013: 7-Obsession

Just-In-Time (JIT) Just-Doesn't-Work (JDW)

While I was expressing concern for the value proposition and viability of Japanese fashion-retail stalwarts BEAMS and United Arrows’ formal expansion into the U.S. market, I was also thinking of 7-Eleven. Rather, I was thinking of 7-Eleven, Inc., a wholly-owned subsidiary of Seven & i Holdings Co., Ltd. (Kabushiki gaisha Sebun & Ai Hōrudingusu [株式会社セブン&アイ・ホールディングス]), which also owns Seven-Eleven Japan Co., Ltd. (Kabushiki gaisha Sebun Irebun Japan [株式会社セブン‐イレブン・ジャパン]). Around the time I was publishing that essay, the New York Times was reporting on 7-Eleven’s efforts to weave some of the Japanese parent’s genes into its American in-law’s DNA. At first blush, this is a sensible, attractive idea; as I explained in my piece on the economics of Japanese convenience stores, or konbini (コンビニ), there is much for the U.S. branch to envy and admire about its relatives across the Pacific. The goods and services are of a higher quality, and no one category dominates the revenue pie or sits in a vulnerable two-way codependency. When one considers what pulling off such a stunt will entail, however, its allure morphs into anxiety.

But even before digging into logistics or governance, it’s worth pausing to ask: What, exactly, would “Japan-ifying” 7-Eleven displace in American consumer culture? The U.S. already has its own “convenient lunch counter” ecosystem, but it lives elsewhere. Grocery stores, especially high-end ones, like Whole Foods, Erewhon, and Wegmans, devote entire sections to hot bars, salad stations, and ready-to-eat meals; fast-casual chains like Sweetgreen, Cava, and Shake Shack essentially function as purpose-built lunch commissaries. This market is massive—Technomic estimates the U.S. grab-and-go prepared food category at over $40 billion annually, with supermarket foodservice alone generating more than $15 billion in sales in 2023. By comparison, prepared foods make up only about 20 percent of U.S. convenience store sales, and much of that is reheated items rather than fresh meals.

The geography of American food culture also maps onto its social structure. The U.S. is not a collectivist or socially equalized society but one stratified by what cultural critics have called highbrow, lowbrow, midbrow, and, as coined by John Seabrook in his brilliant book of the same name, “nobrow.” That division expresses itself spatially: the country club versus the public pool, the Erewhon buffet versus the 7-Eleven pizza slice. Few businesses function as true “third places” across class lines; Starbucks briefly gestured in that direction but largely stratified upward. Japanese konbini, by contrast, are designed as socially democratized infrastructure—spaces where an office executive, a clerk, and a student might all buy the same bento. In the U.S., where convenience formats skew toward either the low end (7-Eleven, Dollar General) or the high (Whole Foods, Sweetgreen), the “all-in-one for all” idea has little precedent.

For starters, it’s important to underscore the fact that the convenience store (“C-store”) is fundamentally distinct from the konbini. Like the eye of the human and the eye of the octopus, superficially similar but developed along entirely separate evolutionary paths, the American C-store and the Japanese konbini are intrinsically distinct concepts. In Japan, the konbini is a pillar of daily life, celebrated for its high-quality fresh food and a wide array of services that have cemented its role as a piece of “social infrastructure” (shakai infura [社会インフラ]). In the United States, the C-store has historically operated a vastly different business model, one tied to car culture, anchored by gas pumps and low-margin products. And yet, today, the new chief executive of Seven & i Holdings, Stephen Dacus, is betting billions on a pivot to make American 7-Elevens more like their Japanese counterparts by emphasizing fresh, prepared foods. While this strategy represents a compelling—and likely necessary—pivot for the U.S. market, a full, one-to-one replication of the Japanese model is a structural and cultural impossibility. The chasm between the two markets, from franchise dynamics and logistics to consumer expectations and competitive pressures, is simply too wide to bridge.

America is nothing if not built on small-business entrepreneurship, and 7-Eleven is nothing if not a case study in just that. The franchise has been the backbone of its U.S. operations for decades: in the 1970s, 40 to 50 percent of stores were franchised; in the 80s, that rose to 50 to 60 percent; in the 90s, 70 to 80 percent; and by the 2000s, nearly 90 percent. In recent years, acquisitions like Speedway have nudged the ratio down to around 60 percent, largely through dilution rather than reorganization, but the model still defines the brand. On paper, this parallels Japan, where nearly all 7-Elevens are franchised, too. In practice, the relationship couldn’t be more distinct. The Japanese system is built on a philosophy of “co-existence and co-prosperity” (kyōson kyōei [共存共栄]), where strict uniformity is enforced but the partnership is collaborative, almost paternalistic. If a 7-Eleven steps out of line, they’re terminated, as was the case with one that disputed the twenty-four-seven rule. While the centralized power is a source of internal friction, it is the engine that drives the top-notch experience. In the U.S., the franchise arrangement is a profit split that often feels, to operators, like a trap. 7-Eleven provides the land and equipment, then skims from the gross; franchisees take on the labor, the stress, and, many argue, the short end of the stick. No surprise, then, that lawsuits abound, with operators likening themselves to “unpaid, poorly treated employees.” Advocacy groups such as the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) have been even more blunt, arguing that corporate’s recent push into fresh food is structurally incompatible with the franchise model, and perhaps even the franchise agreements. More labor, more risk, same cut: a raw deal. If what Seven & i insists is central to 7-Eleven’s future is met with such resistance from its own operators, then enforcing the quality control required for food programs is not just hard—it is innately nearly impossible.

Corporate governance can evolve, whether as slowly as an ocean liner or as fiercely as a white-water rapid, but geography and topography obey only the laws of nature. Japan’s hyper-dense population and compact urban design both enable and demand a perfectly calibrated Just-in-Time (JIT) latticework, where fresh deliveries arrive multiple times a day and the “storage room” is essentially the retail floor. The abundance of 7-Elevens in Tokyo isn’t a quirk; it’s a necessity. In a place where space itself is a luxury, the shelves that greet the customer are the only warehouse one can afford.

The United States is the opposite, a sprawling, car-dependent nation of 3.8 million square miles, where space is plentiful and distance is forever. American 7-Elevens rely not on nimble network nodes but on centralized distribution centers, giant seaports in miniature designed to load up trucks with bloated assortments of goods, rather than corner donut shops slinging straight-out-of-the-fryer pastries. These CDCs were once pitched as the backbone of a fresh-food future but quickly fell victim to scale: to justify the trucks, they had to be stuffed with everything, not just perishables. The result is a system optimized for shelf-stable products and roller-grill fodder, not for sticky rice balls and creamy egg sandwiches that demand the punctual rhythm of thrice-daily replenishment.

It is little wonder, then, that Japan has twenty 7-Elevens for every 100,000 people while California has barely five. Density is the condition of possibility for the Japanese konbini; sprawl is the condition of impossibility for the American C-store. The logistical machinery that makes a Tokyo konbini hum is not simply difficult to replicate here—it is structurally incompatible with the American landscape.

Finally, while culture can change rapidly and at a snail’s pace alike, it’s first and foremost society, politics, and a quilt of corporations that guide its path and sculpt its profile, and here, too, Japan and America are divided by a deep, wide valley. Most obviously, the U.S. is a car country, and the 7-Eleven of the States, which often have pumps attached to their stores, reported that nearly 45 percent of its revenues came from gas in 2017, only magnifying the negative perception of whatever food might be on offer—pre-packaged items and shriveled hot dogs spinning in the red light of a roller grill. It’s here, then, that Seven & i generally has the right idea with its intention to “Japan-ify”; gas drives revenue but offers lower profit margins, whereas prepared foods tempt with their fat profit potentials.

In part because the 7-Eleven of Japan never had to contend with this car conundrum, it has been able to construct a financial model that’s food-centric: “fast food” (ファスト・フード) accounts for 29 percent of sales, “daily food” (nippai shokuhin [日配食品]) for 12.5 percent, and “processed food” (kakō shokuhin [加工食品]) for 32 percent. In other words, in aggregate, food accounts for 70 percent of all sales, with more than two-fifths being fresh. The fresh-food-first model generates a remarkable 27 percent operating profit margin, too, which helps cultivate a positive feedback loop: consumers expect quality, so 7-Eleven obliges and invests through a network of company-owned bakeries and food manufactories, which, in turn, stokes sales and profitability. This reality, paired with the “social infrastructure” nature of the shops, encourages cleanliness and safety, and the micro-service center that is 7-Eleven in Japan becomes an odd duckling “third place.”

In America, 7-Elevens have a distinctly tainted, sometimes tormented, culture. Anecdotally, not a month goes by that I don’t witness something unusual, shall we say, transpire at one of the chain’s Los Angeles locations, like a bickering-couple macing incident or an impromptu parking-lot fireworks display. (Certainly, I also catch a fair amount of theft, which, unlike in Japan, where the risk of stealing is rather low and, in fact, the stores themselves operate as “safety stations” to help prevent crimes, is a growing problem in American cities. A report from the Council on Criminal Justice found that reported shoplifting in Los Angeles was 61 percent higher between mid-2019 and mid-2023, and that the share of felony-classified incidents has nearly doubled in some cities. This is not a diffuse problem, but a concentrated one: a specific case in Los Angeles involved a man charged with twelve felony counts of petty theft from the same 7-Eleven store. As such, retail theft is a constant financial and physical threat to American store operators.)

My feeling on this is that the chaotic atmosphere isn’t just a byproduct of a certain segment of American society; it’s a feature of the “third place” identity that 7-Eleven here has unintentionally facilitated through its business model. In Japan, where food is ubiquitously fairly priced, and rarely neither “cheap” nor “expensive,” and restaurants are abundant and situated to feed demand with supreme efficiency, it is principally pure convenience that pulls a customer into a 7-Eleven. In the U.S., 7-Eleven offers slices of pizza, already oozing on trays and ready to go, for as low as a buck, and eight boneless chicken nuggets, drying up under heat lamps, begging to be plucked out of their misery, for three or four. While there is something nominally convenient about this, it is indisputably primarily convenient for a certain type of price-sensitive consumer, which nudges 7-Eleven towards a “third place” distinction within particular swaths of the citizenry more than others.

In the U.S., then, convenience stores remain culturally marked as low-end, even when the suits at corporate insist on grafting higher-end ambitions onto them. That stigma is precisely what the “convenient lunch counter” niche—whether a Whole Foods hot bar or a Sweetgreen—absorbs instead. The result is a bifurcated food culture where socioeconomic lines dictate formats, leaving little room for the konbini’s democratized middle. This is why, despite Seven & i’s best efforts, fresh food in an American 7-Eleven will never carry the same neutral universality it does in Japan. The very structure of the marketplace ensures that the hot bar belongs to Erewhon and the roller grill to 7-Eleven, with precious little overlap in between.

Competition, too, plays out differently across the Pacific. In Japan, the industry is an oligopoly: Seven-Eleven, Lawson (ローソン), and FamilyMart (ファミリーマート). The Big Three have battled each other for decades in a kind of high-frequency arms race, fine-tuning store formats and food offerings in increments so small and obsessive they become cultural texture. Even the failures are memorable. People still fondly remember Sankusu (サンクス), whose name was a mangled gairaigo (外来語) attempt at “thanks,” and whose eventual collapse only underscores the dominance of the three titans. This tightly bounded rivalry has driven relentless innovation, and it’s why Japanese konbini culture feels so refined, even overengineered.

The dream of transposing that which works for 7-Eleven Japan to 7-Eleven America, then, can perhaps be best described as another example of a “reverse Japan” maneuver: An American company or institution makes a thing and then successfully pawns it off on Japan for a short-term gain, only to ultimately grow green with envy as it witnesses the foreign sapling become heartier and more vibrant than the domestic crop. American partners chomp at the bit at the opportunity to re-export the same product back to the States, now bestowed with a certain Eastern magic, then struggle to cast the same spell for themselves.

This is precisely what happened in the mid-2000s, when FamilyMart attempted a “reverse Japan” of its own in Southern California and opened a few Famima!!-branded stores, first in West Hollywood, then downtown and Santa Monica. The concept was clear: CEO Goichi Itokazu (糸数 剛一), a managing executive at the parent company, would bring an upscale, food-focused concept to L.A., specifically in trendy neighborhoods that shared a proclivity for novelty and that had in-built fast-moving office-worker and tourist foot traffic. I adored the one near my warehouse-loft apartment when it first opened; it was a haven of Japanese treats and silky soft serve during a period when these items were still hard to find or expensive to import. However, the brand did not exactly scream “Japan,” despite the exclamation marks; perhaps it would’ve been better off sticking to its birth name and native appearance, much like bottled tea heavyweight Ito En (Kabushiki Gaisha Itō En [株式会社伊藤園]) did after ending its short dalliance with a minimal and cosmopolitan yet soft retooling, intended to resonate with the American consumer. Eventually, Famima!! threw in the towel, devolving into a slightly spiffier facsimile of 7-Eleven, packed with bags of Takis and two-liters of Mountain Dew rather than plastic-wrapped onigiri (おにぎり) and cans of Pocari Sweat (ポカリスエット). It fully exited the U.S. in 2015. Similarly, BOOKOFF (ブックオフコーポレーション), a massive second-hand books retailer (and, later, second-hand everything store, with spin-off HARD OFF [ハードオフ]), arrived in America with an “Americanized” concept, then U-turned back into what it knew when that didn’t show promise.

The failure of Famima!! and the initial missteps of BOOKOFF point to a crucial distinction: the success of a Japanese company abroad is not found in the superficial imitation of its products, but in the faithful execution of its underlying business philosophies. Rather than simply selling chicken karaage (から揚げ) and egg sandwiches, a successful “reverse Japan” maneuver requires transposing the principles of continuous improvement, data-driven operations, and a relentless focus on quality. The challenge, then, is not whether American consumers want Japanese goods, but whether American businesses can adopt the management discipline to produce them.

Far be it from me to prognosticate and suggest solutions to the “reverse Japan” paradox, tantalizing as a prompt yet confounding in practice. That said, America has knowingly and willingly been a globalizing force and the prime beneficiary of globalization for decades, and the economic, social, and political consequences of this cannot be reversed. No amount of ballyhooing about American manufacturing will change this. Toothpaste, meet tube. Japan, on the other hand, while very much a participant in the globalization-shaped world order, prioritizes the protection and perseverance of its majoritarian, homogeneous identity and heritage, and takes pains to confer this attitude and approach to its every aspect and feature. The solution for these Japanese companies and their American partners, then, is probably a simple one, which Toyota and other automakers first succeeded at, and that UNIQLO later pulled off: exploit gaps in the American market not through the sale of Made-in-Japan products (and, increasingly, Made-in-Japan-branded products) but through the assertion of Made-in-Japan business management.

The data overwhelmingly suggests that a complete replication of the Japanese konbini model is unattainable. The structural and cultural barriers—from fractured franchise relationships and a logistical nightmare of distance to a deeply ingrained consumer stigma and a fragmented competitive landscape—make a one-to-one transplant unviable. The most likely path to success for 7-Eleven is not to become a Japanese konbini, but to strategically pivot its business model to become a food-focused “convenient lunch counter” or a series of bifurcated, purpose-built formats that can compete on value and quality in a market that is slowly becoming more receptive to prepared C-store food. This pivot, an example of Japanese business management being asserted abroad, is already underway. The U.S. retail market is undergoing a “great bifurcation,” where brands must choose to be either big, efficient, and cheap or intimate and remarkable. 7-Eleven’s traditional model is the former, while its new food-centric strategy strives for the latter. The company is piloting its solution through “evolution stores” (エボリューション・ストア) and “in-store restaurant formats” that emphasize fresh food and have modernized interiors. These stores are outperforming traditional locations, generating 45 percent higher sales, and the company plans to nearly double its footprint of these formats within the next five years. 7-Eleven is also building food commissaries in North America in partnership with its Japanese suppliers to support this shift. This approach aligns with the idea of positioning 7-Eleven as a “convenient lunch counter,” and there is precedent for this model succeeding. Regional U.S. chains like Wawa and Sheetz have transformed themselves into pseudo-fast-casual restaurants by offering high-quality prepared foods, demonstrating that the food-centric model can work in the U.S. In this context, a bifurcated model, perhaps with a higher-end Natural Lawson-style (ナチュラルローソン) concept for urban and upscale markets, could provide a way for 7-Eleven to compete on a new front without completely abandoning its traditional business model.

Still, much as I personally would love to have Japanese 7-Eleven oden (おでん) and katsu-sando (かつサンド) at my beck and call night and day, the romance that fuels the “reverse Japan” dream is exactly that, a dream. The American soil is too vast and arid for this transplant to take root. What blossoms in Tokyo’s density and discipline wilts under America’s sprawl and ranchise squabbles. And yet, this won’t stop executives and consultants from trying—rolling out “evolution stores,” dangling bifurcated formats, shimming fresh-food programs onto a chassis built for ICEE dispensers and roller grills. These efforts will yield splashy headlines and glistening flagships, but the spell will never quite take. Replication is impossible, and adaptation is only ever partial. Best, then, to accept the stubborn truth: Japan will continue to be the octopus eye, evolved along its own path, peering at the same world but seeing it differently. America, meanwhile, will keep squinting, hoping to copy that vision, and wondering why the picture never comes into focus.