A real heavyweight: Kwik Trip continues its rapid expansion | Madison Wisconsin Business News

LA CROSSE – In its stores, Kwik Trip customers can see baskets filled with muffins, a white milk and chocolate cooler and a holster containing some salads, mugs of parfait and fresh turkey sandwiches on bread. wheat and cranberry.

But on a 120-hectare business campus in La Crosse, food production is measured in the millions, a strategy that contributes to the rapid growth of Kwik Trip, which already has 700 stores in three states.

Unlike other convenience store operators such as Kelley's Market, Stop-N-Go, BP and Casey's, which rely on outside suppliers for most foods sold in their stores, Kwik Trip's many product-related activities costs are largely self-sufficient. It saves money by using its own bakery, dairy and food product production facilities, as well as an in-house trucking company to move food to stores.

Kwik Trip serves 8 million customers a week, employs over 24,000 people and has annual sales of more than $ 5 billion. The company plans to add 42 stores this year, in addition to demolishing and rebuilding a handful of other existing Kwik Trip stores. With the acquisition of other convenience stores and $ 2.5 billion in capital investments, Kwik Trip will be on the verge of adding another 250 to 260 facilities.

"We have a lot of room for growth," said Carl Rick, Kwik Trip's Leadership Development Specialist. "We are not in some of the larger cities of Wisconsin, we are not in some of the largest cities in Minnesota, and we are not in some of the larger cities in Iowa. So we have room to grow in the states where we operate. "

Kwik Trip, which has 400 stores in Wisconsin, jumped into the Madison Market and the suburbs of Milwaukee in late 2017 with the purchase of 34 Middleton-based PDQ stores. However, Kwik Trip still does not have a store in the cities of Milwaukee and Racine. In Iowa, where stores carry the Kwik Stars brand, the company has just begun touring Des Moines. In Minnesota, Kwik Trip has not yet entered Minneapolis or St. Paul.

"The challenge for them is growth, and a lot of good companies have been spoiled by the challenge of growth," said Hart Posen, who studies business strategy and strategic decision-making at UW- Madison School of Business. "The key is to understand how to grow, but over the past 15 to 20 years, they have made many very smart decisions."

Posen said the challenges for the company include staffing, finding real estate for store construction, and geographic limitation because most of the food in his stores is shipped almost daily from the La Crosse campus. . Kwik Trip must also balance the demand for its stores with the ability to meet production schedules and improve capital at La Crosse.

"It's a chicken and egg thing," said Rick. Do you invest capital in stores or production facilities in La Crosse? Because you are going to be inefficient in one area or another. So, we always play this game the size is too big. It's really our most difficult growth challenge. From there, it's finding real estate.

Large scale food

The Kwik Trip corporate campus is a real heavyweight of production.

It includes a large-scale dairy, which has bottled 26 million liters of milk last year, from farms located within a radius of 250 to 300 miles. There is a 212,000 square foot confectionery bakery that makes millions of cookies, donuts and muffins a year. Last year, a 60,000 square foot shopping center made 6.1 million sandwiches and 1.9 million salads. His pizza line prepares 50,000 pizzas a day. The soups are prepared 1,000 gallons at a time.

But the company's rapid growth requires $ 300 million to invest, including campus expansion, including the recent launch of a $ 112 million, largely automated bakery and buns, and a plan to expand the business. his candy bakery next year. Construction work began this month in an engineering building that will serve as a distribution center for the materials needed in the stores. The campus also includes a 360,000 square foot training center and distribution center.

The kitchen of the police station is also online for expansion. The plans have not been finalized yet, but the company plans to create a pizzeria and a section of preparation of a take-out meal program associating fried chicken in shops and restaurants. 39, accompaniment produced in La Crosse. The program is currently being tested in a few stores, including Delafield, Holmen and West Salem.

"As we continue to grow, what we are talking about six months ago is not what we are talking about today," said Brad Clarkin, director of production operations. "You always try to stay ahead of this end. Predict what we will produce, then (ask) what are the associated units and how to run them for the retail trade? This is one of the many things we try to stay ahead of. "

The expansion of the company site generated $ 21 million in income tax credits granted to Kwik Trip in November 2017 by the Wisconsin Economic Development Corp. Kwik Trip and WEDC said the project is expected to create more than 300 jobs in the La Crosse area over the next few years. five years. He had already created 171 jobs by the end of September 2018, according to a project performance report filed by the company with the public agency.

The operation is based on a profit-sharing program which last year rewarded each full-time and part-time employee of the company with a cash bonus of 10% and another contribution of 3.1%. individual retirement accounts 401 (k). The company also has its own self-insured health clinics for employees in La Crosse and Appleton and has converted the former PDQ headquarters in Middleton into a health clinic that is expected to open next month.

"They are fascinating," said UW's Posen. "Most convenience stores and consumer gas stations simply do not have the scale to be profitable enough to allow this. The difference in scale allows them to be more profitable, which then allows them to recruit better people because they can provide better wages and benefits, which translates into better customer service. . "

"You need to change"

Kwik Trip was founded in 1965, when John and Donna Hansen opened a small grocery store in a corner on the east side of Eau Claire. The first La Crosse store was added in 1970 and Don Zietlow made its debut in the company in 1972. The company was eventually owned by three families, but Zietlow finally bought the two families – one in 1989 and the other in 2000.

The independence of a single owner has opened a new era for Kwik Trip.

Zietlow, born in Chaseburg and graduated from La Crosse High School in 1952, introduced donuts and hot Glazers in 2003. Foods such as salads and cold sandwiches were added in 2005. The company started selling fresh meat such as chicken, steak and pork in 2014.

Over the past six years, nearly 300 stores have been added, while many other Kwik Trip properties have been renovated and expanded. According to the National Association of Convenience Stores, the total will be approximately 7,000 square feet, compared to 3,200 square feet on average.

Today, more than 2,300 of Kwik Trip's employees are hidden in northern La Crosse, leaving almost all the food purchased in ubiquitous red and white stores in three states. The company's truck drivers travel 29 million kilometers a year to deliver food to its stores.

Kwik Trip buys very little else. Their employees even make the milk jugs they fill because it's cheaper than buying from another seller.

All of the changes over the years – the addition of department stores, hot foods, and other fresh groceries – were a direct result of lower tobacco sales and lower margins on the market. gasoline sales.

"The writing was on the wall 20 years ago," Rick said. "How do you replace this income or do you die? You have to change.