7-Eleven vs. Wawa for NNN Lease Investing

NNN lease investing is a great strategy for real estate investors seeking low-risk, income-generating investments.

NNN leases transfer property expenses to the tenant, making them appealing due to minimal landlord responsibilities. 7-Eleven and Wawa, prominent convenience store chains with an extensive national presence, are highly sought-after NNN lease tenants.

But navigating the real estate market can be hectic and confusing. That’s why this article will be comparing their strengths and weaknesses, offering valuable insights to investors considering a net lease investment in either company, and why real estate is still one of the most solid investments you can make.

Overview of 7-Eleven

7-Eleven has a rich history since 1927 and is now a global convenience store chain with over 70,000 stores in 17 countries. This extensive presence offers diversification and stability in terms of market reach. 7-Eleven stores are strategically placed in high-traffic areas, providing a diverse range of products and services such as food, beverages, snacks, and gasoline.

Financially, 7-Eleven demonstrates strength and growth potential, leveraging its robust business model and strategic expansion initiatives. As an NNN lease tenant, 7-Eleven is a very attractive option for investors. The company has a strong track record of financial performance, and it has a long-term commitment to its NNN properties.

Why Should You Invest in a 7-Eleven NNN Lease?

Strong Brand Recognition

7-Eleven is a well-known convenience store business with high brand recognition, enhancing its visibility and customer base.

Financial Performance

7-Eleven has reported strong financial results, with income and revenue exceeding previous performance and projections.

Expansion And Acquisition

In 2021, 7-Eleven acquired approximately 3,800 Speedway convenience stores, significantly expanding its North American presence to over 14,000 locations.

Extensive Market Reach

With its expanded footprint, over 50% of the U.S. population now lives within a 2-mile radius of a 7-Eleven store, showcasing its widespread market reach.

Promising Future Outlook

7-Eleven’s continued expansion and strong financials suggest a bright future for the company.

High-Quality Tenant

Considering its brand recognition, financial performance, and expansion efforts, 7-Eleven is an investment-grade tenant that presents an attractive option for NNN lease investments.

Overview of Wawa

Wawa is a regional convenience store chain that is headquartered in Pennsylvania. Founded in 1964, Wawa has gained a strong foothold primarily in the Mid-Atlantic region of the United States. While its presence is more geographically limited than 7-Eleven, Wawa has expanded to over 900 stores and continues pursuing growth opportunities.

Financially, Wawa demonstrates stability and a commitment to customer-centric strategies. As an NNN lease tenant, Wawa offers investors a strong regional presence and notable growth potential. The company is well-positioned for future growth with a solid financial track record.

Why Should You Invest in a Wawa NNN Lease?

Privately Held Company

Wawa’s status as a privately held company may limit access to detailed financial information but signifies its stability and long-term viability.

Forbes Ranking

Wawa ranks at number 24 on Forbes’ list of the largest privately held American companies, showcasing its significant market presence and success.

Impressive Revenue Growth

Wawa experienced strong revenue growth, with an increase from approximately $11 billion in fiscal year 2021 to $14.93 billion in 2022, indicating a thriving business.

In-Store Sales Dominance

While fuel sales contribute to revenue, the majority of Wawa’s profit comes from in-store sales. Customers visiting for fuel often make additional purchases, boosting overall revenue.

Daily Revenue

Wawa generates around $35 million in revenue per day, demonstrating its financial strength and consistent income potential.

Outperforming Competitors

Wawa’s revenue numbers surpass those of local rival Sheetz, highlighting its market superiority. It also maintains a strong investment outlook compared to larger competitors like 7-Eleven.

Ideal NNN Ground Lease Tenant

Considering its financial performance, market position, and revenue generation, Wawa stands as a high-quality tenant and an attractive option for NNN ground lease investments.

7-Eleven vs. Wawa for NNN Lease Investing

When comparing 7-Eleven and Wawa for NNN lease investing, consider the following pointers:

1.   Market Presence

• 7-Eleven: Extensive global presence with over 70,000 stores in 17 countries.
• Wawa: Primarily operates in the Mid-Atlantic region of the United States with over 900 stores.

2.   Lease Terms

• 7-Eleven: Offers long-term leases (10-20 years) with fixed rental rates and periodic escalations.
• Wawa: Provides long-term leases (15-20 years) with fixed rental rates and periodic escalations.

3.   Cap Rate

• The average cap rate for a 7-Eleven net lease is 4.25%, suggesting a lower-risk investment with good profitability and return potential.
• The average cap rate for a Wawa net lease is 4.4%, indicating a lower-risk investment with good profitability and return potential.

4.   Financial Stability

• 7-Eleven: Demonstrates strength and growth potential, leveraging a robust business model and strategic expansion initiatives.
• Wawa: Displays stability and commitment to customer-centric strategies.

5.   Tenant Reputation

• 7-Eleven: Established reputation as a reliable tenant, known for fulfilling lease obligations.
• Wawa: Earned a favorable reputation for maintaining strong relationships with landlords and fulfilling lease obligations.

6.   Location Strategies

• 7-Eleven: Expansive network allows for a broader reach, offering geographic diversification and potential exposure to different markets.
• Wawa: Focuses on strategic expansion within its established regions, particularly in the Mid-Atlantic area, leveraging strong brand recognition and customer base.

7.   Adaptability to Market Trends

• 7-Eleven: Proactively embraces technological advancements, implementing features like mobile payments and app-based loyalty programs.
• Wawa: Recognizes the importance of technology in enhancing customer experience, offering mobile ordering and payment capabilities.

8.   Risk Assessment and Mitigation

• 7-Eleven: Potential risks include market saturation in certain areas due to extensive presence, but financial stability and established brand mitigate risks to an extent.
• Wawa: Geographic concentration in the Mid-Atlantic region may pose a risk of overexposure, but strong brand recognition and customer loyalty help mitigate concerns.

Conclusion

Both 7-Eleven and Wawa offer potential opportunities for NNN lease investments. Each chain has its own unique advantages and considerations.

Investors should conduct thorough analyses and risk assessments and align with their investment goals to make informed decisions. Evaluating lease terms, location strategies, and market trends is essential in navigating the realm of NNN lease investments.