Kwik Trip 's Unique Business Plan

Wisconsin c-store chain commits to adding 20 new stores a year through 2013

LA CROSSE, Wis. -- The Kwik Trip convenience-store chain plans to make and sell 15.6 million pizzas this year, produce 83.7 million doughnuts and sweet rolls, and 35 million bottles and bags of milk and juice, according to a report in the Milwaukee Journal-Sentinel. It'll sell about 940 million gallons of gasoline. Kwik Trip also announced a three-year growth plan in December that calls for a continuation of its 20-store-per-year expansion.

Kwik Trip, a company perhaps best known around Wisconsin for its 38-cents-a-pound bananas, is a family-owned c- store chain that racked up $3.4 [image-nocss] billion in sales last year and continues to grow in its tri-state market area, according to the report.

Over the past few years, Kwik Trip has expanded the capacity of its food production areas and started to sell food on a wholesale basis to other companies.

"The facilities are built larger than what we need," John McHugh, manager of corporate communications, told the newspaper. By 2030, the wholesale business could account for as much as half of the food that Kwik Trip produces.

The La Crosse location is the center of a 300-mile radius market area that Kwik Trip serves. The company has stores across most of Wisconsin. Kwik Trip is in the southeastern part of Minnesota and in the northeastern area of Iowa, operating there as Kwik Star.

There are no plans to expand outside of that area, said Steve Zietlow, a co-owner and son of founder Don Zietlow. With the business model of producing food products and trucking them daily, it wouldn't be possible to go beyond the 300-mile radius without building another production and distribution facility, Zietlow said.

Besides, Zietlow said, there are enough good locations inside the current market zone to allow the company to keep building 20 stores a year for the next 20 years.

The company's vertically integrated business model--making and/or processing the food they sell--and an employee-friendly ethic make Kwik Trip unique among its peers, industry observers say.

"It's extremely unusual," Mitch Morrison, vice president and group editor for CSP, an industry trade publication that covers the convenience-store segment, told the newspaper. "They're on a very elite plane with other convenience stores."

"They're probably one of the four or five companies nationally that you'd come up with who's leading the industry," said Neil Stern, senior partner at McMillanDoolittle, a Chicago retail consulting firm. "They've been defining what the convenience store of the future should look like."

Don Zietlow, 76, has transferred ownership of the business to his three children, to ensure the family ownership. The limited partnership that gives Kwik Trip's real estate to employees--a plan that gives workers some yearly income and a potentially large payout when they retire--was another way of ensuring family ownership. Without it, Zietlow said, the taxes that would be due upon the death of an owner could force a sale or stock issue to come up with the cash.

As it is, Kwik Trip gets offers from potential buyers every week, Don Zietlow said. "A lot of times, daily."

"It's not for sale," Steve Zietlow said.

Click here to read the Milwaukee Journal-Sentinel's complete profile of Kwik Trip.