Subway and 7-Eleven Take Advantage of Urban Sprawl

Convenience stores and sub sandwich franchisees like Subway and 7-11 have spent nearly fifty years catering to suburban demographics and college campuses. Finally, they are taking advantage of opportunities in urban areas, particularly inner-city, working class neighborhoods.

“Some of our highest performing stores are in our inner-city markets,” Hardy Grewal says, president of OHCAL Foods, and a Subway area developer. The trend stretches from Compton, California, to Washington, D.C., with other large cities like Cleveland, Chicago, Detroit, Houston and even the densest urban market in the United States, Manhattan. What’s spurring the trend? A consumer need for healthier meals, as well as a growing preference for fast, fresh food.

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According to Grewal, 40 to 50 percent of the 629 Subway units in his territory are in minority-dominated working-class neighborhoods. Business is also booming for the three units of 7-Eleven franchisee in Manhattan. What will become of independent bodegas, delicatessens, and mom-and-pop corner stores in the area? Grewal thinks the growing popularity of these convenient stores and sub sandwich shops will open up new opportunities for local business owners. Many of these independent bodega and deli operators might be persuaded to become 7-Eleven franchisees, and by the looks of it, the numbers won’t disappoint.

In Manhattan, 7-Eleven comes armed with a new marketing strategy. In addition to a huge amount of snack food inventory, 7-Elevens are now offering fresh packaged fruit and vegetable salads, as well as yogurt and fresh juices. The advertisements boast lower-calorie sandwiches and smaller portions. In fact, shelves of fresh inventory resemble the shelves of Starbucks more than those of classic convenient stores. Subway has been cashing in for a while on diet branding, using famed spokesperson Jared, who allegedly lost weight simply from forgoing his usual lunch in favor of a Subway sandwich.

What's more, 7-Eleven is exempt from the soft drink regulations on other New York Mom and Pop convenient stores which ban selling sodas larger than sixteen ounces. Because 7-Eleven is regulated by the state and not the city, they can continue to sell their “Big Gulp” fountain beverages. In dense urban areas, it seems Subways and 7-Elevens get the best of both worlds.