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Kwik Star: Gas station, convenience store — and groceries
Food is produced at huge Kwik Trip campus in Wisconsin
By Steve Gravelle, - correspondent
Mar. 24, 2024 5:00 am, Updated: Mar. 28, 2024 1:41 pm
When your low-fuel light flashes and you pull into a Kwik Star to gas up, you may not even notice the shopping carts.
But “we’re a grocery store that happens to sell gas and cigarettes,” said Jay Ellingson, chief food scientist for Kwik Trip Inc. “That’s how I see it.”
Founder Don Zietlow set the family-owned company’s course after buying out his partners in 2000. He embarked on an aggressive growth strategy built around the idea of Kwik Trip as the new corner store, the only source for groceries in some communities.
That’s an opportunity in Iowa, where 43 percent of the grocery stores in towns under 1,000 population closed between 1995 and 2005, according to Peggy Stover, director of the Marketing Institute and associate professor at the University of Iowa’s Tippie School of Business.
“It is expensive to operate a grocery store,” Stover wrote in an email. “The profit margins are low single digits, and workers are in short supply. Many of them are shuttering in rural parts of the USA. So, c-stores are becoming a substitute for residents to fill the gap.”
Ellingson said the company leaders thought if their stores were going to sell food, “we’ve got to do it right. We realized we had a potential niche because in some of the areas we do business in we were essentially the only place in town to sell food products. Today, they call them food deserts.”
Vertical integration — in which a company makes in-house the products it sells, rather than relying on external suppliers — is critical to the strategy.
Kwik Star in Iowa
You won’t find a Kwik Trip in Iowa, Illinois, or South Dakota, where the stores are branded Kwik Star to avoid confusion with Oklahoma-based Quik Trip.
“Quik Trip with a ‘Q’ was there before us,” said Amy Dupont, Kwik Trip public relations and tour specialist. “When you hear ‘quick trip’ on the radio, you don’t know which one it is.”
Where it’s made
Eighty percent of the food products sold at more than 875 Kwik Trips in six states is produced on its 141-acre campus on the north end of La Crosse, Wis.
About 4,500 people work there on three shifts, producing everything from Glazers doughnuts — 47 million of them last year — to Nature’s Touch ice cream and milk and the drinks sold in plastic jugs and bottles that are also produced in-house.
“People don’t realize we make all this stuff,” Dupont said.
The sweets bakery opened in 1988 and today is 245,000 square feet. It consumes 9,000 pounds of flour a day, just to keep the dough from sticking on the line, plus tons more in the product, which also require 18,000 pounds of filling a day.
White-garbed workers place each cinnamon roll — 5 million a year — by hand on the baking pans and cooling racks.
The bread and bun bakery, the size of an aircraft hangar, opened in 2017.
“It takes 11 people to make that bagel,” Dupont said at one station. “Bread that’s made on Thursday is in your store no later than Saturday.”
Finished, packaged products and nearly all vendor products move through the Kwik Trip Distribution Center where 700 co-workers work around the clock to load truck and send products to 875 stores. Each truckload stocks four to six stores.
The milk sold in its stores — 25 million gallons last year — comes from farms in Iowa, Minnesota and Wisconsin within 150 miles of its headquarters. The dairy can produce up to 8,000 gallons of ice cream a day in two dozen flavors.
“I’ve been in the dairy business for 35 years,” said Al Bollinger, who oversees ice cream production. “It’s in my blood.”
“I worked for Kwik Trip all through college, so I worked in retail for four years,” said food technologist Katarina Nemitz. “I went off and got my big-girl job after graduating college in St. Cloud (Minn.), in a cheese plant. When we moved back to Wisconsin that was one of the first things, working at Kwik Trip again.”
Founder’s doodles
Don Zietlow was 88 when he retired in December 2022. His son, Scott Zietlow, at the time a Mayo Clinic trauma surgeon, succeeded him as president and CEO.
The elder Zietlow left his mark: Each Kwik Trip-branded plastic jug of milk or bottle of water, tea, lemonade or juice has a tiny, smiling face molded into the bottom.
“A little bit of an Easter egg,” Dupont said as she showed a visitor through the plant that molds the bottles. “A tribute to Don.”
Similar, larger doodles by Zietlow hang in offices and corridor walls at the company’s headquarters.
“I use the smiley face as a reminder to treat our customers good and do it with a smile and be happy about it,” Zietlow told the TV show “Discover Wisconsin” in 2022.
Zietlow, who grew up on farms in the La Crosse area, was working as truck driver delivering to grocery stores when he and a partner opened the first Kwik Trip in Eau Claire in 1965.
The partners opened several locations around Eau Claire before their first La Crosse store in 1971. Two years later, they built a distribution center and offices in La Crosse, a city of 52,000 on the Mississippi River.
Producing some 65 million plastic bottles a year is also “probably our best example of vertical integration,” Dupont said, a decision based around the realization that “when you’re shipping empty bottles, you’re shipping air.”
‘Food destination’
While the average Kwik Trip customer — 11.5 million of them in 202 — spends around three minutes in the store — usually just to gas up — the expanded role defines the company’s place in a competitive industry.
“In the USA, c-stores are seen as a transactional shopping experience,” the UI’s Stover said. “You gas up or buy a few snacks and go. There’s no lingering around, and it’s not a personalized experience, whereas in other parts of the world (mainly Europe), it’s the opposite. In Europe, c-stores are viewed as an extension of a grocery/supermarket with great focus on prepared foods.”
Kwik Trip’s vertical integration strategy led the company to invest in product development that others might outsource to suppliers.
“We like to think of ourselves as a food destination so we’re not just looking at other convenience stores,” said Kevin Buttner, manager of production research and development and a third-generation owner. “We’re looking at what restaurants are doing (and) grocery stores. We’re looking at all the different channels to see what’s going on.”
“We spend a lot of time monitoring emerging trends in the food-service world, while also keeping in mind what’s approachable to our guests in the Midwest,” said senior food researcher and product development manager Isaac Wilde, a classically trained chef who studied at the Culinary Institute of America and worked in restaurants, hotels and resorts before joining Kwik Trip.
The product development team’s most recent major project brought last October’s launch of the Kwikery line of fully cooked meats, “probably the most innovative things that Kwik Trip has launched in a little while,” Wilde said.
Designed for customers to take home and build a meal around — perhaps using recipes designed by Wilde — the product “really touches almost everybody in the company,” according to food technologist Lacey Holcomb. “They’re fully prepared proteins that we’re manufacturing here in our kitchens, so all the hard work is essentially completed for the consumer.”
Owning the production process is an advantage when developing new products.
“You’re looking at how your new product will be offered in the store, how it fits in the store, and how they’re going to be picking that product and how you’re going to be shipping it to the store,” Holcomb said. “It’s really the whole picture of the company.”
Testing the food
Ellingson, the chief food scientist and a molecular biologist who’s worked at Iowa State University and the USDA lab in Ames, came to Kwik Trip in 2006 to develop and open its Food Protection Lab.
“(Don Zietlow) made the decisions that we’ve got to have a system in place that manages the risk as product comes in through our supply chain through our production areas all the way out to retail,” he said.
The lab analyzes samples from all of the production lines — more than 16,000 tests a month.
“We make it, we ship it, we sell it ourselves,” Ellingson said. “It’s a great way to reduce costs for the consumer. It also puts the risk on us. You can have all these programs in place, but at the end of the day, the science doesn’t lie. We are the safety net.”
Ellingson opens the lab to invited guests every September.
“We invite our vendors, the government, our competition to that event,” he said. “We have them take a look under the hood. We let them see everything that we do because we think we all need to do it right.”
Co-workers share profits
Vertical integration and long-standing company policy helped the company navigate COVID’s supply and workforce disruptions.
Post-pandemic, the company raised wages — a new store worker makes $16 an hour in Cedar Rapids, $15 in smaller communities. After six weeks of training in La Crosse, assistant store managers with at least a year’s experience make $53,000 a year, according to the company’s website.
“We’ve put a huge focus on our retention,” public relations specialist Ben Liebl said. “The retail industry has some of the highest turnover rates — well over 100 percent. Our turnover rate is right around 50 percent. A big reason for that we believe is our culture. We put such a heavy emphasis on taking care of people.”
That includes Don Zietlow’s decision to return 40 percent of pretax profits to its employees — called co-workers — regardless of rank or position within the company.
“I said, ‘If I ever own a company, I’m going to share the profits with the people who make the money for the company,’ ” he recalled in that 2022 interview.
As a private, family-owned company, Kwik Trip does not release its financials.
Saturation point?
The National Association of Convenience Stores counted 152,396 convenience stores nationwide last year, a 1.5-percent increase over 2022.
Kwik Trip’s 875 stores makes it the nation’s eighth-largest chain, according to the association, trailing sound-alike QuikTrip’s 992. Iowa fixture Casey’s is third-largest, with 2,489 stores. Another Iowa-based chain, Kum & Go, was sold by its family owners last year to Utah-based Maverik, which plans to rebrand the 400-plus Kum & Go stores in 13 states.
That’s a convenience store for every 2,225 Americans, but there are still opportunities to expand, Liebl said.
“Our real estate team, when they go out and look for a property, they’ll look at car counts and see how busy the traffic is,” he said. “They’ll see if there’s an empty vacant lot. If it’s commercial, are there plans for the rest of that to get built up? If it’s residential, we try and get that spot early to let everything come around us after that. We try and pick those prime locations based on what the future looks like.”
Stover isn’t so sure the industry will continue to grow at its current rate.
“In my personal opinion, the c-store landscape in the USA is becoming saturated,” Stover wrote in an email, noting one out of every three stores in the U.S. is a convenience store and 93 percent of Americans live within minutes of one.
“With saturation comes the fight for market share,” Stover said. “C-stores who want to stay competitive need to evolve.”
What’s next?
Kwik Trip plans to build 13 new Kwik Star stores in Iowa this year, adding to the current 140, Liebl said.
The expansion includes stores for Sioux City, Storm Lake, Spencer, Mitchellville, Bettendorf, Webster City and North Liberty. The new stores will be the chain’s 9,000-square-foot “Gen 3” stores, configured to meet their local market.
The company has 13 Kwik Star stores in the Cedar Rapids metro area and two in Iowa City. Grocery offerings depend on the size of the store, with larger stores carrying more products.
“For some, we become the convenience store, the grocery store, the gas station,” Liebl said. “I’ve had people call and say ‘I do my grocery shopping for the whole week at Kwik Trip.’ That’s why we have those shopping carts there because they load up.”