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How a DIY business strategy led to Kwik Trip's explosive growth. 11.5 million people visit the stores every week.

If customers look hard enough, they'll find a tiny Easter egg on each bottle of milk at their local Kwik Trip.

It's a small, hard to see smiley face, a reproduction of a drawing that former President and CEO Don Zietlow drew during annual meetings when he announced the company's year-end results, future goals and the amount employees would receive through the company's profit sharing program. It also appears on bottles of tea, juice and other drinks.

The smiley face is a nod to Zietlow, who retired in 2022 , and to the company's employee-focused culture. But it's also an add-on that's only possible because of a business strategy Zietlow introduced more than two decades ago and continues to underpin the company's rapid growth.

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Known as vertical integration, it's a do-it-yourself strategy of controlling as much of the production, warehousing, distribution and sales as you can. In Kwik Trip's case, that's grown from a small bakery at the back of an early store to a production and distribution network that extends across six states from Kwik Trip's sprawling La Crosse campus.

The La Crosse operation includes a dairy, a bread bakery, a sweets bakery, a commissary that makes all of the chain's hot food items and salads, warehousing and a distribution center, food safety and quality assurance labs, offices, a call center and other backroom functions. It all operates seamlessly to send custom ordered shipments six days a week to 872 convenience stores in Wisconsin, Minnesota, Iowa, Illinois, South Dakota and Michigan.

One of the benefits of doing all of that food preparation and packaging in house: the dairy operation also makes its own plastic bottles, which allowed Kwik Trip to easily add Zietlow's smiley face.

"Don asked people to smile at every guest and ask them to come back. So he started drawing smiley faces on stage and that kind of became his signature, his trademark, the early part of his personal brand," said Carl Rick, Kwik Trip's training manager and a third-generation owner of the business.

A changing convenience-store business needed a new model

Kwik Trip began making sandwiches for its stores in the back room of a La Crosse location in the 1970s, and it bought a small dairy in Caledonia, Minnesota in 1981. The full embrace of vertical integration didn't really come until 2000, said John McHugh, Kwik Trip's vice president of external relations.

That's the year that Zietlow concluded the exiting model for convenience stores, based on sales of cigarettes, snacks, gasoline and household staples sold at "insult prices," wasn't a recipe for long-term success. Instead, McHugh said, Zietlow decided to focus on in-house food and drink production and cutting out the middle man as a way to overcome two traditional barriers to growing a convenience store business: cost and freshness.

"If you're having a third party deliver that loaf of bread and you're only doing a handful of loaves in a traditional convenience store, you have to charge so much for that loaf of bread to make it worthwhile that, in our industry, we have something called insult pricing – we have it and you need it, we're convenient, and you're gonna pay through the nose to get it," McHugh said.

Controlling production, storage and transportation reduces those costs and puts Kwik Trip prices on equal footing with grocery stores.

It also helps ensure freshness and food safety. In the case of milk, that means 24 hours from the dairy to the store shelf. For the company's signature Glazers donuts, it means delivery the same day they're made.

The result: customers know that they can get consistently fresh food items at a competitive price.

"Don knew that for us to be successful in our business model, you had to beat everybody on price, and you had to beat everybody on freshness, and that's where the vertical integration model comes in," McHugh said.

The success of the model can be seen in the shopping trends of Kwik Trip's 11.5 million weekly customers, he said.

"What happens now is, especially if you look at some of our small and rural markets, from 1 in the afternoon until 4, the demographic is people in their late 70s and 80s with grocery carts in our stores buying eggs, milk, butter, bread, onions, kind of thing," McHugh said. "People are just coming here for their their basic commodities."

The company does not make its annual sales public. However its profit sharing plan provides a glimpse into the its finances. Last year employees received about $200 million as their 40% share of Kwik Trip's pre-tax profit, which puts the company's annual profit at about $500 million.

Nearly 8,000 employees keep Kwik Trip stores stocked and the business humming

What began as a small food production operation in what is now the company's training center has grown to take up most of the company's sprawling 140 acre campus. Much of that growth has occured since 2017, when the company first tapped Wisconsin Economic Development Corp. Enterprise Zone tax incentives to fuel its expansion.

Since then, the company has spent more than $325 million to expand the operation and created nearly 1,800 new, full-time jobs, according to WEDC records.

WEDC Secretary Missy Hughes said that growth is all the more impressive because the company has maintained its employees-first focus and even doubled down by providing on-site child care and a health clinic in La Crosse.

"They're a model Wisconsin company, and their decision to continue to expand here is just a huge win for us," Hughes said.

Today, the La Crosse workforce includes:

• 700 production employees in the kitchen, also known as the commissary, who produce pizza, burritos, salads and take-home meals.
• 150 dairy workers who pasteurize and homogenize milk, package it and make ice cream.
• 320 people who make doughnuts on two lines: one dedicated to Glazers in the morning and Dunkers in the afternoon, the other focused on Bismarks and Long Johns, cookies, cinnamon rolls and other sweet treats.
• 117 workers in the bread and roll bakery.
• 600 drivers who handle deliveries to retail locations with a fleet of 350 tractors and 250 trailers.

Kwik Trip's plan for continued growth and expansion

The seamless system that gets products to the stores' shelves is a product of 20 years of growth, experimentation and learning, one that company leaders acknowledge would be hard to reproduce today.

"This whole process grew organically," McHugh said. "To re-establish our140-acre campus with everything that we have here, someplace else in the Midwest, would be cost prohibitive."

Kwik trip has more than doubled its retail stores in the past decade and keeping up with that growth required continued investment in all of the behind-the-scenes support operations.

The company recently announced plans to spend another $151 million to support its plan to continue to add about 50 new stores a year.

That includes a recently completed expansion of Kwik Trip's burrito production line to make up to 90,000 burritos a day, a new 40-foot production line for Dunkers and cake doughnuts and additional packaging automation in the sweets bakery and a cooler expansion in the dairy.

For the first time, Kwik Trip will move some of the La Crosse operation off campus by building a new distribution center in De Forest and renovating an office building in Onalaska that the company recently bought.

The office building will house training, accounting and operations support, including a 24/7 help line for the stores, which in turn frees up more space for other overcrowded office functions. In time, the current training center will likely be torn down for an expansion of the dairy, McHugh said.

That expansion is being aided by an additional $15 million in tax credits from WEDC. The credits are tied to completing the $151 million investment and creating more than 500 new jobs by 2027.

"What I love is Kwik Trip's commitment to Wisconsin and the Midwest. They clearly have confidence that they can continue to grow," Hughes said.

The De Forest distribution center will help Kwik Trip better support its stores in southeastern Wisconsin, McHugh said. The company plans to eventually set up two additional distribution centers to better serve Kwik Trip's retail expansion. Likely locations are in western Wisconsin near Twin Cities and in Iowa, he said.

"We think we can double our footprint of stores and still be able to service it with this campus and the satellite distribution centers, but after that I think we're going to have to start thinking about other logistic concerns," McHugh said. "First, maybe you do a dairy or a bakery - you can't just replicate this campus."

Tapping automation increases efficiency without cutting workforce

Automation has helped the company expand production, while the company's growth has ensured that the efficiencies robotics bring don't cost employees their jobs.

"We're going to spend a lot of money on automation in years to come not to create jobs, but to free up those people to do jobs that we need people to do," Rick said. "Nobody's going to get fired because the robot's doing a job. We're taking those manual jobs, those highly repetitive jobs, and we're going to use robots for that. And that frees people up to do more, a different line of work."

Keeping the existing workforce is critical for a company expects to hire 500 more workers in a competitive regional labor market. Opportunities for career advancement and personal growth, and the company's commitment to sharing its profit with with employees has resulted in annual employee turnover of about 30%, far below the industry average, and is a key to attracting new workers, Rick said.

"When you go back to when Don was very first starting in business in the '50s and '60s, we were a major manufacturing community and Don watched friends, he watched family, he watched people lose jobs, because those facilities were bought, sold and had those jobs left La Crosse and never came back," Rick said. "And, so, one of the reasons we're committed to owning and growing the business going forward is we want to provide that long term stability for our co-workers and for the communities that we call home."

This article originally appeared on Milwaukee Journal Sentinel: How a DIY business strategy led to Kwik Trip's explosive growth. 11.5 million people visit the stores every week.

Made in Wisconsin: Behind the scenes of Kwik Trip's headquarters in La Crosse

It is rare for a convenience store chain to have millions of followers on social media, but maybe not if that chain is La Crosse, Wisconsin-based Kwik Trip.

The store has a large and cult-like following that grows each time they open a new store. TMJ4 News was granted a rare look behind the scenes at the company’s headquarters, where decisions are not only made, but also a lot of the food that is sold at the more than 860 stores across the Midwest.

The 140-acre campus is comprised of several buildings, with more than 3,000 employees. Kwik Trip first entered the La Crosse area in 1971, after opening their first store in Eau Claire 6 years earlier.

In 1973 the corporate headquarters was established, and it has continued to grow ever since.

“Kwik Trip is part of Wisconsin and I think that part of that is Wisconsin is proud of Kwik Trip" says John McHugh, the company’s Vice President of External Communications.

The company is still owned by one of the original partners that started it back in the 60s. Don Zietlow has since stepped down as CEO, but the company is still run by his son Scott. Training Manager, and 3rd generation owner by marriage, Carl Rick, says Don instilled what Kwik Trip is all about early on in his time with the company.

“The thing I heard from Don more often than anything else is 'Carl, it's such a simple business model. If we take care of our coworkers, then our coworkers will take care of our guests and we'll be successful well into the future.'”

The model has worked well for the company, which plans to open even more stores in 2024.

Employees at Kwik Trip are known as “coworkers” and all 38,000 of them across the company share in the profits. Last year more than $208 million was dispersed in profit sharing.

“We're just a beloved company, we do the right thing for our guests and everybody knows that,” says McHugh.

Perhaps the most impressive part of the Kwik Trip headquarters is the amount of product that is being made around the clock to supply stores.

One of the most popular is the “Glazers” donuts. Glazers first hit stores in 2003 after more than a year of research and development.

“We had a challenge from the management to see if we could make a Krispy Kreme-ish donut” says Dan Walters, the Research and Development Manager of the KT bakery.

The team playing with recipes took advantage of open fryers during the overnight shift to perfect the donut. Today, the company makes about 45 million glazers a year in the sweets bakery. That’s nearly 400 a minute being pumped out.

Not too far away in the bakery, 1,600 buns and 225 loaves of bread are made a minute, packaged and shipped to the stores.

You’ll need something to wash down those glazers. Not to worry - Kwik Trip also bottles its own milk - 65 million jugs and bottles in 2023.

Just steps away, up to 8,000 gallons a day of Nature’s Touch Ice Cream is made. Their most popular flavor is Vanilla.

The campus also has some places you might not expect for a convenience store. There is a test kitchen where many of the recipes for food are created and scaled for large production. KT also employs a full time Food Protection Lab where they test for anything that may contaminate food.

Kwik Trip says they plan to continue to expand in the coming years. They currently operate stores in Wisconsin, Minnesota, Iowa, Illinois, and Michigan under Kwik Trip and Kwik-Star brands among others.

You can also meet the woman behind some of Kwik Trip's viral social media posts here .

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A Kwik Trip customer thought she deserved a free beer after the outage, Kwik Trip agreed

After recently bouncing back from a two-week system outage ,which resulted in the Kwik Trip rewards program being inoperable, one customer thought it was time for more than just an apology.

Turns out, so did Kwik Trip.

Julia Mary had posted on the private Facebook group called Wisconsin Kwik Trip Enthusiast Club saying, "Kind of hoping for a 'sorry the rewards app was down, here is a free beer' coupon when the app is fixed." Mary said.

That was back on Oct. 16.

Friday morning, Kwik Trip screenshotted the post and tweeted "say no more" telling rewards members to check the offers section of the reward app.

That offer, a free 16–24-ounce Coors Light, Miller Light or Coors Banquet.

The offer is valid through Nov. 1 and can only be redeemed at Wisconsin stores.

Kwik Trip also informed members that any rewards cards swiped during the outage have received the correct credits for those purchases made during the outage. Members should see and be able to use those rewards in their account beginning Monday, Oct. 23. This applies to fuel discounts, Packers Points and all other rewards.

Claire Reid contributed to this reporting.