The Wawa way

Executive Summary
Company. Wawa Industry. Hospitality Key. The employee stock-ownership plan is Wawa's largest single shareholder.

Wawa convenience stores have been around 50 years, but they didn't start selling gasoline until 1996.

That may be a surprise to Floridians who have started seeing Wawa stores with gasoline pumps appear at busy intersections on the Gulf Coast.

By 1996, Pennsylvania-based Wawa had already opened 500 stores in the Mid-Atlantic, focusing on fresh food and conveniences such as beverages and snacks.

Now, every new store comes with gasoline that's sold as a commodity to attract customers to spend money inside the store, where the margins are higher on made-to-order food such as sandwiches and coffee.

“It's really all about volume,” says CEO Chris Gheysens, speaking at a lecture recently organized by Florida Gulf Coast University's Lutgert College of Business in Fort Myers. “We want you to come back.”

Wawa is more than a convenience store. “We think of ourselves as the unofficial town hall,” Gheysens says. But even the CEO admits it's tough to explain that Wawa is a food purveyor in addition to a gasoline retailer and convenience store: “I'm the CEO and I don't have a one-liner to explain it.”

Wawa plans to build 300 stores in Florida, including at least 80 on the Gulf Coast. Each store costs $6 million to build and employs about 40 people.

Gheysens gushes about the ease of doing business in Florida. “When we identify a piece of land where we want to open a Wawa in the Mid-Atlantic, it's a three- to five-year process. Here it's a 12- to 18-month process. It's different because there are not as many levels of local bureaucracy.”

Wawa spares no detail in building its stores. It builds wider parking spaces so its customers can get in and out more easily, it installed touch-screen computers to order custom-made sandwiches and its ATM machines don't have surcharges.

Because of the quality of its made-to-order food and fresh coffee, the chain has a cult following among its customers. In fact, Wawa is the nation's seventh-largest coffee retailer. “We've had people get married inside our stores,” Gheysens chuckles.

Employees have ownership
Gheysens attributes part of the chain's success to the fact that the employee stock-ownership plan is the company's largest shareholder, controlling nearly 41% of the privately held company's stock. “Public companies think short term,” he says. “If something's not good for our people, we don't do it.”

That culture of ownership has permeated through the ranks of the company. For example, Wawa has a department that helps care for employees who may be struggling financially, helping them pay for rent and utilities if they need it. Every year, the company publishes a book for employees about successes in their lives and in the stores. “We celebrate and recognize those stories like heck,” Gheysens says.

Wawa tells its employees that they have three to five minutes to make someone's day better. “There is no training for that; it's culture,” Gheysens says.

Outsiders notice the difference. “The folks we deal with at Wawa have many years of tenure at the company,” says J.P. Guzzardo, vice president of development with The Sembler Co. in St. Petersburg.
“You can see the same loyalty to their customers shown to their employees. It's not uncommon for us to be dealing with people who have 15 or 20 years or more with the company.”

Friendly employees with an ownership stake in the business help give Wawa an edge over the competition. “It's really pushed the others to step their game up,” says Guzzardo.

Call it the Southwest Airlines effect of convenience stores. “We show up and everyone gets competitive,” says Gheysens, who estimates Wawa “saved” Orlando consumers $100 million in the first year on everything from lower gasoline prices, free air for tires and no-surcharge ATM transactions.

David Conn, executive vice president and director of the retail service group of commercial brokerage CBRE in Tampa, says Wawa's culture is akin to Publix. “They don't have to answer to Wall Street,” he says.

Conn ticks off the Wawa stores' advantages: “Their buildings are bigger, their driveways are wider, their parking spaces are full sized, the canopy is beautiful, the air is free, the ATM has no surcharges, the coffee's outstanding, they make great hoagies,” he says. “That shows you the level of detail they go to for the customer experience.”

Wawa builds stores that are meant to last. For example, the company uses materials like steel and stone that are designed to last longer and look more like a Panera Bread or Whole Foods. In fact, Wawa's competition is more likely to be Starbucks and McDonald's than gas stations.

Straight from the boss

Chris Gheysens, the president and CEO of Wawa, recently discussed the Pennsylvania-based convenience store chain's expansion to Florida before speaking to the Lutgert College of Business at Florida Gulf Coast in Fort Myers. Here's an edited transcript of the conversation:

How many stores do you plan to build in Florida?
Our current network plan would be approximately 300, long term. In the five states where we operate in the Mid-Atlantic we have 600 stores. There's just as much population in the state of Florida as there is up there. And that's why we chose Florida, because it wasn't about the first 50 or first 100 stores. From a brand perspective, from a supply chain perspective, from a convenience perspective, we want that density and critical mass.
How many of those 300 stores will be on the Gulf Coast?
In the long term 20 to 30 [from Bradenton to Naples]. Including Tampa and Pasco County we'll probably have 80. So Tampa continues to be an area we need to build in.

You don't have any stores in Sarasota and Naples yet?
Bradenton will get their first Wawa next year. Sarasota will be the following year, in 2016. And Naples will come in around 2016.

You could have expanded anywhere?
We looked across the whole country. In our current geography, there just wasn't enough opportunity. So Florida represented a few things. One, about a third of the population down here knew of Wawa. Two, the availability of real estate; we build everything ground up, so there was wonderful real estate available for us. There's high traffic, high population, good workforce, great demographics. And we felt that our brand could really get traction down here. And local and state officials, frankly, are even better than what we see in the Mid-Atlantic.

What's your biggest challenge in Florida?
The biggest challenge here is when you mention our brand and sell fuel, you're guilty by association. There aren't many places in the country where when you pull up to a gas station you think they have good food that can be healthy. So it's trying to get our brand and the food and the beverage side of it recognized by native Floridians who didn't know Wawa.

Are your stores in Florida different than they are up north?
They're a little big bigger. We have seating outside. We've never had seating anywhere in our stores. That's one visual clue that seating equals food. We didn't design the seating to be used as much as it is, but it's been wildly successful.

You started out in food, right?
We did. Our dairy heritage was the reason got into the business. In the '60s when the home-delivery dairy business started to go south, the convenience store was the outlet for our fresh dairy. That's why we've been highly credible for 50 years in the food business.