7-Eleven Seeks to Threaten Leading Doughnut Chains

BOSTON -- Ads from 7-Eleven Inc. are rolling out across several New England markets to promote the convenience store chain's Dreammm Doughnut program, which the company says is not just a breakfast food, but an all-day snack.

According to Dallas-based 7-Eleven, Dreammm Doughnuts are made at off-site bakeries and delivered fresh to many of its 5,800 North American stores daily, according to the Boston Globe

Once, 7-Eleven competed with other convenience store chains. Now, it sees its future in providing both convenience and fresh food, such as doughnuts. The transition could have 7-Eleven vying with doughnut chains in the morning and sandwich chains in the afternoon. "The future model sees Dunkin' Donuts, Starbucks, and Subway as future competitors,'' said Jim Keyes, 7-Eleven's chief executive.

Worldwide nearly 25,000 stores do business under the 7-Eleven nameplate. In Japan, fresh products account for 40 percent of sales, Keyes said; at U.S. stores, it's 10 percent. Raise that percentage, and U.S. stores can grow market share, he said. To that end, the company has concentrated on ''portable cravables'' such as ''Go-Go Taquitos.''

7-Eleven began initial tests of the Dreammm doughnut program at 226 stores in Virginia last year. The Dreammm is bigger, by 10 grams, than Krispy Kreme's Original Glazed and it comes with more calories, too: 240 vs. 200. A doughnut six-pack will sell for $2.99. Individually, the doughnuts are 65 cents.

"The deal is that we wanted to go into the area and we wanted to prove our doughnut is better," Hague said. "We are excited about it," Des Hague, vice president of fresh foods for 7-Eleven Inc., told CSNews Online in an earlier interview.

A Krispy Kreme executive told The Globe the company doesn't talk about the competition. ''We just try to focus on what we do,'' said senior vice president Stan Parker.

Dunkin' Donuts, though, doesn't think a chain seeking to do many things at once can match a rival whose core business is coffee and baked goods. To ensure freshness, most of its 3,700 US stores are supplied twice a day, said Kenneth Kimmel, vice president of Dunkin' Donuts Concepts. ''The challenge is delivering a quality product consistently,'' he said.

Another challenge for 7-Eleven is repositioning a chain many consumers associate with beer, gas, and Slurpees as a place to go for fresh food. That ambition may be attainable, said John Glass, a restaurant analyst with CIBC World Markets. He pointed Wawa Inc., the privately held convenience store chain that has built a reputation for the quality of its perishables and fresh food.

As for the Dreammm Doughnut, Boston 7-Eleven franchisee Tracy Hollander said initial customer response has been "very positive."