Trend setter

La Crosse Tribune, Feb 29, 2004 by Cahalan, Steve

Coming soon to Kwik Trip convenience stores - Glazers doughnuts, the La Crosse-based company's answer to Krispy Kreme Hot Original Glazed Doughnuts.

It's the latest innovation from Kwik Trip, which began test marketing the product last week in its stores in the Rochester, Minn., area.

"We've been working on (the new doughnut) for about eight months" at the Kwik Trip bakery in La Crosse, said Gary Gonczy, the company's director of marketing and advertising. Consumer response to the new product in the Rochester area has been "very positive," he said.

"Our goal was to create a doughnut as good or better than Krispy Kreme's," Gonczy said. The company believes it's accomplished that, he said. Glazers should be available in all of the chain's stores within six weeks.

Being innovative has been a major reason for the company's success, said Joe Chilsen, A member of the faculty at the University of Wisconsin-La Crosse Department of

Marketing. He said he had heard Kwik Trip planned a new doughnut to compete with Krispy Kreme, whose Onalaska, Wis., store opened Jan. 27.

I believe they've done a good job in staying ahead of the curve as far as innovation," Chilsen said of Kwik Trip. "They recognize that in (the convenience store) business, you either innovate or you die." Kwik Trip has been "quite innovative," he said.

I recommend my students watch Kwik Trip because of the way they've done business and how they've grown over the years from a gasoline, cigarette and pop outlet to what they are today," Chilsen said.

"There are literally doughnut wars going on" with the expansion of Krispy Kreme and new doughnut offerings by other retailers, said Jeff Lenard, spokesman for the National Association of Convenience Stores. "There's more to be made on doughnuts than gas," he said, comparing profit margins.

Gasoline profit margins have been declining as more businesses, such as grocery stores and discount stores, begin selling fuel, Lenard said. As a result, he said, "You make pennies at the pump and hope to make dollars inside" convenience stores.

But convenience stores also are seeing more competition for what they sell inside, Lenard said. Drug store chains such as Walgreen's are carrying more food items than before, and dollar stores continue to open, he said.

"It has forced innovation (in the convenience store industry) like never before," Lenard said.

Kwik Trip, which opened its first store in 1965 in Eau Claire, Wis., says it has grown because of innovative ideas, entrepreneurial thinking and the value it places on customers, employees, business partners and surrounding communities.

Kwik Trip, which today is owned by the Don Zietlow family, has about 900 employees at its La Crosse support center, which has a bakery, commissary where sandwiches and other food items are made, dairy plant where milk and ice cream are produced, offices, transportation facilities and two warehouses.

In addition, its 21 convenience stores in LaCrosse, Onalaska, Holmen, West Salem and in La Crescent, Minn., together have about 300 employees.

Kwik Trip has about 6,700 employees companywide. That number has grown by about 1,000 in the past year with the opening of new stores, employment growth at the support center on La Crosse's far North Side and the addition of hot food items at its stores. Hot Spot items and specialty breads are made at the individual stores, which requires more employees.

Kwik Trip's employee turnover rate is exceptionally low among convenience

store chains, partly because 40 percent of the company's pre-tax profits are

returned to employees through profit-sharing, Gonczy said. Also, stores

constructed since 1990 are owned by a separate corporation, Convenience Store

Investments, which leases the land and buildings to Kwik Trip. Full-time

employees who have worked for Kwik Trip at least five years own CSI, which

pays them an annual dividend.

Kwik Trip opens 10 to 15 stores a year.

Today, it has 308 convenience stores in Wisconsin, Minnesota and Iowa, along with 46 Tobacco Outlet Plus stores, three restaurants and eight travel centers.

Gonczy said Kwik Trip serves 3 million customers per week, or about 156 million per year. The company doesn't publicly reveal sales figures.

The company runs new concepts, such as Glazers doughnuts, by a panel of consumers from the Madison area. By getting advice from Madison-area residents, Gonczy said, "We get a good demographic mix, and it allows us to hear from consumers who are exposed to a lot of convenience store chains."

Gonczy said Kwik Trip also is creating a second advisory panel, comprised of Kwik Trip employees, that will meet monthly and discuss new and existing products and ideas.

Some concepts Kwik Trip has introduced in its stores in the last few years include the Hot Spot hot foods section, its Cafe Karuba specialty coffee products and its Cinnamon Cinnsations line of cinnamon rolls.

Besides Glazers, the company is about to introduce a new fresh healthy foods section, which already is being tested in the Losey Boulevard and La Crescent stores. "We're experimenting with what to put in it," Gonczy said. "What we're trying to do is bring in some healthy foods, such as low-carb sandwiches, salads and cut fruit." The new feature will be in all Kwik Trips within a year, he said.