by John R. Harris

Where would you expect to find two of the world’s largest convenience store chains based? Somewhere like Dallas, perhaps – but surely not Tokyo and the Montreal suburb of Laval. And yet the honsha of 7-Eleven parent 7&i Holdings is right near Yotsuya Station. Meanwhile, Circle K’s parent, Alimentation Couche-Tard, is legally domiciled in an industrial park not far from where, 45 years ago last month, founder Alain Bouchard opened his first “dépanneur.”

What’s a “dépanneur?” Ask a Parisian and the answer may be tow-truck driver or repairman. But in Quebec slang it’s roughly, “help when you’re in a jam” – like where to go late at night when you run out of smokes: to the “dep.” Dépanneur and couche-tard (which loosely translates as “night owl”) are terms as deeply Quebecois as konbini is authentically Japanese.

The two giant chains are now engaged in a courtship dance as Couche-Tard (with 16,800 stores in 31 countries) proposes to acquire its much larger competitor, 7-Eleven (85,000 stores in 20 nations). Its initial proposal having been rebuffed, ostensibly over fears of what a foreign owner might do to a Japanese icon, Couche-Tard is now eager to explain the positive contributions it hopes to make.

How compatible are the two prospective international marriage partners? They share both similar traits and key differences.

Both Couche-Tard and 7-Eleven Japan benefitted from similar environmental advantages in their initial stages of growth: limits on competition from large supermarkets.

Quebec used to ban supermarkets from opening on Sundays and late evenings, leaving the field free to dépanneurs, which were also allowed to sell beer, while SAQ, the government liquor monopoly, sold wines and spirits. And when lotteries were introduced, the ‘deps’ were big winners.

With this wind at their backs, Bouchard and his three partners began to acquire convenience stores, both in ones & twos and major chains, first in Quebec, then across Canada, into the U.S. and most recently in Europe. Over 45 years they have made more than 75 acquisitions.

In Japan meanwhile, 7-Eleven’s master franchisee, Ito-Yokado, scored a huge win by cracking the neighborhood monopoly of “mom & pop shops,” small independent grocers that were protected by local merchant associations, key pillars in the LDP’s electoral dominance. The “large-scale retail law,” which ban-ned outlets over 1,000m2 from local neighborhoods, also imposed an unfair burden on consumers and worked to keep out imports.

A decade after its first outlet opened in Tokyo in 1974, 7-Eleven ingeniously overcame this obstacle by pioneering small-store formats designed around an IT-based POS (point-of-sale) system. As soon as a customer bought an onigiri, the system would alert warehouse staff to put a fresh one on the load for a delivery truck leaving within the hour. This enabled two things: no in-store storage needed and ultra-fresh food on the shelf.

The success of this formula allowed 7-Eleven to roll out stores across Japan, mainly operated by franchisees. While the brand thrived in Japan, by the early ‘90s 7-Eleven in the U.S. was teetering on bankruptcy. So the Japanese child bought the American parent, Southland Corp., and 7-Eleven became a Japanese brand.

Both Couche-Tard and 7&i Holdings (7-Eleven’s parent) have a mix of franchised and company-owned outlets. But one significant difference between the two is in the relationships between the companies and their franchisees.

7&i is essentially a traditional Japanese enterprise with a top-down corporate structure and an all-powerful head office that closely instructs managers across its sprawling network. 

Couche-Tard: focus on the frontline and the bottom line

By contrast, Couche-Tard has a radically frontline-centric system, so much so that there is no head office apart from the small Laval facility that is its legal domicile. Although it remains a Canadian company, listed on the Toronto exchange, administrative functions are distributed across a network of “service centers.” These are located in cities where acquired companies were based: Charlotte, North Carolina; Tempe, Arizona; San Antonio, Texas; and Oslo, Norway among others. This was a very deliberate approach taken by the founder, Alain Bouchard. 

Emerging from a hard-scrabble upbringing in Quebec’s backwoods Saguenay region, the 25-year-old Bouchard arrived in Montreal with a tireless work ethic, a genius eye for detail and fierce determination to succeed. After launching several stores for another outfit, he single-handedly opened his first store in 1980. Not long after, Bouchard brought in three friends as partners. Forty-five years later, he is the chairman and two of his old friends remain as directors. 

As the tale is told in an engaging biography of Bouchard, Daring to Succeed, by Radio Canada journalist Guy Gendron, the team set ambitious growth goals from the outset. But where most of their competitors were led by executives who had never been behind a store counter, the Bouchard team had a knowing eye for the nitty-gritty of running a corner store and the human qualities needed to do it successfully.

Even so, as they acquired one chain after another, the Bouchard team didn’t go in with a “we know best” attitude. For example, early on when they acquired a small Quebec City chain, they liked its name so much that all their other stores and the company were rebranded as “Couche-Tard.” And once Couche-Tard acquired the much larger Circle K chain in 2003, the Circle K brand name was eventually spread across all the company outlets worldwide – well, except in Quebec where the Couche-Tard name is almost sacred.

The Quebecois senior executives were so humble and down-to-earth that for years they continued to stay in modest hotels and fly economy. But with stores and management functions now so spread out, corporate jets have become essential. With their thick Quebec accents and limited English proficiency, they were almost always under-estimated by their targets, frequently to their advantage. Time and time again though they proved to be shrewd negotiators.

Still, with any acquisition, buying at a low price has little value unless you can successfully on-board what you buy. After all, people who dislike the new regime can simply walk out the door.

This may be where Couche-Tard’s humility and frontline focus have most powerfully contributed to its successful growth. Executives in the acquired companies have been delighted to find that they are not second-class citizens but are quickly given opportunities to advance. And Bouchard made a point of personally visiting every new store and chatting with frontline managers and staff – until there were simply too many stores to visit. People respond to leadership like that.

Now, with the founders semi-retired, a new generation is leading the charge. But Couche-Tard has not lost its appetite for growth. Far from it. In fact, they are determined to land their biggest acquisition yet. Will “les gars de Laval” be underestimated yet again? Time will tell. 

At 7-Eleven, a more top-down approach

Today, with more than 21,500 stores across the archipelago, 7-Eleven is Japan’s largest convenience-store operator – and something of a national icon. Its outlets are spotless. Its restrooms are reliable. Its selection of prepared foods is varied and almost always fresh. The range of daily necessities is well-curated. Even the wine selection is fairly decent.

With its efficient ATMs, 7-Eleven arguably offers better banking service than Japan’s banks. When it comes to paying your phone or power bill, it typically takes 10 minutes or more at a bank (when it’s open), versus under a minute at the konbini, 24 hours a day. 

In short, 7-Eleven is one of the most ubiquitous and dependable features of modern life in Japan. When disaster strikes – as happens all too often in this fragile island chain – the konbini is where people turn. 

And yet, in recent years the company’s financial performance has disappointed the market. Analysts have pointed to senior management being distracted by fingers in too many other pies, such as department stores and supermarkets, the high-profile failure of its 7pay cashless payment system and too much distance between head office and the stores.

As a result, dissatisfaction is reportedly widespread among 7-Eleven franchisees in Japan, local owner-operators of the stores. Although 7&i does not disclose the number of franchised versus company-owned stores, most estimates peg franchises at 60 to 70 percent of the total.

A September 2024 Reuters story cited interviews with several 7-Eleven franchisees “who voiced disapproval of Seven & i’s strategy and welcomed the proposed buyout by Couche-Tard.”

Given the Japanese propensity to viscerally reject any hint of a foreign takeover, this may be significant. Unhappiness with management may run so deep that “gaijin” owners don’t seem so bad after all.

The most contentious issue has been the head-office diktat that all stores must stay open 24 hours, no matter what. That might make sense in big-city areas that bustle into the wee hours – and where Chinese and Vietnamese migrants are happy to take late shifts. But in rural Japan stores can go hours after midnight without a single customer. And who has to work the graveyard shift? When no one else is willing, it is too often the franchisee all by himself – left with long hours to ruminate over how much he hates head office.

If he ever gets the chance, that franchisee might well be amazed and delighted by the qualities ingrained in the Couche-Tard culture by Alain Bouchard. And the founder himself has made clear just how Couche-Tard would proceed if its acquisition succeeds.

“We have great respect for the 7-Eleven brand in Japan,” Bouchard said. “And our goal is to share best practices across the global business to enhance operations, our offerings and values for our global customer base. Our goal is to keep local management as they best know how to serve their customers and keep the goods and services that local customers have come to know and love in 7-Eleven Japan.”

Although its first bid was rejected, Couche-Tard has not given up. And having made several dozen successful acquisitions in the company’s 45-year history, one thing is clear: never, ever underestimate the dépanneur from Laval.

A Quebec City Couche-Tard store in the early ‘80s. Bouchard acquired 11 Couche-Tard outlets in 1985 and adopted the name for all his stores.

Opposite, Alain Bouchard chatting with Couche-Tard shoppers and staff. His
eye for detail during thousands of store visits is seen as a key factor in the company’s success.

Below, Alain Bouchard with co-founders, Jacques D’Amours (L) and Richard Fortin (R), celebrating Couche-Tard’s 1986 listing on the Montreal Stock Exchange.