to be very few customers at all. He takes about 15-20k a day and makes around 45-50k a month. His major outlay is stock, he and his wife are the only "employees" and his daughter helps out when university is on holiday. He doesn't seem to be able to increase business and he's doing everything including running mobile phone top ups as a re-seller. I think a 7/11 would work very well in his location on the edge of town, on the main road with some parking available. However, even assuming he had the 3m, why would he go in for it if he could only get the same money (as per previous posters) ? I guess he would need to pick up at least a minimum 33% return on his 3m on top of his 600k or so which would be around 1.5m or 125k a month and it doesn't seem as though he could earn that through 7/11 ? #34
Sam Drucker
Senior Member Posted 2010-07-22 20:11:27
I think a 7/11 would work very well in his location on the edge of town, on the main road with some parking available. However, even assuming he had the 3m, why would he go in for it if he could only get the same money (as per previous posters) ? I guess he would need to pick up at least a minimum 33% return on his 3m on top of his 600k or so which would be around 1.5m or 125k a month and it doesn't seem as though he could earn that through 7/11 ? One reason that immediately jumps out at me is: Does he feel secure that it is not likely (or inevitable) that a 7-Eleven will eventually open near his store anyway? And if one did open, what would be the impact to his business? In his situation, it might be a good move simply from a defensive standpoint, in order to hold onto the business he already has (and which would also no doubt grow if he franchised with 7-Eleven.) #35
RAZZELL
Platinum Member Posted 2010-08-08 16:40:08
English email to my gf attached.
Apologies - it was in some strange format so I had to cut and paste it into word. One question...what happens at the end of the franchise period? RAZZ Attached Files
#36
hl2u
Newbie Posted 2010-08-10 14:05:05
@gilbreth: please send me the soft copy too.
#37
aussiexpat
Newbie Posted 2010-08-28 21:48:59
Hi, based on a recent post in The Nation, 7-Eleven is offering financing for privately run franchises. I wanted to re open this thread, but also close some loops by developing the attached profit model. I do not want to address any other side issues (e.g., exclusivitiy, wife's education, etc). I simply wanted to try to figure out if this is a good investment. Can anbody shed light on the attached? I am only considering Type C, the Type B seems to be "buying a job." I own several businesses here in Thailand, and from what I can see, this seems like a great payback (13 months) with big upside if one can get a fairly decent location. Could anyone in the know review the attached and point me in the right direction if I am missing something? Can I assume that CP let's you keep all incremental profits since a franchise has paid the "store management fee?" I will be pleased to send the soft copy for any constructive comments! Thank you much! I think you're issing a major point which is the ongoing franchise fee of the gross profit margin (I think it 56% in Thailand). The Australian websites states the following: 7-Eleven receives 57% of the gross profit to pay for:
#38
Svadhistana
Member Posted 2011-08-17 00:36:40
Unfortunately the thumbnailed report is completely wrong!
I have the official numbers from CPAll (7Eleven). First of all you get 54% of the gross margin (which is 20%, not 27%). Second,the op.exp. are about 140-150 KBaht. Therefore the net profit (with 1,500,000 monthly revenues) are about 15,000 baht only! Fortunately an average 7Eleven has revenues around 2-2,5 MBaht. Therefore the net profit can be between 70 and 120 KBaht a month. #39
garrfeild
Senior Member Posted 2011-08-17 12:34:52
Thanks for the responses, much appreciated! I am looking into a location ATM. Here in town there already is a Seven Eleven, but I am pretty sure the place could handle another one. (how does the company determine if there's enough capacity? Do they just count traffic?) The location I'm looking at is right next to a school, and right around the corner from a well visited market. The market is crowded from 4 in the morning until about mid day. The street sees reasonable traffic throughout the day as well. It's not the companies problem how many 7-11's are in a given area, they want your 1.5 or 3 million baht. that is their only interest. they are not lossing money if you don't make any money. All in all a bad idea. Better to open your own convenience store emulating 7-11 if that is really what you want to do? Edited by garrfeild, 2011-08-17 12:35:40. |
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