Banking With a Big Gulp
Food first. 7-Eleven reported revenues of $12.2 billion last year and boasts an impressive record of 34 consecutive quarters of same-store sales increases. Although the company declines to break out the numbers on Vcom, it acknowledges that income from financial services is still only a small fraction of the company's overall business. Goldman Sachs retail analyst John Heinbockel expects that for the next five to 10 years, other revenue categories--especially gasoline, beverages and snacks, and fresh food (such as deli sandwiches and baked goods)--will continue to be more important than banking. But Vcom services "generate incremental revenue on their own, and they have the potential to generate some merchandise sales," says Heinbockel. "Over time, they will play a bigger role."
If convenience is the upside to banking at 7-Eleven, the downside is that you'll pay for it. Each service exacts a fee, typically $1.50 for paying a bill, for example. Check-cashing fees are based on the face value of the check, usually 1 percent to 3 percent, depending on the region of the country--a bit lower than those charged by check-cashing outlets. Consumer advocates advise paying close attention to the fees. Consumer Action's Linda Sherry points out that the markets for these types of services are "vulnerable populations who don't have a lot of money to spend on these kinds of financial services." 7-Eleven counters that it offers an alternative for people who want round-the-clock access to financial services that is more convenient and often less expensive than its competitors' offerings.
Back at the 7-Eleven in Tampa, Ruggiero agrees, pointing out that the $3 charge she pays is $2 less than what she used to fork over to check-cashing outlets. Best of all, now she has a little time and a little money to spend on her favorite 7-Eleven snack: a Hot Pocket and a Diet Pepsi. Talk about handy.
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