It’s a Wawa World

Forget Comcast and Sunoco — the most powerful economic force in Philadelphia these days is the one making your Shorti. How our homegrown convenience store went from cult favorite ... to superpower

JEREMY PLAUCHE IS A burly, rowdy-looking guy — six feet, maybe 300 pounds, with the bold facial hair of a modern 24-year-old — but he admits that when he was getting the Wawa logo tattooed on his right inner biceps, the second “wa“ kind of hurt. It’s just a little more tender in there closer to the torso. Totally worth it, though. Plauche works night shifts for the rescue squad in Millville, New Jersey, where he also went to high school. It’s a little town about 45 miles south of Philadelphia, with a population of roughly 27,000 and four Wawas within about two miles. He’s made countless Wawa runs. He’s candid about his favorite product: “I’ll be honest with you — the peach iced tea.“

“I’m originally from Louisiana,“ he says. “I tried to explain to my friends there what Wawa was and what it means to people who live up here … and they kind of didn’t believe me. Wawa is part of our culture. It’s part of our way of life.“ So he decided to let the body art speak. He photographed a Wawa sign and took the image to a tattoo parlor in Vineland, where they stabbed it into his flesh.

“I definitely proved my point,“ he says. And there was a bonus: When Wawa found out, “I got the hookup for a little bit, free stuff for a while. I had coupons out the wazoo.“

By now, it’s obvious that Wawa, our homegrown convenience-store chain, has achieved the level of cult-like customer devotion that every consumer brand on the globe dreams about. To build a world-class cult, you need a core of gung-ho zealots and a mass of zombie followers, and Wawa is fully loaded in both categories. There are the five young women from West Chester who in 2009 completed an almost two-year trek to visit every Wawa in existence (then 586 stores). There are the high-school graduates who choose a college based at least partly on campus proximity to a Wawa, and there are the University of Maryland students who, when the company announced it would close an on-campus Wawa in 2007, flash-mobbed the closing store, “screaming and reminiscing,“ according to the school paper. There’s the official Wawa page on Facebook, which has 753,394 “likes,“ and there are the splinter Facebook groups, such as “People who miss Wawa“ (after moving away from the store’s five-state realm) and one group called “If Wawa was a person I would get married to it.“ And there are Scott Gaddis and Cindy Richardson, who in 2008 got married at the Wawa store in Abingdon, Maryland. (They conveniently had the reception there, too.)

Wawa’s cult status became official with a 2006 article about the company called “Convenience Cult?“ in the New York Times Magazine (there are no Wawas in New York), which attributed the chain’s unlikely rock-star appeal to its yummy house-brand foods and friendly staff. (CEO Howard Stoeckel tells employees they’re not just making a sandwich; they’re helping their friends and neighbors have a better day.) The Times piece was inspired by a Harvard Business Review article that put Wawa’s customer service in the league of Nordstrom and the Ritz-Carlton. Of course, to anyone who’s spent quality time in the Philadelphia region, the idea that Wawa is vastly more popular than any chain ought to be is familiar territory. But sometimes familiarity can create- blindness to the big picture. For Wawa, the picture keeps getting bigger and bigger. Crazy customer loyalty has translated into eye-popping numbers and made Wawa one of the dominant economic forces in Philadelphia — one that supports an entire ecosystem of suppliers and vendors. And slowly — relentlessly — Wawa is transforming: altering its product mix, making bigger footprints whenever it moves.

And that — like everything else about Wawa — is all part of a carefully engineered plan. If you think a convenience store can get to be this successful on Shortis alone, well … there’s more to Wawa than you’d ever guess.

HERE’S A WAKE-UP jolt to illustrate how colossal Wawa has become: It’s now the number eight seller of cups of coffee in the whole country. The only folks selling more cups every day, according to research firm Studylogic, are almost all national chains, like Starbucks, Dunkin’ Donuts, McDonald’s, Burger King and 7-Eleven. 7-Eleven has more than 6,000 stores across America. Wawa has 587 now, limited to Pennsylvania, New Jersey, Delaware, Maryland and Virginia. Wawa sells one of every five cups of coffee sold in this region. In 2008, it celebrated selling its one billionth cup of coffee in the 21st century alone.

Wawa sells 80 million hoagies a year, the most in the region. (It’s number one in “total sandwiches,“ too, says Studylogic.) In the 15-county Delaware Valley area, Wawa ranks third in overall grocery sales, topped only by ShopRite and Acme, according to an annual survey by Food Trade News, which also says there’s no other region in the country where a convenience-store chain ranks as high as third, and that Wawa’s annual per-store average, nearly $5 million (excluding gas sales), is a number that’s “untouchable by its c-store competitors.“

“You can have Wawa stores that can do $400,000 a week or more, split between fuel and inside the store,“ says Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm. “The average 7-Eleven would be stretched to do $25,000 to $30,000 in sales per week.“

Overall, Wawa did $5.89 billion in sales in 2009, making it the country’s 50th largest private company, according to the latest calculation by Forbes magazine. That revenue would place Wawa, if it were a public company, among the handful of Pennsylvania’s Fortune 500 companies. As things are, 50 percent of the company is owned by a trust benefitting members of the founding Wood family, 30 percent by company executives and employees through a stock plan, and the remainder by other Wood relatives and Wawa associates.

Wawa began pumping gasoline in 1996 and now sells close to 1.4 billion gallons a year, from 297 locations. That’s about one percent of all gas sold in the country. The Oil Price Information Service ranks Wawa first among all U.S. gas stations in “market efficiency,“ which is market share relative to the number of outlets. Two years ago, Wawa was the impetus behind a $72 million expansion at the Port of Wilmington, where oil distributor Magellan Midstream Partners built 11 massive fuel tanks to hold gas for the company. (Wawa works with Chevron and other suppliers to import its already-refined gas.)

In 2009, shortly after Phillies announcer Harry Kalas passed away, Wawa made a deal to be the exclusive purveyor of a book called Remembering Harry Kalas. It was the first book Wawa ever sold. And it sold, all right: 60,000 copies in 60 days, more than most books sell in a lifetime. In April 2010, the chain celebrated its one-billionth in-store ATM transaction. Wawa famously charges no usage fee, so it boasted of having saved its customers $1.3 billion in surcharges. Still, the company makes money from the ATMs, because PNC Bank pays Wawa to put them in the stores.

As it’s grown, Wawa has hoisted a handful of regional brands along with it. It’s the number one convenience-store seller of Herr’s chips and a top account for Amoroso’s hoagie rolls, Tastykake (whose problems, insiders say, were unrelated to Wawa) and the Sunday Inquirer. The company’s impact on local jobs isn’t about just its own 17,000 employees, but also many more along the supply chain of firms that service Wawa and its suppliers. Local companies do well enough in the relationship that they’ll alter operations and move facilities to keep Wawa happy.

“They know they’ve got vendors who will bend over backward for them and do whatever it takes to fill their needs,“ says Len Amoroso, who in 2008 moved his bakery for rolls for Wawa hoagies from Philly to Vineland, New Jersey, because, he says, Wawa wanted him closer to its central distribution facility.

But Wawa isn’t just getting big. It’s getting different, too. The chain has spent years winnowing the selection of dust-gathering dry goods on its shelves while enlarging its in-store food-prep areas and focusing on super-sized stores and gas stations. Stephen Hoch, a marketing professor at Wharton, says when you think about it, Wawa might not even be a convenience store in the traditional sense anymore — the place you’d go as a last resort for a can of soup. That role has been assumed by drugstores like CVS, or dollar stores. Really, Hoch says, “Wawa has become a fast-food restaurant with a gas station.“

Wawa CEO Stoeckel told me pretty much the same thing. We were sitting in the tiny back room of the Columbus Boulevard Wawa, where the company was debuting a store design featuring a gigantic open kitchen jutting out in the shape of a bay window, to take up maybe a quarter of the store’s area.

“More and more of our product today is for immediate consumption: I’m thirsty, I’m hungry, I need nicotine, I need caffeine, I need gasoline, I need money at an ATM machine,“ Stoeckel said, I suppose rhyming intentionally. (He also likes somewhat cringe-worthy acronyms. After becoming the company’s first non-Wood-family CEO in 2004, he created a strategy called UNO, for “unique experience, nimbleness and opportunity.“ Wawa rewards exemplary employees based on an evaluation called CHAMP, for “consistent action, heartfelt, awe-inspiring, meaningful and progressive.“)

“Our customers want us to solve immediate-gratification needs,“ Stoeckel told me. “That’s where all of our growth is.“ Stoeckel was at the Columbus Boulevard store in part to star in a video, to be shown to employees, extolling the virtues of the newish handmade smoothies. He wore a mustard-colored chef’s hat and mugged for the camera with store manager Matt Duca. Stoeckel finished the shoot by getting a dollop of whipped cream from a mango crème smoothie on his nose and reciting one of the company’s awkward marketing bywords: “That’s appetizing!

WAWA’S BIG NUMBERS are humongous, but its small numbers are tiny, because you can’t get big without thinking small. As rhymers say, retail is detail. There’s barely a square inch in a Wawa store that isn’t exactly the way it is for a reason. The main goal: cutting a few seconds off the time you spend there. Starbucks built its cult following by making its stores inviting places to linger for an hour; Wawa stays popular by getting everyone the hell out.

“But we want ‘em back two more times that day,“ says David Johnston, Wawa’s chief operations officer.

Everything is designed for speed, which translates to turnover, customer contentment and, essentially, profit. The touch screens at deli counters let customers speedily handpick ingredients for their hoagie or prime-rib-in-a-bowl and also enable “upselling“ of add-ons like cookies, chips and mashed potatoes. The placement of coffee stirrers, the “on ramp“ space at checkout counters — it’s all engineered. Ray Cavanaugh, Wawa’s director of operations engineering, told me that over the past few years, the company has shaved one and a half seconds from the typical cash transaction and five seconds from the average credit buy.

Not every experiment works. Wawa abandoned a drive-through-store trial in Virginia and ditched online ordering. Though many of its private-label products — notably its bottled water — have crushed name-brand competitors, others, like the ill-fated Mach W energy drink, came and went.

“We will test in one store, work out the bugs. Then 15 stores, to test consumer interest. Then 50 stores, and then we hit the gas,“ Johnston told me. “Once we get confident, we hit it hard.“

I met Johnston at a Wawaversary — a goofball party that the company throws about 50 times annually at stores that hit milestone years. In this case, it was 40 years on South Main Street in Doylestown. A dedicated customer-relations crew (including Wally, the Wawa goose mascot) arrived with ribbons, noisemakers and stickers. They strung white paper bells across the aisles and hauled in a giant sheet cake and gave away free coffee. They honored several longtime customers, presented a check for $133,000 to the Juvenile Diabetes Research Foundation, and tried to get everybody to dance.

Johnston and I tried to find a quiet place to talk, near the motor oil, but we kept getting in the way of shoppers.

“One of the tricks in our store,“ he said, “is that there’s no good place to stand.“

WAWA, OF COURSE, is based in Wawa, Pennsylvania — a town named for the Ojibwe word for “Canadian goose,“ giving the company its name and mascot — at an expanding campus along both sides of Baltimore Pike. The dairy there includes a 1929 building with a red brick facade and white portico columns that make it look like something pictured on the back of currency. Wawa hasn’t owned cows since the 1940s, but the dairy plant processes about 100,000 gallons of milk a week, much of it from Pennsylvania’s Amish farms, to serve stores and 903 wholesale accounts (such as a prison supplier and Villanova University).

A bit down the road, the sprawling corporate headquarters surround a house that George Wood purchased in 1892, before his company was named Wawa. Downstairs in the HQ cafeteria (it’s a Wawa) one recent morning, a marketing team performed a “sensory test“ of two salads (three-bean medley and broccoli) that haven’t been introduced to stores yet. Employees tasted them and filled out evaluation forms. The process of bringing a new product to stores usually takes many months, said Lynn Hochberg, director of product development. Smoothies, she says, took years, mostly spent working out blender design and ice-bin location to save seconds in the preparation.

Wawa has also taken over part of the nearby building that used to be the Franklin Mint. In a kitchen as large as a gymnasium, Michael McLaughlin, product development manager for coffee and fresh beverages, was “cupping“ coffee grounds sent by multiple roasters. He arranged cups in a circle and went around the table slurping. At another table, a couple workers gathered around a tray of fresh Boston cream doughnuts. This is actually part of their job.

“The test doughnut is wet at the bottom, and we don’t know why,“ Hochberg said.

Although Wawa is famously a Pennsylvania company, its key supply and distribution partners are clustered in South Jersey — not by coincidence, but because Wawa has the muscle- to insist they set up shop near its Bridgeport distribution center. That hasn’t always been happy economic news for Philly proper, since it’s moved jobs out of the city, but it shows Wawa’s impact on regional employment beyond its own payroll.

In Carneys Point, McLane Grocery, the nation’s largest supplier to convenience stores (owned by Warren Buffett’s Berkshire Hathaway), operates a vast warehouse with 400 employees, which, unlike McLane’s other buildings around the U.S., serves just one customer: Wawa. McLane delivers packaged goods, including cigarettes, to Wawa stores. Ready Pac Foods, in Swedesboro, has a staff assembling the Wawa-label pre-packed salads, wraps, parfaits and cut fruits that fill the grab-and-go island in every store — another way to get customers in and out quickly.

In Vineland, Omni Bakery produces every hoagie roll Wawa serves. “We probably supply them with something like 65 to 75 million rolls a year,“ says Omni and Amoroso’s Baking Company co-owner Len Amoroso. That’s just less than 200,000 a day.

In its move to Jersey, Omni became the exclusive hoagie-roll provider to Wawa — before, there had been a few. So Amoroso is making a lot of bread. “Let’s put it this way,“ he says. “It’s hard not to do well with them.“

Wawa’s Bridgeport distribution hub — known as the “cross dock“ — is in a warehouse adjacent to Uptown Bakeries, whose primary purpose is to bake the pretzels, cookies, doughnuts and muffins trucked to every Wawa store every night. (The sugar cookies, if you like the kind that are slightly gooey inside, are unbelievable.) Uptown’s operation here is another enterprise that exists just for Wawa. Local junk-food conglomerate J&J Snack Foods bought Uptown in 2000, in part because Uptown had a contract to supply soft pretzels to Wawa, says J&J CEO Gerry Shreiber. J&J also bought Philly institution Federal Pretzel, moved it in with Uptown, and eventually leveraged its pretzel tie to Wawa to take over the pastry case, knocking Dunkin’ Donuts out of there.

Every night, 57 Penske trucks transport the hoagie rolls from Omni, the grab-and-go items from Ready Pac and the bakery goodies from Uptown to every Wawa store. Every crate of food is labeled for its store; every truck is tracked by GPS. Most Philly-area store deliveries are done by 1 a.m., which is when your glazed doughnut will be its freshest. If you’re at your local Wawa in the wee hours and see an unmarked truck unloading racks of food, get ready to watch an employee dump leftover doughnuts from the bakery case into the garbage (d’oh!).

The mix of stuff each store gets is unique, based on historical munching patterns. “You can go to one store and they sell glazed doughnuts all over the place, but go two miles down the road and that town is buying the cruller,“ explains Chuck Taylor, manager of Penske’s Northeast carriage contracts.

Wawa stores are like snowflakes; no two are exactly alike — but basically they’re all snow. The Wildwood Wawa has a neon retro- exterior. Princeton’s has a hippie vibe. Inside, the look is standard: bright and clean, with the carnival-colored beverage case in the back, big posters of food where you order, and the eclectic customer mix of cops, punks, geezers, teens and moms. Ed Herr says the diverse clientele is ideal for when Herr’s test-markets new chip flavors: “They might have a Walmart shopper, a supermarket shopper, a drugstore shopper,“ he says.

Because the company is private and refuses to franchise — all stores are Wawa-owned — it has expanded at a consistent but sensible pace, avoiding Wall Street’s destructive imperative to grow at an ever-faster rate. The chain added 24 stores in 2010 and plans to open around 20 more this year. If Wawa wanted, it could expand all the way up and down I-95, from New England to Florida, with little competition, says retail analyst Burt Flickinger. (Wawa dropped stores in Connecticut but has announced a plan to open in Florida in late 2012).

Rather than sprawl too much, the company chooses to backfill where it already dominates and keep existing stores productive. Old Wawas don’t get decrepit; they get spruced up or shut down. As former Wawa president and CEO Dick Wood once articulated: “Leave the stars alone; close the dogs; feed the children; and milk the cows.“ Even the gritty Wawa at 17th and Arch gets a face-lift this fall, though Wawa has largely forsaken Center City (and North and West Philly).

Still, there’s a transition in progress, and it hasn’t always been smooth. Traditional Wawas were 2,000 to 3,000 square feet; new Wawas with gas pumps, the only kind the company builds now, are between 5,500 and 7,400 square feet, on three acres or more. Half of all Wawas now sell gasoline. Some communities have pushed back and said no to the bigger footprint. In Berwyn, Wawa abandoned plans after being met with local resistance over traffic and development concerns. In Conshohocken, where Wawa considered adding a location, opponents started a hurtful “Stop Wawa“ campaign on Facebook. CEO Stoeckel makes no apologies for the company’s growth.

“We compete with everyone,“ he says. “McDonald’s is a competitor, Subway. For things like coffee, our competitors are the big national chains — Starbucks. Competition’s good for the consumer.“

It hasn’t been bad for Wawa, either.

MAYBE THE HARSHEST RESISTANCE Wawa has met lately concerns its most curious project, back in Millville, where it had its primordial days. Beginning in the 1800s in South Jersey, the Wood family at different times produced textiles, glass and ironworks.

“We joke that we used to make cannonballs and now we make meatballs,“ Stoeckel says. The Woods built factories along Millville’s Maurice River and put in a dam that created Union Lake, New Jersey’s second largest, which the company owned until 1982. Wawa still owns 390 lakeside acres — about a mile of shoreline — and has been planning a massive real estate development. What is it — a Wawaland amusement park? No, mostly retail stores and gated residential communities. Wawa says it’s not getting into a new business, just trying to make use of this legacy land it’s owned forever by leasing it to developers.

Matt Blake, an environmentalist with the American Littoral Society, gave me a tour of the area. Union Lake is spectacular and peaceful, sparkling with the tea-colored water of the Pine Barrens.

“They’re talking about going in there and whacking this forest,“ he said. “This is not about building a Wawa. This is about building a city within a city.“ Blake was the most outspoken Wawa critic I’d come across. But later, prior to a hearing on the “Wawa tract,“ he admitted he kind of likes its stores.

Think of the birders who set out at 6 a.m., he said. Without Wawa, “Where would they get their coffee?“ Then he added, without a trace of sarcasm: “Thank God for Wawa.“