🍟 1/16/2024 – The Regional Convenience Behemoth (Wawa)

DEEP DIVE 

A Regional Convenience Cult

Operating in just 7 states, Wawa does a whopping $15 BILLION in revenue.

Each year, they serve:

  • 200M cups of coffee
  • 80M made-to-order “hoagies”
  • Over 600 million customers

Oh, and there’s gas too ⛽

Here’s how Wawa became a convenience store behemoth:

Origins

In 1902, owner George Wood shifted his family business from an iron factory, to dairy farming. He opened a milk processing plant in none other than Wawa, Pennsylvania (where their corporate HQ still is today).

But the first Wawa store wouldn’t open for decades. Before refrigeration was commonplace, milk delivery was the norm.

It wasn’t until the 1960s that dairy products were sold at grocery stores. So in 1964, the grandson of George Wood opened the first Wawa as a way to sell their dairy products: milk, butter, & ice cream.

The 1st Wawa store was a hit, and they’d open nearly 80 more in 6 years. By 1970, they expanded their product selection.

Wawa-branded ice cream mingled with coffee & hoagies that became built-to-order in the ’80s (later voted BEST SANDWICH in a national Market Force survey).

Success Strategies

This leads us to strategy #1: 

PRIVATE LABEL

Wawa’s exclusive private label won customer loyalty AND high margins for the company as the “Trader Joe’s” of convenience stores.

Wawa’s products aren’t sold outside of Wawa, which fueled their expansion in the ’60s and again today. Wawa’s exclusive private label won customer loyalty AND high margins for the company as the “Trader Joe’s” of convenience stores.

Wawa’s products aren’t sold outside of Wawa, which fueled their expansion in the ’60s and again today. Wawa has another winning product too..

#2: GAS

Wawa ventured into gas in the ’90s; now they have gas stations at most of their 1K stores.

They’ve seen #1 market share in the 7 states they have stores in, but otherwise are not focused on gas-only locations.

#3 CONVENIENCE

Wawa has redefined convenience in its category by being open 24/7 with speed-optimized layouts.

Convenience stores are low ticket businesses that hinge on customer turnover in <5 minutes. Average Wawa customers are in and out in 155 seconds. Wawa’s convenience extends further:

✅ They partnered with PNC for surcharge-free ATMs in the 1990s

✅ They launched touch screen ordering in 2002 (5 years pre-iPhone!)

✅ Wawa’s app (in 2015!!) let customers pay with their phone

How did they do it? Two words: TIGHT CONTROL

Unlike competitors, Wawa remains privately owned.

They’ve sidestepped public stock offerings and franchising, answering only to themselves.

The Wood family owns the majority of Wawa to this day, BUT an aggressive employee stock program has paid dividends…

Wawa started profit sharing with their employees in the 70s, which became an Employee Stock Ownership Plan (ESOP) in 1993.

Wawa’s “pride in ownership” is a big core value; their employees now own~40% of the company! The stock has become 15x more valuable over the past 20 years.

Former CEO Howard Stoeckel said that clustering stores in Philly & NJ made Wawa seem “bigger than we appear”.

But at nearly 1K stores, Wawa is the largest private company in Pennsylvania, and the 20th largest in America.

And they plan to ~2x their store footprint by 2030 👀


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