Just as the dust started to settle on Viva Energy’s announcement about its planned acquisition of OTR, last week started with news of yet another major development in the Australian Petrol & Convenience Market. On Monday 1 May 2023, the owners of 7-Eleven announced that the entire Australian business was up for sale. The sale of this high-quality national P&C network – the biggest privately owned P&C network in the country – is a further development in what is fast becoming a ‘big year’ for the Australian Petrol and Convenience Industry.
Calendar year 2023 is fast becoming one of the more notable years in the ongoing evolution of the Australian petrol and convenience industry, with yet another major announcement of a proposed change in ownership of a significant privately owned Australian Business.
Hot on the heels of Viva Energy’s announcement that it had reached an agreement with the owners of OTR for the purchase of their business, this week the family owners of 7-Eleven announced that they are seeking expressions of interest for the purchase of their own substantial national business.
And ‘substantial’ is the right word when it comes to 7-Eleven.
“Started in 1977 by the Withers and Barlow families with just one store in Melbourne (and a licence for use of the 7-Eleven trademark), the business has since developed into one of the powerhouses of the Australian petrol and convenience industry”, said ACAPMA CEO Mark McKenzie
Today, 7-Eleven boasts a national network of approximately 750 stores. It processes more than 250 million transactions per year and supports the employment of more than 9000 Australians across its administration and franchise businesses.
The future of the business was further strengthened last year with the announcement that 7-Eleven had reached an agreement with Mobil for the exclusive supply of transport fuels through to at least 2033.
But the real significance of the 7-Eleven business isn’t simply the size of its retail network, or the nature of its fuel supply arrangements.
The real significance of this business lays in its’ strong pedigree in convenience retail.
“I believe that the 7-Eleven announcement (and the recent Viva acquisition of OTR) point to the fact that many in our industry are recognising that the key to extracting increased value from traditional service station assets in the future lays in developing a sophisticated convenience retail and hospitality proposition, to offset likely gradual declines in fuel revenues over the next 10 to 15 years”, said Mark.
OTR and 7-Eleven essentially entered the market from the retail side of the equation – as opposed to the other major players in our industry that have largely sought to bolt on convenience offerings to businesses with a dominant fuel supply chain culture.
“That is not to say that one is better than the other necessarily, but with most P&C businesses working feverishly to develop their non-fuel offerings as they position for the future, those that have already developed the necessary retail culture and internal service have a bit of a head start”, said Mark.
“And these developments bode well for the increasing number of small Australian family businesses in our industry that are already advancing their own unique convenience retail and hospitality offerings.”
The other notable similarity between the 7-Eleven and OTR developments, is that both decisions have occurred because the families that owned them decided that now was the right time to change ownership.
“The Company has made significant progress in recent years on a number of fronts and is performing well under a highly credentialed management team, with an exciting outlook for growth. As such the Withers and Barlow families have decided that the time is right to review options for the future ownership of the business with a view to setting it up for future growth and success”, said Russell Withers (speaking on behalf 7-Eleven’s shareholders).
“There are likely few Australians that know 7-Eleven is actually a wholly-owned Australian Family business – a very big one with an international trademark, but nonetheless an Australian family business”, added Mark.
ACAPMA understands that the 7-Eleven announcement this week marked the commencement of a discovery process designed to identify parties that would be interested in the purchase of the business.
The process is understood to be at an early stage and is expected to take a number of months.
In the meantime, the 7-Eleven leadership team and its franchisees will continue to operate on a ‘business-as usual’ basis.
The rest of us will be watching developments closely, in a year that is fast becoming a bit of a landmark year for the Australian Fuel and Convenience industry.
“What is very clear, is that although our industry is currently navigating some tricky inflationary pressures at the moment, we are one of few industries in Australia that is experiencing vibrant and dynamic change – all coming at a time when many other industries are still struggling to recover from the destructive impact of the COVID-19 economic downturn”, concluded Mark.
ACAPMA
Source: https://acapmag.com.au/2023/05/for-sale-7-eleven/.
