16 ms·

The realities of 'owning' a Japanese convenience store

233 points by Ultramanoid 7y ago

vkou 7y ago
The irony is, of course, that the chain is named "Seven-Eleven" because it was originally open from 7 am to 11 pm. > One Monday night in late March, only 10 customers came to the man’s store in the three hours before dawn, and the sales during that time were a little more than ¥6,000. The store will be in the red if he hired someone for night shifts. Smart management would close the store during those hours. Of course, the franchise doesn't care for smart management - when the operator eats the loss.
- microcolonel 7y ago
  I think what they're getting at is that if you want to operate a 7-Eleven, you ought to be absolutely reliably open at the expected hours. The intended alternative is to shut down the store. This man made a terrible business decision and is now stuck between a sunk cost and probably not a lot of alternatives for work.
  - ranrotx 7y ago
    That’s the problem with a lot of franchise agreements. So many things are set and specified for you that you have no room to optimize your business as an operator. In a way, you’re almost just like an employee of the franchisor, but without any of the benefits and a lot more liability. But it’s a great relationship for the person selling the franchise.
    - Scoundreller 7y ago
      Depending on the tax system, being able to structure yourself as a « business owner » can mean more money in your pocket than being a salaried manager.
  - vkou 7y ago
    I have a feeling that 'expected hours' would suddenly and magically stop including 1am-6am, if the parent company were on the hook for the operating losses the franchises are suffering. But as long as they can make other people pay for their business decisions, that will, of course, not happen.
    - microcolonel 7y ago
      That would entirely defeat the purpose of franchising agreements. The point is to diffuse risk, standardize the brand, and allow local owners to decide the things which don't affect the brand, in the service of their own interests (including whether or not to continue operating the location). A franchise where the owner bears a small minority of the risk might as well just be centrally owned.
      - mgkimsal 7y ago
        and where the franchise parent bears basically no risk at all is a pretty crappy deal for franchisees, who basically take what seems to be most of the risk (described in the article) for... 30% of the gross profit? maybe? eventually, 7-11 will be known as a place where you're likely to encounter sick children lying on chairs at 10pm because the franchisee's family is living in the store. eventually that might actually damage the brand enough that they'd remove some of the stipulations.
- yskchu 7y ago
  > Smart management would close the store during those hours. It's mentioned in the article actually, in the later section on Mitoshi Matsumoto; he closed early and made more $$$.
  - hudibras 7y ago
    So he said.
bane 7y ago
Just came back from Japan and man are there too many convenience stores. Within any given area there is probably 6 to 7 stores within eyeshot and an easy walk. It's weird thinking that they are too convenient, but honestly they start to become pointless. More than once we simply walked by a few knowing that there would be another one just a minute or two more down the street. It's great that we could find something to eat at 2am when jet lag messed with our eating schedule and nothing else was open except the four 24-hour chain restaurants, 6 full-service Izakayas and a late night curry shop within a 5 minute walk. What would we have ever done without a choice of 6! different convenience stores within the same area?! Oh and on the way there's vending machines literally jammed into every available urban crack that can fit one where I can service most of my beverage and a few food needs. I couldn't figure out how these places earn enough money to keep the lights on given the competition, now I guess I know.
- Klonoar 7y ago
  I mean, I lived there for 5 years of my life and go back often... the alternatives open at 2AM only really exist in the tourist areas or the uber dense areas (Shinjuku, etc). Past 2, you're pretty much only eating conbini food or a "family restaurant" like Denny's, Johnathans or Royal Host if you're lucky enough to be near a 24 hour one.
  - bane 7y ago
    Okay, to be fair, I'm definitely talking about big downtown areas exactly like Shinjuku or Shibuya. But I'm also talking about places like すき家 and 松屋 which are pretty good late night drunk eats and we never failed to find a late night pub with crazy hours no matter where we were.
    - Klonoar 7y ago
      I understand if those places seem amenable to you, but I (and pretty much everyone I know who lived there long term) wouldn't set foot in one of those past their college years. They're horrible for your body. I'd sooner eat conbini food and pass out. The late night pubs do exist, sure, but a lot of them stay open to capture any foot traffic from people missing their last train around midnight. Most don't serve full menus at that hour and it's usually a skeleton staff (short of, say, a HUB or something... but those aren't going to be open past 2, short of Roppongi & co generally). Japan (really Tokyo, I guess) stopped being truly 24-hours post 2011 earthquake. After the power issues around the country, I noticed a lot of places never returned to their same livelihood. It's a shame, was fun while it lasted. I'm mostly commenting at this point because the misconception of Japan being this constantly-on always-good-food crazy ass heaven is really tiring to see these days.
baroffoos 7y ago
The problem seems so obvious. There is far more supply than demand. Why do people keep opening these stores when it is clear no one wants them?
- patio11 7y ago
  It’s not clear no one wants them, since there is little data available to an ex-salaryman looking to open one in a particular neighborhood and if you do an unsophisticated “just watch a store all day” competitive analysis both a thriving store and a struggling store appear busy at all hours of day and night. The franchisor is basically uniformly in favor of more locations since the franchisee bears most startup costs and the franchisor gets an effective call option on their cash flow. (It’s also not clear to me that convenience stores are oversupplied relative to demand; there are probably some geographic mismatches but in e.g. this neighborhood in Tokyo you can find 3 in a Us city block and they’re self-evidently very viable. Which you might ask “How is that self-evident?” and I’m left to say “Trust me.”)
  - michaelt 7y ago
    I guess it depends on how much data you'd expect someone to gather before opening a store. I was under the impression opening a convenience store cost $50,000 or more, not an investment to make lightly IMHO. A few visits will tell you if the owner is working 16 hours a day 7 days a week, and you can estimate markups by looking at prices on the store shelves. And that's without looking for franchisees complaining online, or asking them in person.
- psychomugs 7y ago
  There might be more supply than demand, but that doesn't mean that the demand is low.
jorblumesea 7y ago
I don't understand the demand from the parent company to stay open late, given the lack of customers they clearly have and the oversupply of combini. I was at a 7-11 in Osaka by the dotonbori and it was basically vacant. Like many things in Japanese society it seems to be because "this is the way it's done".
- patio11 7y ago
  You live in a country with franchises, right? What would you articulate as the brand promise of a McDonalds? McDonalds has a very clear internal understanding of that brand promise: it includes clean bathrooms, a smile, extremely low prices available, and very consistent food. 7/11 also has a brand promise. It includes, prominently, “If you need it, 7/11 is open.” The LTV of a conbini regular is very, very, very high and the brand does not want you to sour on it for reasons specific to Store 6548 in May 2019.
  - CydeWeys 7y ago
    I wonder if this matters less in the age of smartphone apps. I tend to check opening hours on Google Maps first before heading to a place when it's outside of obvious business hours (like the middle of the night).
    - ericd 7y ago
      I don't think it does. Decreased friction provides a very real, very large boost to almost any business like this. Any uncertainty or mental effort makes me much less likely to go, especially if there's another option that I am certain will provide me what I want. Conversely, if they're reliable and require little effort, I am much more likely to grow to depend on them habitually.
      - smelendez 7y ago
        I think that's probably the deal with a lot of 24-hour businesses. Letting it be known that you're always open may make sense even if the overnight hours aren't always profitable. I suspect it's true for diners, for instance, and New York bodegas. Insomniacs drinking coffee aren't paying the bills, but they'll come back for lunch or breakfast. Bars also often seem to stay open as late as they legally can, even if it's just the bartender and the town drunk on a typical night.
CydeWeys 7y ago
I was just in Japan two weeks ago, and convenience stores were omnipresent. I'll admit, it was incredibly convenient, as I never went for lack of food or water, and I got into habit of grabbing a beer and a snack every night to take back to my hotel room before bed. I was relying on them (and vending machines) pretty heavily for coffee and green tea throughout the day as well. There were way too many convenience stores that were open in the middle of the night, though (and apparently this is a requirement on the franchisees). There was a 24/7 convenience store on the first floor of my hotel, and then another one down the block, and then several more within a two block radius. There's no reason they couldn't all coordinate better so that each individual store is only open through the night a couple times per week. That would make a lot more sense. Most customers would still be able to reach an open convenience store, even in the middle of the night, within a few blocks walk. It'd be nice if stores had posted the hours of nearby stores so you'd know where else to go if the one you wanted was closed, but that's probably unnecessary now in the age of apps (I had no problem finding opening times for places on Google Maps).
- gambiting 7y ago
  Pharmacies in Poland all operate on this rotating schedule, where at least one pharmacy in town is open 24h(they always post a sign saying where the nearest 24h pharmacy is). I have no idea if it's by law or just a thing that everyone does.
  - ovi256 7y ago
    Yes, this is by law and it's a requirement for having a pharmacy operating license. Fun fact: in most of the world, medical personal like pharmacists can't go on strike.
    - AstralStorm 7y ago
      Poland is not part of it then. What does have to happen is that emergency or base services are sustained. That is the one 24h pharmacy. All others can just close. Similar with doctors in hospitals, as long as emergency service works fine strike is allowed.
RyJones 7y ago
I also just came back from Tokyo and Osaka; I was blown away by how many 7/11s there were and how close they were. The vending machines are amazing. One other thing I would like to import: the widely available, clean bathrooms all over the place. That was super nice.
- CydeWeys 7y ago
  Free public bathrooms everywhere was nice, but there was still a dearth of free public water fountains -- which, admittedly, most cities don't have enough of. Rome is kind of the gold standard in this regard. I loved how some of the vending machines and convenience stores sold hot canned drinks. I've never seen that anywhere in the US. Now the hot canned coffee wasn't actually good (I had to try it), but it was interesting to have that as an option. There were also plenty of vending machines that would make coffee for you (which I didn't use because I opted for free coffee in the hotel in the morning and cold green tea thereafter, which I must say was delicious).
  - RyJones 7y ago
    I had the same experience. I had to try the hot canned coffee; I didn't try it again. Also: canned mixed drinks! Japan is truly living in the future.
    - bobthepanda 7y ago
      IMO the vending machines aren't the future; they're the manifestation of a different future. When cities start industrializing, one of the first things that consistently pops up are food vendors on the street taking up public right-of-way. Food preparation is a skill that doesn't need education, people working the long shifts of industrializing societies need to eat quickly, and new city-dwellers miss their regional foods, so poor provincial migrants quickly start hawking whatever they can sell on the street. As cities grow up, they start viewing street food vendors as unhygenic nuisances. Some cities license them (New York's street carts), others try and corral them into more formal, permanent setups (Singapore's hawker food centers), and some just attempt to ban them altogether (tried in Bangkok.) Vending machines are a unique response to the Japanese need for quick food; they're small enough to fit on tiny Japanese streets, they have no labor requirements in a country suffering from unskilled labor shortages, and there's no need to waste time doing the Japanese customer-service pleasantries with an inanimate object. The American future would be the food truck. Food trucks have changed the dining scene in many areas, because a food truck and a permit is significantly cheaper than commercial leasing. And it works in the American context because American cities are full of wide streets with loads of parking, and there's lots of cheap labor to staff trucks with. But it would never fly with Japan, the same way Japanese vending machines would probably get vandalized in their first week on an American sidewalk.
delhanty 7y ago
Even for HN, these are some of the most empathy-deficient comments that I've ever read. Yes, it's true that there is a huge problem with overwork for the franchisees. But those stores aren't there (just) for you. Imagine this scenario: you're over 80, living on your own and not very mobile. The fact that there's a 7-eleven within 100 metres that sells a large variety of foodstuffs and essential items in single portion sizes allows one to maintain one's independence, which is a godsend. Try that in LA! Japan values social-cohesion. Many of us who live here long term do too. Edit: admit there's a problem for the franchisees.
- delhanty 7y ago
  Oh - update! I'm living in a farming & fishing village about 800 metres from the nearest combi. After the local village shop shut down, the railway station 7-eleven started sending a van into the village once a week on a Wednesday afternoon so that the old people in the village could get their groceries.
- blazespin 7y ago
  Right, but the solution is probably automation and not overworked to death franchise owners.
  - rangersanger 7y ago
    Overwork is better than no work. Automation may be part of the solution, but on its own it fails.
    - adventured 7y ago
      > Overwork is better than no work. No work is rarely the trade-off issue in Japan. They operate for quite different margins and labor practices than eg the US. They haven't had an unemployment rate over 5.5% in 40 years. The typical rate has been 3% to 3.5% for the last 30 years - a time in which they've suffered from perpetual economic stagnation and zero net growth. It's around 2.5% right now. Japan is losing population while simultaneously having an extraordinarily low unemployment rate. Automation is the only path forward, they should be pursuing it with as much vigor as possible. If you're Japan, as your population contracts, the ideal is to wipe out all convenience store jobs and push the labor force higher up the ladder whenever possible.
frequentnapper 7y ago
I currently stay in japan. The competition here is intense when it comes to food and drink. Every alley, even in residential areas in the back of the houses, has some mom & pop operated hole in the wall eatery. I never see more than two customers at many of these places at a time, but they stay open ungodly hours. I can't imagine they would be making more than $2-3 an hour on the average after all the costs.
- SenHeng 7y ago
  A lot of family run retail shops all over the world/Asia seem to have this misconception that family labour is free, thus their employees/children/siblings are effectively working for below minimum wage.
  - granshaw 7y ago
    It’s an arrangement. Low paid labor now for ownership of the business in the future
raverbashing 7y ago
7-11 is not friendly to Franchisees in the US either. There have been some lawsuits even Owning a convenience store is a hard proposition
- PhantomGremlin 7y ago
  It's not just 7-Eleven. I wouldn't want to be a franchisee of any sort in the US. The power dynamic is horrible. McDonald's is probably one of the better ones. But you're still beholden to them. They often own the land under the building, if not the building itself. They tell you exactly what you must do. They tell you when to remodel. They make you buy from their suppliers. They can decide to open another store a mile away from yours. But longer term I think the worst franchise to be in will be car dealerships. Once EVs become mainstream, the service revenue will fall by about 80%. There's just so much less to go wrong. How will dealers be able to pay for the overhead of their giant buildings?
  - Scoundreller 7y ago
    Probably through higher margins on sales? But we’ll have less of those too with increased realiability. I think the real threat to the incumbents is the risk of having only the 3rd best or worse electric drivetrain. We might be in a winner-takes-all-ish market, like cell phones.
  - Moru 7y ago
    That's interesting with the EV's, a local cab company just went bust and they claimed it was the large repair costs that did them in. That and the closest workshop that could service them was 600 km away. I'm not sure how they would even get the thought of starting a cab service 600 km from the closest garage that could service the cars but that's another question... The local 7-Eleven also went bust yesterday, together with their other store just a few blocks away. That corner of the city has plenty of other stores so it can't be easy to keep afloat. Town only has about 100 k people. (North Sweden)
  - AmVess 7y ago
    Chick-fil-A and McDonald's are two of the better ones. They don't give them to just anyone, and are careful about locations, too. To become a franchisee with them ,you have to have a proven record of success and have plenty of money in the bank. Rule of thumb: the easier it is to obtain a franchise, the less it is worth.
blazespin 7y ago
The problem is capitalism and not really 7-11. If 7-11 didn't do this, family mart would and the guy would probably lose his store altogether. Capitalism doesn't care about people or the distress they feel during transitions. It's very effective at generally raising up the living standards of all people, but can be pretty inhumane at times when dealing with certain groups of people who's skills and services are becoming obsolete. The only choice really is retraining and switching careers and having social safety nets. The other alternative, socialism, just spreads the pain across the entire world. Our only realistic chance at reducing global poverty anytime soon is via capitalism. Sucks for this 7-11 owner, but that's how it goes.
- ako 7y ago
  Are you really sure that capitalism will reduce global poverty? The core of capitalism is competition. This may result in higher quality and larger choice, but if these are sufficient enough it will in the end result in lower prices. This has to be done through efficiency but will also result in lower wages. I think unconstrained, uncontrolled capitalism will result in 90% of the global population working very low income, replaceable jobs, or being completely replaced by automation.
  - ixtli 7y ago
    Yeah. The social uplift only happens to people connected in some way to where the capital is accumulating. If you live where the capital is flowing from you're gonna have a bad time.
  - icebraining 7y ago
    > I think unconstrained, uncontrolled capitalism will result in 90% of the global population working very low income, replaceable jobs, or being completely replaced by automation. I think that's likely; after all, capitalism already replaced the jobs of 90% of the developed world population with automation and other efficiencies: that's why most of us no longer work in agriculture. Now, was that a net negative development?
    - 7y ago
Causality1 7y ago
I admire the courage of people who run their own business but I don't think that life would ever be for me. I love working 40-48 hours a week and leaving my work at work when I go home.
- h1d 7y ago
  If you have confidence in your skill, can stay in the field you like and get double the average, why not?
ixtli 7y ago
The problem isn't convenience stores (I lived in japan for 1.5 years and lemme tell you, they're wonderful and everyone loves them.) It's capitalisms completely unregulated growth in situations where no one could possibly benefit. They call it competition, but that's not what this is in practice.
jen729w 7y ago
See also: Australia. 7-Elevens are everywhere [1] and the stories of underpaid workers are commonplace [0]. [0]: https://www.theguardian.com/commentisfree/2016/may/12/7-eleven-is-the-tip-of-the-iceberg-in-worker-exploitation-so-whos-turning-a-blind-eye https://www.theguardian.com/commentisfree/2016/may/12/7-elev... [1]: In the major metropolitan areas.
- baroffoos 7y ago
  I'm in Adelaide and convenience stores are not super common. There is usually one on each major street but nowhere near as much as the other states. When I was in Sydney it was a massive shock to see 711 everywhere. It was quite often to have 2-3 of them within my field of vision.
  - avinium 7y ago
    The first time I went to Sydney (late 90s) I remember thinking the same - 7-11's everywhere. There was definitely an explosion of convenience stores across Adelaide - perhaps 2010 until 2015? But they then all shuttered in quick succession.
wiggler00m 7y ago
One advantage of the prolific Japanese convenience store (or "konbini") is that any improvement in the underlying franchise system can be rapidly deployed to all franchisees (like nodes in a network). This is true of many franchises, but the konbini are exceptionally prolific, so this effect is magnified. For example, if there is an opportunity to increase efficiency, or reduce costs or environmental impact, it would be relatively easy to deploy this throughout an entire franchise, as compared with heterogenous stores. As for the issue of opening hours, labour shortages and demographic trends (the population is aging and decreasing) are significant. I am only aware of two likely solutions which are not mutually exclusive: (1) immigration; and (2) automation, ie. robots. Increasing the fertility rate might also address this issue, but seems less likely to happen.
- pyrale 7y ago
  I guess smaller opening times would also solve the issue. I have yet to understand why societies tolerate such things as stores open at 3am, given the productivity it has, and the implications for workers.
  - TulliusCicero 7y ago
    There's nothing inherently wrong with stores open odd hours. Some people like to keep odd hours, some have to because of the nature of their job (a lot of maintenance/repair/cleaning stuff is done at night), so some stores being open works with that. And of course there are places like clubs where night hours make more sense. This situation in Japan seems unusual, usually a business would only stay open late if there was actually a reasonable amount of demand at that time.
    - pyrale 7y ago
      The "Some people like to work odd hours" is pretty tired in my opinion. Most people who work these hours are doing it out of necessity. If execs were forced to work whenever some of their employees work, their imagination about who likes what would change dramatically.
ilaksh 7y ago
It seems like 7 Eleven could help coordinate hours so that one owner could rest but a nearby store would be open at that time.
- bkor 7y ago
  The article specifically states that 7/11 is preventing various stores from not being open 24/7. E.g. small store, wife is utterly ill, 7/11 doesn't care; store needs to stay open. It seems they like the owner exhausted so they cannot do the things which makes sense. E.g. to sell the food which is close to the expiry date instead of throwing it out. Yet another example from the article.
  - SapporoChris 7y ago
    The article specifically states that 7/11 was preventing various stores from not being open. “We will let the owners (of franchise stores) make the final decision (on whether to shorten operating hours),” said Seven-Eleven Japan President Fumihiko Nagamatsu. There is a 7/11 near the Sapporo Zoo that is closed early in the evening.
coldtea 7y ago
How close another franchise would allowed to be should have been part of the contract when opening a store. E.g. "no second franchize store in 1 mile radius" (of course this could differ from place to place based on market and population density).
- esrauch 7y ago
  When I was in Japan there were some cases of four 7/11s visible at once without turning my head, so I think you can set your sights a lot lower than a one mile radius.
mft_ 7y ago
It would seem that this is ripe for automation, no? In fact, I've been surprised for some time that there hasn't been a greater development/proliferation in this area. It would seem that a large (room-sized) refrigerated vending machine offering a range equivalent to a small convenience store is already highly technologically feasible, and would probably be far more cost efficient (smaller footprint, much lower staffing requirements) than running a convenience store.
- typeliftr 7y ago
  I feel like vandalism and theft would be a big problem in this scenario.
  - kibibyte 7y ago
    Outside of Japan maybe, but it's something that would work in that culture. From my last trip to Japan a couple of years ago, I saw vending machines everywhere. In urban areas, there would be one every couple of city blocks in urban areas; I even encountered a few in the middle of park trails in relatively more secluded areas (e.g. more or less the middle of a forest). All these vending machines appeared unattended, but they always had inventory.
  - asdff 7y ago
    It always comes down to that, but what's stopping a company from hiring someone located anywhere in the world with a big monitor to stare at 20 feeds and just hit an alarm and call the cops when people get disgraceful? Have the cams only flip on with motion even. Could probably do it for dollars a day in some countries.
SenHeng 7y ago
Has anyone noticed how FamilyMart seems to be in a war of attrition with 7-11. There's always one nearby another. Lawson seems pretty fine being on their own.
ferros 7y ago
Don't underestimate the safety factor. Walking around late at night past scores of open stores presents a significantly different backdrop to other cities around the world where everything is closed and all the lights are off.
hrktb 7y ago
It’s a bit brushed over and sprinkled in the article but this part was brutal: > Last year, when Fukui Prefecture was hit by the heaviest snowfall in decades, it was discovered that a 7-Eleven franchise store was banned by the parent company from closing temporarily even after the store owner’s wife fell ill from overwork. > He lost his wife in May last year and he “was on the verge of falling ill or dying from karōshi (death from overwork),” he said. It summarizes for me how extreme the relation is between franchise and the owners, how little escape they have from that abusive bind.
fnord77 7y ago
> The owner, in his 40s, said he works 500 hours a month. how is this even possible? That would be almost 17 hours a day, 7 days a week for a 30-day month.
- zimpenfish 7y ago
  Given it's 24/7, there's only 10 employees, and "the store will be in the red if he hired someone for night shifts", 17 hours a day seems plausible for the owner/manager (if somewhat unhealthy.)
- hudibras 7y ago
  It's not; he's lying.
  - zimpenfish 7y ago
    Do you have a source for that claim? The article doesn't give me enough information to judge but I might have missed something.
Mikeb85 7y ago
It's a pretty solid assumption in economics that in an industry with perfect competition, profit margins eventually converge with the benchmark interest rate.
tokyoHacker 7y ago
Inspite of having 7/11 at every nook and corner ( specially in Tokyo/Yokohama), it would be hard to get a sandwich, obento(お弁当) or onigiri if you go to a convenience store (コンビニ) just after peak lunch time.

233 points by Ultramanoid 7y ago

vkou 7y ago

The irony is, of course, that the chain is named "Seven-Eleven" because it was originally open from 7 am to 11 pm. > One Monday night in late March, only 10 customers came to the man’s store in the three hours before dawn, and the sales during that time were a little more than ¥6,000. The store will be in the red if he hired someone for night shifts. Smart management would close the store during those hours. Of course, the franchise doesn't care for smart management - when the operator eats the loss.

microcolonel 7y ago
I think what they're getting at is that if you want to operate a 7-Eleven, you ought to be absolutely reliably open at the expected hours. The intended alternative is to shut down the store. This man made a terrible business decision and is now stuck between a sunk cost and probably not a lot of alternatives for work.
- ranrotx 7y ago
  That’s the problem with a lot of franchise agreements. So many things are set and specified for you that you have no room to optimize your business as an operator. In a way, you’re almost just like an employee of the franchisor, but without any of the benefits and a lot more liability. But it’s a great relationship for the person selling the franchise.
  - Scoundreller 7y ago
    Depending on the tax system, being able to structure yourself as a « business owner » can mean more money in your pocket than being a salaried manager.
- vkou 7y ago
  I have a feeling that 'expected hours' would suddenly and magically stop including 1am-6am, if the parent company were on the hook for the operating losses the franchises are suffering. But as long as they can make other people pay for their business decisions, that will, of course, not happen.
  - microcolonel 7y ago
    That would entirely defeat the purpose of franchising agreements. The point is to diffuse risk, standardize the brand, and allow local owners to decide the things which don't affect the brand, in the service of their own interests (including whether or not to continue operating the location). A franchise where the owner bears a small minority of the risk might as well just be centrally owned.
    - mgkimsal 7y ago
      and where the franchise parent bears basically no risk at all is a pretty crappy deal for franchisees, who basically take what seems to be most of the risk (described in the article) for... 30% of the gross profit? maybe? eventually, 7-11 will be known as a place where you're likely to encounter sick children lying on chairs at 10pm because the franchisee's family is living in the store. eventually that might actually damage the brand enough that they'd remove some of the stipulations.
yskchu 7y ago
> Smart management would close the store during those hours. It's mentioned in the article actually, in the later section on Mitoshi Matsumoto; he closed early and made more $$$.
- hudibras 7y ago
  So he said.

bane 7y ago

Just came back from Japan and man are there too many convenience stores. Within any given area there is probably 6 to 7 stores within eyeshot and an easy walk. It's weird thinking that they are too convenient, but honestly they start to become pointless. More than once we simply walked by a few knowing that there would be another one just a minute or two more down the street. It's great that we could find something to eat at 2am when jet lag messed with our eating schedule and nothing else was open except the four 24-hour chain restaurants, 6 full-service Izakayas and a late night curry shop within a 5 minute walk. What would we have ever done without a choice of 6! different convenience stores within the same area?! Oh and on the way there's vending machines literally jammed into every available urban crack that can fit one where I can service most of my beverage and a few food needs. I couldn't figure out how these places earn enough money to keep the lights on given the competition, now I guess I know.

Klonoar 7y ago
I mean, I lived there for 5 years of my life and go back often... the alternatives open at 2AM only really exist in the tourist areas or the uber dense areas (Shinjuku, etc). Past 2, you're pretty much only eating conbini food or a "family restaurant" like Denny's, Johnathans or Royal Host if you're lucky enough to be near a 24 hour one.
- bane 7y ago
  Okay, to be fair, I'm definitely talking about big downtown areas exactly like Shinjuku or Shibuya. But I'm also talking about places like すき家 and 松屋 which are pretty good late night drunk eats and we never failed to find a late night pub with crazy hours no matter where we were.
  - Klonoar 7y ago
    I understand if those places seem amenable to you, but I (and pretty much everyone I know who lived there long term) wouldn't set foot in one of those past their college years. They're horrible for your body. I'd sooner eat conbini food and pass out. The late night pubs do exist, sure, but a lot of them stay open to capture any foot traffic from people missing their last train around midnight. Most don't serve full menus at that hour and it's usually a skeleton staff (short of, say, a HUB or something... but those aren't going to be open past 2, short of Roppongi & co generally). Japan (really Tokyo, I guess) stopped being truly 24-hours post 2011 earthquake. After the power issues around the country, I noticed a lot of places never returned to their same livelihood. It's a shame, was fun while it lasted. I'm mostly commenting at this point because the misconception of Japan being this constantly-on always-good-food crazy ass heaven is really tiring to see these days.

baroffoos 7y ago

The problem seems so obvious. There is far more supply than demand. Why do people keep opening these stores when it is clear no one wants them?

patio11 7y ago
It’s not clear no one wants them, since there is little data available to an ex-salaryman looking to open one in a particular neighborhood and if you do an unsophisticated “just watch a store all day” competitive analysis both a thriving store and a struggling store appear busy at all hours of day and night. The franchisor is basically uniformly in favor of more locations since the franchisee bears most startup costs and the franchisor gets an effective call option on their cash flow. (It’s also not clear to me that convenience stores are oversupplied relative to demand; there are probably some geographic mismatches but in e.g. this neighborhood in Tokyo you can find 3 in a Us city block and they’re self-evidently very viable. Which you might ask “How is that self-evident?” and I’m left to say “Trust me.”)
- michaelt 7y ago
  I guess it depends on how much data you'd expect someone to gather before opening a store. I was under the impression opening a convenience store cost $50,000 or more, not an investment to make lightly IMHO. A few visits will tell you if the owner is working 16 hours a day 7 days a week, and you can estimate markups by looking at prices on the store shelves. And that's without looking for franchisees complaining online, or asking them in person.
psychomugs 7y ago
There might be more supply than demand, but that doesn't mean that the demand is low.

jorblumesea 7y ago

I don't understand the demand from the parent company to stay open late, given the lack of customers they clearly have and the oversupply of combini. I was at a 7-11 in Osaka by the dotonbori and it was basically vacant. Like many things in Japanese society it seems to be because "this is the way it's done".

patio11 7y ago
You live in a country with franchises, right? What would you articulate as the brand promise of a McDonalds? McDonalds has a very clear internal understanding of that brand promise: it includes clean bathrooms, a smile, extremely low prices available, and very consistent food. 7/11 also has a brand promise. It includes, prominently, “If you need it, 7/11 is open.” The LTV of a conbini regular is very, very, very high and the brand does not want you to sour on it for reasons specific to Store 6548 in May 2019.
- CydeWeys 7y ago
  I wonder if this matters less in the age of smartphone apps. I tend to check opening hours on Google Maps first before heading to a place when it's outside of obvious business hours (like the middle of the night).
  - ericd 7y ago
    I don't think it does. Decreased friction provides a very real, very large boost to almost any business like this. Any uncertainty or mental effort makes me much less likely to go, especially if there's another option that I am certain will provide me what I want. Conversely, if they're reliable and require little effort, I am much more likely to grow to depend on them habitually.
    - smelendez 7y ago
      I think that's probably the deal with a lot of 24-hour businesses. Letting it be known that you're always open may make sense even if the overnight hours aren't always profitable. I suspect it's true for diners, for instance, and New York bodegas. Insomniacs drinking coffee aren't paying the bills, but they'll come back for lunch or breakfast. Bars also often seem to stay open as late as they legally can, even if it's just the bartender and the town drunk on a typical night.

CydeWeys 7y ago

I was just in Japan two weeks ago, and convenience stores were omnipresent. I'll admit, it was incredibly convenient, as I never went for lack of food or water, and I got into habit of grabbing a beer and a snack every night to take back to my hotel room before bed. I was relying on them (and vending machines) pretty heavily for coffee and green tea throughout the day as well. There were way too many convenience stores that were open in the middle of the night, though (and apparently this is a requirement on the franchisees). There was a 24/7 convenience store on the first floor of my hotel, and then another one down the block, and then several more within a two block radius. There's no reason they couldn't all coordinate better so that each individual store is only open through the night a couple times per week. That would make a lot more sense. Most customers would still be able to reach an open convenience store, even in the middle of the night, within a few blocks walk. It'd be nice if stores had posted the hours of nearby stores so you'd know where else to go if the one you wanted was closed, but that's probably unnecessary now in the age of apps (I had no problem finding opening times for places on Google Maps).

gambiting 7y ago
Pharmacies in Poland all operate on this rotating schedule, where at least one pharmacy in town is open 24h(they always post a sign saying where the nearest 24h pharmacy is). I have no idea if it's by law or just a thing that everyone does.
- ovi256 7y ago
  Yes, this is by law and it's a requirement for having a pharmacy operating license. Fun fact: in most of the world, medical personal like pharmacists can't go on strike.
  - AstralStorm 7y ago
    Poland is not part of it then. What does have to happen is that emergency or base services are sustained. That is the one 24h pharmacy. All others can just close. Similar with doctors in hospitals, as long as emergency service works fine strike is allowed.

RyJones 7y ago

I also just came back from Tokyo and Osaka; I was blown away by how many 7/11s there were and how close they were. The vending machines are amazing. One other thing I would like to import: the widely available, clean bathrooms all over the place. That was super nice.

CydeWeys 7y ago
Free public bathrooms everywhere was nice, but there was still a dearth of free public water fountains -- which, admittedly, most cities don't have enough of. Rome is kind of the gold standard in this regard. I loved how some of the vending machines and convenience stores sold hot canned drinks. I've never seen that anywhere in the US. Now the hot canned coffee wasn't actually good (I had to try it), but it was interesting to have that as an option. There were also plenty of vending machines that would make coffee for you (which I didn't use because I opted for free coffee in the hotel in the morning and cold green tea thereafter, which I must say was delicious).
- RyJones 7y ago
  I had the same experience. I had to try the hot canned coffee; I didn't try it again. Also: canned mixed drinks! Japan is truly living in the future.
  - bobthepanda 7y ago
    IMO the vending machines aren't the future; they're the manifestation of a different future. When cities start industrializing, one of the first things that consistently pops up are food vendors on the street taking up public right-of-way. Food preparation is a skill that doesn't need education, people working the long shifts of industrializing societies need to eat quickly, and new city-dwellers miss their regional foods, so poor provincial migrants quickly start hawking whatever they can sell on the street. As cities grow up, they start viewing street food vendors as unhygenic nuisances. Some cities license them (New York's street carts), others try and corral them into more formal, permanent setups (Singapore's hawker food centers), and some just attempt to ban them altogether (tried in Bangkok.) Vending machines are a unique response to the Japanese need for quick food; they're small enough to fit on tiny Japanese streets, they have no labor requirements in a country suffering from unskilled labor shortages, and there's no need to waste time doing the Japanese customer-service pleasantries with an inanimate object. The American future would be the food truck. Food trucks have changed the dining scene in many areas, because a food truck and a permit is significantly cheaper than commercial leasing. And it works in the American context because American cities are full of wide streets with loads of parking, and there's lots of cheap labor to staff trucks with. But it would never fly with Japan, the same way Japanese vending machines would probably get vandalized in their first week on an American sidewalk.

delhanty 7y ago

Even for HN, these are some of the most empathy-deficient comments that I've ever read. Yes, it's true that there is a huge problem with overwork for the franchisees. But those stores aren't there (just) for you. Imagine this scenario: you're over 80, living on your own and not very mobile. The fact that there's a 7-eleven within 100 metres that sells a large variety of foodstuffs and essential items in single portion sizes allows one to maintain one's independence, which is a godsend. Try that in LA! Japan values social-cohesion. Many of us who live here long term do too. Edit: admit there's a problem for the franchisees.

delhanty 7y ago
Oh - update! I'm living in a farming & fishing village about 800 metres from the nearest combi. After the local village shop shut down, the railway station 7-eleven started sending a van into the village once a week on a Wednesday afternoon so that the old people in the village could get their groceries.
blazespin 7y ago
Right, but the solution is probably automation and not overworked to death franchise owners.
- rangersanger 7y ago
  Overwork is better than no work. Automation may be part of the solution, but on its own it fails.
  - adventured 7y ago
    > Overwork is better than no work. No work is rarely the trade-off issue in Japan. They operate for quite different margins and labor practices than eg the US. They haven't had an unemployment rate over 5.5% in 40 years. The typical rate has been 3% to 3.5% for the last 30 years - a time in which they've suffered from perpetual economic stagnation and zero net growth. It's around 2.5% right now. Japan is losing population while simultaneously having an extraordinarily low unemployment rate. Automation is the only path forward, they should be pursuing it with as much vigor as possible. If you're Japan, as your population contracts, the ideal is to wipe out all convenience store jobs and push the labor force higher up the ladder whenever possible.

frequentnapper 7y ago

I currently stay in japan. The competition here is intense when it comes to food and drink. Every alley, even in residential areas in the back of the houses, has some mom & pop operated hole in the wall eatery. I never see more than two customers at many of these places at a time, but they stay open ungodly hours. I can't imagine they would be making more than $2-3 an hour on the average after all the costs.

SenHeng 7y ago
A lot of family run retail shops all over the world/Asia seem to have this misconception that family labour is free, thus their employees/children/siblings are effectively working for below minimum wage.
- granshaw 7y ago
  It’s an arrangement. Low paid labor now for ownership of the business in the future

raverbashing 7y ago

7-11 is not friendly to Franchisees in the US either. There have been some lawsuits even Owning a convenience store is a hard proposition

PhantomGremlin 7y ago
It's not just 7-Eleven. I wouldn't want to be a franchisee of any sort in the US. The power dynamic is horrible. McDonald's is probably one of the better ones. But you're still beholden to them. They often own the land under the building, if not the building itself. They tell you exactly what you must do. They tell you when to remodel. They make you buy from their suppliers. They can decide to open another store a mile away from yours. But longer term I think the worst franchise to be in will be car dealerships. Once EVs become mainstream, the service revenue will fall by about 80%. There's just so much less to go wrong. How will dealers be able to pay for the overhead of their giant buildings?
- Scoundreller 7y ago
  Probably through higher margins on sales? But we’ll have less of those too with increased realiability. I think the real threat to the incumbents is the risk of having only the 3rd best or worse electric drivetrain. We might be in a winner-takes-all-ish market, like cell phones.
- Moru 7y ago
  That's interesting with the EV's, a local cab company just went bust and they claimed it was the large repair costs that did them in. That and the closest workshop that could service them was 600 km away. I'm not sure how they would even get the thought of starting a cab service 600 km from the closest garage that could service the cars but that's another question... The local 7-Eleven also went bust yesterday, together with their other store just a few blocks away. That corner of the city has plenty of other stores so it can't be easy to keep afloat. Town only has about 100 k people. (North Sweden)
- AmVess 7y ago
  Chick-fil-A and McDonald's are two of the better ones. They don't give them to just anyone, and are careful about locations, too. To become a franchisee with them ,you have to have a proven record of success and have plenty of money in the bank. Rule of thumb: the easier it is to obtain a franchise, the less it is worth.

blazespin 7y ago

The problem is capitalism and not really 7-11. If 7-11 didn't do this, family mart would and the guy would probably lose his store altogether. Capitalism doesn't care about people or the distress they feel during transitions. It's very effective at generally raising up the living standards of all people, but can be pretty inhumane at times when dealing with certain groups of people who's skills and services are becoming obsolete. The only choice really is retraining and switching careers and having social safety nets. The other alternative, socialism, just spreads the pain across the entire world. Our only realistic chance at reducing global poverty anytime soon is via capitalism. Sucks for this 7-11 owner, but that's how it goes.

ako 7y ago
Are you really sure that capitalism will reduce global poverty? The core of capitalism is competition. This may result in higher quality and larger choice, but if these are sufficient enough it will in the end result in lower prices. This has to be done through efficiency but will also result in lower wages. I think unconstrained, uncontrolled capitalism will result in 90% of the global population working very low income, replaceable jobs, or being completely replaced by automation.
- ixtli 7y ago
  Yeah. The social uplift only happens to people connected in some way to where the capital is accumulating. If you live where the capital is flowing from you're gonna have a bad time.
- icebraining 7y ago
  > I think unconstrained, uncontrolled capitalism will result in 90% of the global population working very low income, replaceable jobs, or being completely replaced by automation. I think that's likely; after all, capitalism already replaced the jobs of 90% of the developed world population with automation and other efficiencies: that's why most of us no longer work in agriculture. Now, was that a net negative development?
  - 7y ago

Causality1 7y ago

I admire the courage of people who run their own business but I don't think that life would ever be for me. I love working 40-48 hours a week and leaving my work at work when I go home.

h1d 7y ago
If you have confidence in your skill, can stay in the field you like and get double the average, why not?

ixtli 7y ago

The problem isn't convenience stores (I lived in japan for 1.5 years and lemme tell you, they're wonderful and everyone loves them.) It's capitalisms completely unregulated growth in situations where no one could possibly benefit. They call it competition, but that's not what this is in practice.

jen729w 7y ago

See also: Australia. 7-Elevens are everywhere [1] and the stories of underpaid workers are commonplace [0]. [0]: https://www.theguardian.com/commentisfree/2016/may/12/7-eleven-is-the-tip-of-the-iceberg-in-worker-exploitation-so-whos-turning-a-blind-eye https://www.theguardian.com/commentisfree/2016/may/12/7-elev... [1]: In the major metropolitan areas.

baroffoos 7y ago
I'm in Adelaide and convenience stores are not super common. There is usually one on each major street but nowhere near as much as the other states. When I was in Sydney it was a massive shock to see 711 everywhere. It was quite often to have 2-3 of them within my field of vision.
- avinium 7y ago
  The first time I went to Sydney (late 90s) I remember thinking the same - 7-11's everywhere. There was definitely an explosion of convenience stores across Adelaide - perhaps 2010 until 2015? But they then all shuttered in quick succession.

wiggler00m 7y ago

One advantage of the prolific Japanese convenience store (or "konbini") is that any improvement in the underlying franchise system can be rapidly deployed to all franchisees (like nodes in a network). This is true of many franchises, but the konbini are exceptionally prolific, so this effect is magnified. For example, if there is an opportunity to increase efficiency, or reduce costs or environmental impact, it would be relatively easy to deploy this throughout an entire franchise, as compared with heterogenous stores. As for the issue of opening hours, labour shortages and demographic trends (the population is aging and decreasing) are significant. I am only aware of two likely solutions which are not mutually exclusive: (1) immigration; and (2) automation, ie. robots. Increasing the fertility rate might also address this issue, but seems less likely to happen.

pyrale 7y ago
I guess smaller opening times would also solve the issue. I have yet to understand why societies tolerate such things as stores open at 3am, given the productivity it has, and the implications for workers.
- TulliusCicero 7y ago
  There's nothing inherently wrong with stores open odd hours. Some people like to keep odd hours, some have to because of the nature of their job (a lot of maintenance/repair/cleaning stuff is done at night), so some stores being open works with that. And of course there are places like clubs where night hours make more sense. This situation in Japan seems unusual, usually a business would only stay open late if there was actually a reasonable amount of demand at that time.
  - pyrale 7y ago
    The "Some people like to work odd hours" is pretty tired in my opinion. Most people who work these hours are doing it out of necessity. If execs were forced to work whenever some of their employees work, their imagination about who likes what would change dramatically.

ilaksh 7y ago

It seems like 7 Eleven could help coordinate hours so that one owner could rest but a nearby store would be open at that time.

bkor 7y ago
The article specifically states that 7/11 is preventing various stores from not being open 24/7. E.g. small store, wife is utterly ill, 7/11 doesn't care; store needs to stay open. It seems they like the owner exhausted so they cannot do the things which makes sense. E.g. to sell the food which is close to the expiry date instead of throwing it out. Yet another example from the article.
- SapporoChris 7y ago
  The article specifically states that 7/11 was preventing various stores from not being open. “We will let the owners (of franchise stores) make the final decision (on whether to shorten operating hours),” said Seven-Eleven Japan President Fumihiko Nagamatsu. There is a 7/11 near the Sapporo Zoo that is closed early in the evening.

coldtea 7y ago

How close another franchise would allowed to be should have been part of the contract when opening a store. E.g. "no second franchize store in 1 mile radius" (of course this could differ from place to place based on market and population density).

esrauch 7y ago
When I was in Japan there were some cases of four 7/11s visible at once without turning my head, so I think you can set your sights a lot lower than a one mile radius.

mft_ 7y ago

It would seem that this is ripe for automation, no? In fact, I've been surprised for some time that there hasn't been a greater development/proliferation in this area. It would seem that a large (room-sized) refrigerated vending machine offering a range equivalent to a small convenience store is already highly technologically feasible, and would probably be far more cost efficient (smaller footprint, much lower staffing requirements) than running a convenience store.

typeliftr 7y ago
I feel like vandalism and theft would be a big problem in this scenario.
- kibibyte 7y ago
  Outside of Japan maybe, but it's something that would work in that culture. From my last trip to Japan a couple of years ago, I saw vending machines everywhere. In urban areas, there would be one every couple of city blocks in urban areas; I even encountered a few in the middle of park trails in relatively more secluded areas (e.g. more or less the middle of a forest). All these vending machines appeared unattended, but they always had inventory.
- asdff 7y ago
  It always comes down to that, but what's stopping a company from hiring someone located anywhere in the world with a big monitor to stare at 20 feeds and just hit an alarm and call the cops when people get disgraceful? Have the cams only flip on with motion even. Could probably do it for dollars a day in some countries.

SenHeng 7y ago

Has anyone noticed how FamilyMart seems to be in a war of attrition with 7-11. There's always one nearby another. Lawson seems pretty fine being on their own.

ferros 7y ago

Don't underestimate the safety factor. Walking around late at night past scores of open stores presents a significantly different backdrop to other cities around the world where everything is closed and all the lights are off.

hrktb 7y ago

It’s a bit brushed over and sprinkled in the article but this part was brutal: > Last year, when Fukui Prefecture was hit by the heaviest snowfall in decades, it was discovered that a 7-Eleven franchise store was banned by the parent company from closing temporarily even after the store owner’s wife fell ill from overwork. > He lost his wife in May last year and he “was on the verge of falling ill or dying from karōshi (death from overwork),” he said. It summarizes for me how extreme the relation is between franchise and the owners, how little escape they have from that abusive bind.

fnord77 7y ago

> The owner, in his 40s, said he works 500 hours a month. how is this even possible? That would be almost 17 hours a day, 7 days a week for a 30-day month.

zimpenfish 7y ago
Given it's 24/7, there's only 10 employees, and "the store will be in the red if he hired someone for night shifts", 17 hours a day seems plausible for the owner/manager (if somewhat unhealthy.)
hudibras 7y ago
It's not; he's lying.
- zimpenfish 7y ago
  Do you have a source for that claim? The article doesn't give me enough information to judge but I might have missed something.

Mikeb85 7y ago

It's a pretty solid assumption in economics that in an industry with perfect competition, profit margins eventually converge with the benchmark interest rate.

tokyoHacker 7y ago

Inspite of having 7/11 at every nook and corner ( specially in Tokyo/Yokohama), it would be hard to get a sandwich, obento(お弁当) or onigiri if you go to a convenience store (コンビニ) just after peak lunch time.