Kwik Trip is on evolutionary road in foodservice development
Kwik Trip, the Wisconsin-headquartered convenience retailer, is ramping up its expertise in foodservice and reaping the rewards of its unique vertically integrated structure. Paul Servais, retail food service director, talks to Fiona Briggs
Kwik Trip has a very focused goal, reports Paul Servais, retail food service director. The La Crosse-based retailer, which operates more than 600 retail convenience stores in Wisconsin, Minnesota and Iowa, is on a journey to move from a “gas station that sells food” to a “restaurant that sells gas”.
Founded in 1965 with a store in Eau Claire, WI, Kwik Trip developed vertical integration with its own dairy, commissary, bakery, warehouse and distribution in the 1980s and early 1990s. It also dabbled with food in stores with fresh sandwiches made by its commissary and fresh donuts made by its bakery. It introduced rollergrills and some stores cooked frozen pizzas and sold them from shams. Development continued to accelerate and in 2002 “we got real serious about food,” Servais recalls.
Between 2002 to 2005 Kwik Trip expanded its beverage selection in stores and upgraded its coffee program and fountain program. It developed a hot food program in all stores, offering fresh and hot sandwiches in a grab and go format and introduced a proprietary Cheese Mountain Pizza program. The business expanded its bakery presence with more items and new bakery cases and added a Glazer donut program in 2005. Fresh cases were introduced to all stores to sell fresh sandwiches, salads, parfaits, produce, fruits and veggies.
Food safety programs have been developed in tandem to ensure the execution was being done safely.
In 2014 Kwik Trip introduced a fresh meat program enabling guests to choose hamburgers, steaks, chops, etc. and in the same year it launched real Espresso coffee drinks including Mochas, Lattes, Cappuccinos, Iced Coffees, which have brought in new customers.
“We feel that after 17 years we are getting there,” Servais smiles, “this is an evolution, not a revolution.”
In November 2017 Kwik Trip announced further expansion plans in foodservice with a $300m investment in new facilities to meet the growing needs of the company – it plans to open 40 to 50 new stores annually. The latest tranche of funding will include a $113m investment in a 200,000sq ft bread and bun production facility, plus multimillion-dollar expansions and improvements in its dairy manufacturing facility, kitchen operations, and transportation fleet.
“We needed to upgrade and expand our facilities due to growth in stores and new stores,” Servais says.
At Kwik Trip vertical integration has grown alongside the food programs in stores. Today the business’s facilities do the following:
• Dairy – milk, ice cream, sports drinks, flavoured waters and teas
• Commissary – soup, pizza, fresh sandwiches, salads, parfaits, cheese planks, boiled eggs (2 packs)
• Bakery – glazers, raised yeast items like Long Johns, Bismarcks, Persians, cookies, cinnamon rolls, donuts. The bakery makes all Kwik Trip’s retail bread and buns, plus supplies the buns it uses in the stores and commissary for sandwiches.
In terms of distribution, 90% of what Kwik Trip sells goes through its warehouse and is delivered on its trucks. “We have cut out the middleman and buy direct from manufacturers,” Servais says. As a result, all stores get a delivery seven days a week, receiving fresh product every day.
Fresh means different things to everyone. In Kwik Trip’s world fresh means:
• Fresh produce, milk, meat, eggs, butter, bananas – the things people need daily
• Fresh salads, sandwiches, parfaits – made and delivered to our stores daily
• Fresh sandwiches, pizza, soup, snacks made in our stores 24 hours a day
• Fresh hot coffee and espresso drinks
• Fresh bread, buns, sweet goods baked daily in our bakery and shipped to the stores
“To do fresh right you need to deliver to your locations daily,” Servais says.”We can get milk from the “cow to the store” in 24-36 hours. Glazer donuts, sub sandwiches, salads, made in our production facilities in the morning and delivered to the stores that same day in the afternoon.”
According to Servais, the vertical structure is unique but also very helpful. “From a food safety aspect alone we know what ingredients are going in and we can control through from the production and warehousing process to distribution to our stores; so from a food safety standpoint, that’s much better. We also operate at lower costs and can pass those savings on.”
Kwik Trip’s Food Safety operations span three food safety/quality assurance teams. One is focused on the science and is based at the campus lab that conducts all the testing. A second is focused on production and works in the facilities to assure co-workers follow proper safety procedures. They test items for safety and quality daily. The third is focused on guests, retail and vendors to make sure Kwik Trip is safe in its stores and its vendors use safe practices.
In addition, all the plants and warehouse are certified and also audited by third party vendors; all vendors are visited by safety teams and the business monitors their third part audits; and stores are audited by Servais’s team twice a year and a third party once a year.
While Kwik Trip produces a large proportion of its own lines, it still sources groceries from big vendors for items such as soft beverages and snacking. Fresh lines are also brought in from the big growing regions and Kwik Trip has strong working relationships with farmers and growers.
But the vertical structure also brings innovation to the Kwik Trip party, as Servais explains. “It’s an awesome place to be because if we decide, as a group, that we want to put a new bakery product into store, it’s our bakery – not another bakery or other supplier and it’s delivered by our trucks every day, which is much more simple. When I go to conferences and share groups, it’s sometimes hard for me talk because I’ve been kind of spoiled and I don’t deal with a lot of those frustrations that some operators may have.”
Kwik Trip is constantly on the hunt for newness, Servais adds. “We are forever flying around like chickens with our heads cut off trying to find the next best item,” he says.
And it appears to deliver. In the last financial year, the business introduced 17 new menu items, 53 limited time offers, 11 new programs and it is currently testing a further five new programs.
Production meetings are held every other week and Kwik Trip spends a huge amount of time analysing every competitor and retailer. “We never slow down but it creates a lot of excitement in the stores and our co-workers love it because they can talk about the new lines with the guests. For guests it’s great too because they can eat the same thing 10 days in a row then all of a sudden want something different.
“Innovation is one of our core values,” Servais adds, and reveals that Kwik Trip is in the throes of inventing a new piece of equipment, in partnership with a manufacturer, to provide a new cold beverage offer that will be in its stores in summer 2018.
The development is a great example of how Kwik Trip is not afraid to step outside of vertical integration to get a product going. “If we see an item but are nervous about whether it will sell, we approach an outside producer but there’s full disclosure that if the product works well, we will take it in house,” Servais says.
In addition, Kwik Trip, employs its own service technicians to maintain its stores and all its equipment. “We understand the sense of urgency and fix things ourselves so the downtime is minimized,” Servais explains.
Dedicated and expert staff are also employed at a corporate level in La Crosse. There is a food science officer, for example, who runs the lab; a dietician; while Jim Bressi heads up the research and development. Bressi’s team works with retail and production to develop new items, maintain nutritional information and help steer the company in the right direction with fresh, clean label, better for you options.
Healthy choices have evolved too. “About eight years ago we were feeling the need to do more with healthy choices,” says Servais. “A dietician from a local hospital approached us about this and said many of her patients with heart issues that needed to lose weight were construction workers, truckers, etc. and they all eat at Kwik Trip daily. She asked if we could help. I thought this was something to explore so we began to work with her and their “500 club”. This opened our eyes and it wasn’t long before we developed our own “Eat Smart” program, hired a dietician of our own, and joined the PHA (Partnership for a Healthy America).”
According to Servais, the exercise with the hospital means Kwik Trip is now perceived in a different light. However, while most people say they want to eat healthily in reality they don’t, he adds. “They still want pizza, even though they might see a sandwich under 200 calories; but we offer both and let people make the choices. Three years ago I decided I weighed too much – so I turned to a diet coach and a health plan and dropped 80lbs. I did not stop eating at Kwik Trip but turned my attention to healthy choices,” he reports.
Despite the fresh and healthier foods focus, a big part of the Kwik Trip business is fill in grocery.
“We believe we can provide our guests with the items they need daily,” says Servais. “We recognize our guests shop the big grocery stores and Amazon once a week or every couple weeks. Our goal is to provide the items they need more often than that. Milk, bread, meat, butter, eggs, bananas, etc. Much of our advertising is used to drive this part of the business. We still sell gas, cigs, lottery and the normal c-store stuff too!”
Servais also appreciates the advantages provided by the online giants like Amazon.
“They’ve simplified things and everyone is time starved. The more people who figure out how to give people time back are going to be winners. We are trying to do that by having a great quality grab and go food product, so you don’t have to wait in a line and that there are enough check outs open, so that you don’t have to wait. Everyone is impatient and wants it right now.”
So does Kwik Trip have a solution for pre-ordering and new delivery options? “We are not there today but it’s in process and we are having those discussions. Our loyalty programme is rolling out in January and February and loyalty is the platform and app that will get us into ordering online and kerb side delivery – we are heading down those avenues. It’s another way of giving people their time back.”
And will the planned store openings – the business purchases and developments to its own sites – take Kwik Trip beyond Wisconsin, Minnesota and Iowa? “We still believe there’s enough growth for us in those three states and there’s not a lot of talk about going outside those three but that’s not to say that it won’t happen,” says Servais. For one, it would be very expensive to duplicate the planned new facility and secondly, Kwik Trip is eager to ensure it can give stores a consistent programme, he adds.
Kwik Trip insists it’s still on a journey of evolution to being recognised as a food retailer first with gasoline on the side but there are inklings it’s evolved its offer. Proof for Sevais comes from the customer reaction to the PDQ stores Kwik Trip acquired in October. While coffee has already been introduced, the full food programme is yet to be added. “But guests come in and say where’s the cheeseburgers and where’s the bakery?” There’s a similar, response from the communities where Kwik Trip acquires tobacco outlet stores, which sell age restricted tobacco and alcohol. “The push back from the community is “we can’t believe you don’t have food in those stores” – that tells me we’re getting there,” says Servais.