Michael Girdley traces how Japan's Ito Yokado came to own 7-Eleven after the Thompson family's 1987 leveraged buyout left the company drowning in debt. A market crash and cash shortage made the chain vulnerable, and Ito Yokado bought it for roughly one-tenth its previous value. The American convenience store that invented the Slurpee and Big Gulp is now run from Tokyo.
The largest convenience store chain in the United States is not even American. It's actually controlled out of Tokyo, Japan. In 1973, 7-Eleven was the brand for convenience stores. In fact, in many places, including sometimes here in Texas, people call convenience stores 7-Elevens. They invented the Slurpee, the Big Gulp, and in fact, they were so impactful on American society that they— carmakers had to redesign cars to fit Big Gulps. In 1973, they licensed the 7-Eleven name from the United States to a Japanese company called Ito Yokado, who would take the brand and build it out in Japan. But they didn't just copy what was happening in the United States around 7-Eleven. They created an entirely new type of store that would become an essential part of Japanese life, delivering fresh food. Heck, you could even pay your taxes there. In 1987, at the peak of the junk bond craze, the family that owned 7-Eleven decided to take it private. They borrowed a whole bunch of money at exactly the wrong time. In 1987, we had a huge stock market crash. And the financial markets froze up. It was called Black Monday, and it meant that 7-Eleven was suddenly under so much debt that it couldn't make its payments anymore. But it turned out one group had money. The people that had licensed the brand name in Japan, Ito Yokado. Ito, because they had money when nobody else did, was able to come and buy 7-Eleven for 1/10 the price that it sold for just 18 months before. The Thompson family that had started 7-Eleven, they were a bit lucky. They didn't lose everything. Just 95%, as they owned 5% after they were, uh, basically sold to Ito Yokado. Debt in business is a tool. It can cut one way to help you magnify your returns and do better, but in the case of 7-Eleven, debt can be something that makes you very vulnerable to lots of outside shocks. And in this case, Black Monday and the freeze-up of the financial markets left them open for Ito to come in and buy the company that originally licensed them the name. I did a long-form video on the entire rise and fall and why 7-Eleven is struggling now. You can find it on my bio page or in the comments below.
