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C S P September 2012 55
WAWA’S OCEAN VIEWChain seeks clearer competitive waters with a new format in Florida
By Samantha Oller and Melissa Vonder Haar || soller@cspnet.com and mvonderhaar@cspnet.com
When inspectors from the
city of Orlando’s permit-
ting services department
visited Wawa Inc.’s first Florida location,
they were momentarily confused.
“This is a restaurant,” one of them
said. “We need some other people to
come in here, because we don’t have the
right people.”
The inspector’s reaction was music to
the ears of Dick Wood, chairman and for-
mer CEO of Wawa, who now in the twi-
light of his career has seen the company’s
extraordinary evolution from a conve-
nience store specializing in foodservice to
a casual restaurant lined with c-store fare.
“It’s very hard when you go to a new
territory like that to convey the impres-
sion that you’re a gasoline retailer selling
restaurant-quality food,” he says during
an exclusive interview with CSP. “So the
design of the store has gone into that:
When you walk into the front door, you
won’t miss the food aspect.”
In this election season, there has been
a lot of talk from pundits about the need
for politicians to define themselves before
others do it for them. It is a strategy that
Wawa clearly embraces as it seeks to not
only open up a new market in an entirely
different geographic region, but also estab-
lish the “fast casual to go” business model.
As Wawa gears up to build 100 sites
in Florida in the next five years, includ-
ing 20 to 30 in the Orlando and Tampa
markets in the year to come, its senior
management team constantly revisits
the lessons from its last new market, Vir-
ginia. Namely, consumers there were not
familiar with Wawa’s food history, which
began with an in-store deli and groceries
and transitioned into its current made-
to-order hoagie program.
“When you open up a store like Wawa,
foodservice doesn’t shout to the customer
who doesn’t know you,” says president
and incoming CEO Chris Gheysens of the
format that dominates the 600-unit chain.
“We were guilty by association. We put up
big fuel courts with cheaper gas prices.”
And as a result, he continues, “They
were hesitant to come in and expect a
good built-to-order offer.” This is despite
the fact that Wawa is a relative newcomer
to fuel, having introduced it in 1996.
To succeed in Virginia, Wawa discov-
ered it needed to tweak the offer in its
stronghold states to accommodate differ-
ent taste profiles. It also needed to execute
a promotion and advertising strategy to
put foodservice front and center.
That is why, at its new Florida site,
Wawa has placed expansive glass win-
dows at the front to showcase the food,
the made-to-order theater, the specialty-
coffee area; it’s the reason for the in-store
kitchen baking hoagie rolls fresh.
“When you walk into a Wawa in Flor-
ida, there’s no mistake we’re in the foodser-
vice business,” says Gheysens. (See “Wawa’s
Fast-Casual-To-Go Statement,” p. 56.)
That said, Gheysens acknowledges the
challenge is great: “Florida’s a big test for us
of: Can you take this brand, this business
model on the road and make it work?”
How would Wood put the Florida
launch into perspective? “How about:
It’s 1,000 miles from the closest Wawa,”
he says. “When you leap 1,000 miles, you
have to re-create the whole business. You
need a new supply chain, you’re going to
have a different set of vendors, a different
Pho
tos
by
Ch
ris
Cas
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C S P September 201256
Wawa’s Fast-Casual-to-Go StatementIn July, Wawa opened the first of its Florida sites, a count it plans to grow to 100 within five years. The company is entering Florida with its newest
format, which emphasizes a food-first offering, complete with built-to-order hoagies, a full-service espresso bar and expansive frozen-beverage lineup.
As CEO Howard Stoeckel says, “The bar’s higher on foodservice, the competition is keener, everyone around you is rebranding, improving, taking their
business to a higher level, so you can’t stand still. We in the c-store industry have to work that much harder to establish our foodservice reputation.”
Glass Act: Large glass windows show-
case the grand foodservice statement inside
the newest Wawa store, and give this site a
decidedly “Floridian” feel.
Check It Out: To bring a greater level of
convenience, Wawa designed dedicated
checkouts in its newest format. The latest POS
from Radiant Systems is more intutive and
allows customers to swipe their card while the
order is being rung up.
Fountain of Youth: Frozen bever-
ages, fountain and prepared food all underline
Wawa’s commitment to fast-casual-to-go.
Coffee Talk: With its success selling drip cof-
fee firmly established, the chain is launching a
full-service espresso-based beverage program.
“It’s amazing the number of people who come
in on a Saturday or Sunday and have nowhere
to go, other than they want their daily routine
and daily fix,” says CEO Howard Stoeckel,
“not in terms of coffee, but the experience.”
At the coffee island, Wawa is constantly rede-
signing the fixture to maximize its efficiency,
examining it and every area of the store from
the perspective of work cells. “We have an
operations engineering group that looks at
it from a customer’s work cell, an associate’s
work cell, arm reach, motion … to make sure
we’re as efficient as possible,” says president
Chris Gheysens.
Hot Bread: Encouraged partly by customer
demand and partly by the appeal of Jimmy
John’s and Firehouse Subs, Wawa included
in-house kitchens in its latest format to bake
hoagie rolls fresh.
Smoothie Moves: The success of
its smoothie program—now including 24
varieties—convinced Wawa that it should give
full-service espresso a second look.
Fueling Up: While food is the focus
inside the store, the new format’s expansive
forecourt shows fuel is an equally powerful
strength. OPIS calls the chain “the efficiency
king” for its ability to command greater
market share with fewer sites. While Wawa
is “watching patiently on the sidelines” to
see which alternative fuel wins out, it has
engineered some flexibility into its new
sites—for example, installing a conduit to
accommodate dryers, compressors and other
equipment required for a compressed-natural-
gas (CNG) setup. On the conventional-fuel
side, it is retrofitting sites for diesel, with plans
to increase installations in the next few years.
An Art and a Science: A Wawa asso-
ciate shows Orlando mayor Buddy Dyer and
a crowd of admirers the technique behind
building a quality hoagie at a special media
open house of the chain’s first Florida site.
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For more photos of Wawa’s first Florida site, as well as pictures from a remodeled urban Wawa, visit www.cspnet.com/wawapics12
C S P September 2012 57
set of customers.”
With all eyes on the Southeast, CSP
sat down with Wawa’s executive team for
an exclusive look at the chain’s planning,
preparation and execution of the next leg
of its growth. What’s clear is that, despite
the effect of external forces—a struggling
economy, local development restric-
tions—Wawa is determined to position
itself in calmer competitive waters that will
ensure long-term growth. This explains
why the company is leapfrogging over the
Carolinas and other intensely competitive
landscapes. And the timing coincides with
a critical juncture internally, as Howard
Stoeckel, CEO for the past eight years,
transitions his leadership to Gheysens to
carry on the game plan. (See “Last Ride of
the Brand Ranger,” p. 44.)
“The new market will benefit all stake-
holders,” says Stoeckel. “It will benefit the
communities that we serve, it will benefit
our associates, it will benefit our vendors,
it will benefit our stakeholders, and the
true owners, the Trust. If you don’t grow,
you can’t grow value.”
Into the Great Blue OceanAbout eight years ago, Wawa’s leadership
team realized that the company was run-
ning out of room.
Its core markets in the five-state swath
of Pennsylvania, Delaware, Maryland,
New Jersey and Virginia certainly had
growth opportunities; in fact, the com-
pany has plans to open 15 to 20 sites in
the mid-Atlantic each year, for several
years, to its current base of nearly 600
sites, and is constantly updating existing
locations. But there was not much room
for the company to really stretch its legs.
Growth north—into Connecticut or
New York, from which Wawa withdrew in
the 1980s—was too difficult from a zon-
ing and permitting perspective. Plus, real
estate was expensive. To the south, heavy-
weights QuikTrip and Sheetz had already
landed in the Carolinas and Georgia.
“We looked east of the Mississippi,”
says Stoeckel, “and found Florida to be
an attractive market that we thought was
underserved, and there wasn’t quite any-
one there like Wawa.”
Then the economy tanked. But
Stoeckel considered the stall a blessing in
disguise; it gave Wawa an opportunity to
take stock of its preparedness for Florida,
along with the state of its brand identity
and balance sheet.
It let Wawa “fine-tune what we will
do eventually,” says Stoeckel. “You can do
this as a privately held company.”
He describes private ownership as
one tenet of Wawa’s “moral compass,”
enabling the company to be more auton-
omous and control its own destiny.
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C S P September 2012 59
“From a long-term perspective, being
private allows us to look ahead and plan
in decades, not every quarter, which is
exactly what we never want to do,” says
Gheysens. “As we look at Florida as an
opportunity, we’re thinking about what
it’s going to look like in 2020.”
Not allowing Wall Street analysts to
control its direction and growth was one
decision for Wawa; not allowing the com-
petition that privilege was another. It is
why Wawa leadership came to embrace
the concept of blue ocean strategy (BOS),
a business methodology that guides com-
panies to create their own market space,
or blue ocean, and make the competition
irrelevant by creating a “leap in value” for
customers.
“You can go berserk if you look at
all of your competitors, and let your
competitors drive your own decisions,”
Stoeckel says. “So I’ve always admired
in the blue ocean companies those that
create their own identity, occupy their
own space in a marketplace, and lay their
own path.”
He cites Southwest Airlines, one of the
few airlines to consistently turn a profit.
The company created its own blue ocean
by staying true to its brand, allowing bags
to fly for free even as other airlines piled
on fees. “Just because another airline does
something, it doesn’t mean [Southwest
does] it,” he says. “That I admire, and I
think that’s the strength of a blue ocean
company.”
The Simplification TablesWawa seeks clear waters in “fast casual to
go,” which enables it to combine the best
of food, convenience and fuel and truly
simplify customers’ lives.
“That’s really the essence of blue
ocean: It’s being able to have a Panera-
type quality product, Wawa-type experi-
ence with that speed and the breadth of
our offer,” says Gheysens. “That’s some-
thing really worth striving for.”
At the new Florida sites, you can see
the material framework of Wawa’s BOS.
Within the 5,500 to 5,600 square feet of
retail space, Wawa provides:
▶ Built-to-order hoagies complete
with touch screens and supplied by an
in-house kitchen area dedicated to baking
fresh hoagie rolls daily.
▶ A full-service specialty-beverage
The Wawa Business Bookshelf“Blue Ocean Strategy: How to Create Uncontested Market Space and Make
Competition Irrelevant,” by W. Chan Kim and Renée Mauborgne (2005).
Advocates for businesses to create their own uncontested markets with maximum growth
potential, or “blue oceans.” The strategy is based on a study of 150 strategic moves—or
“value innovations”—that have taken place in 30 industries over the past 100 years. It is
built on three propositions:
1. Value: how compelling an offer is to customers in terms of its purpose and price.
2. Profit: increasing profits by eliminating or trimming factors that the industry has taken
for granted or on which it has overdelivered.
3. People. How ready and willing employees are to fully execute the new strategy.
“We said we wanted to distance ourselves if we can from our competition and
truly be different from those. Part of the blue ocean strategy is to combine the best
of food, convenience and fuel and really simplify our customers’ lives and help
them have a better day.”
—Howard Stoeckel
“Firms of Endearment: How World-Class Companies Profit from Passion and
Purpose,” by Rajendra S. Sisodia, David B. Wolfe, Jagdish N. Sheth (2007)
Examines how leading companies such as Costco, Whole Foods Market and Wegmans are
delivering “share of heart” to their stakeholders, and in return earning loyalty and endearment.
“So much of our brand is winning the share of heart of our stakeholders: our
customers, associates, vendors, communities we serve. And that’s really what we
stay focused on: winning share of heart. And we do it one customer at a time, one
store at a time.”
—Stoeckel
“Good to Great: Why Some Companies Make the Leap … And Others Don’t” (2001) and “Built to Last: Successful Habits of Visionary Companies” (2004) by Jim Collins
In these well-loved business tomes, Collins examines how good companies became truly
great, and discovers common themes in leadership style, culture and discipline. Introduces
the concepts of the humble, visionary “Level 5 Leader,” finding and placing the right people
on a company’s “bus,” and investing in employees.
“Jim Collins talks about ‘Built to Last’ companies, where you grow your own
people. We’ve always taken great pride in growing our own people.”
—Stoeckel
C S P September 201260
area where customers can order 20 hand-
made varieties of hot beverages, espresso,
chai tea and lattes, as well as 24 varieties
of smoothies and frozen beverages via
touch screen.
▶ Dedicated checkout lanes that aim
to get customers in and out of the site
as quickly as possible, while preserving
valuable “face time” with associates.
In the area of coffee, Wawa is making
one of its greatest leaps in value by adding
baristas to all of its sites. “Getting into
those espresso-based specialty beverages
is a big opportunity for us. It’ll add cred-
ibility and, frankly, we’re just scratching
the surface,” says Gheysens.
If this sounds a little familiar, it’s
because about 20 years ago, Wawa had
introduced full-service baristas at a dozen
sites, and even had a freestanding cof-
fee kiosk. It pulled them out after only a
short time.
“At that point, we were ahead of our
time, and we had not reached the level of
consumer perception in foodservice and
beverages we needed to have to aggres-
sively compete in that business,” says
Stoeckel. “Now that we’ve repositioned
coffee with the new offer and branding,
we’ve come to a new level in foodservice.
Now we’re ready to enter that business.”
Encouraging Wawa that its timing is
finally right is the success of its smoothie
program. Introduced three years ago and
today encompassing 24 varieties, smooth-
ies have signaled to Wawa that customers
accept it as a source for quality food.
In addition to its impressive food
statement, Wawa’s BOS emphasizes sim-
plifying customers’ lives. It’s a purpose
that guides its policies across all catego-
ries. For example, in New Jersey, where
some retailers promote a per-gallon
discount for customers who pay for fuel
with cash—to discourage them from pay-
ing with credit, which carries transaction
fees—Wawa promoted its lack of a cash-
only discount.
“Our core purpose is to simplify the
customer’s daily life,” says Gheysens.
“When you pull up to a gas station and
pull out a card, and say, ‘Oh, it’s 8 cents
more a gallon now?’ That’s not simplifying
anyone’s life, and you certainly don’t feel
like they’re on your side as a customer.”
Consider loyalty, in which Wawa is
conducting a small pilot. Here, too,
simplifying the customer’s life has deter-
mined the pace and form of the offer. “It
really is about being clean, fast, friendly,
great quality food and experience, to
drive that 100% of the time for every
customer and visit,” says Gheysens. “Any
card, any loyalty program—they’re a little
bit clunky in our estimation, so we’ve
waited for technology to catch up a bit. I
think we’re almost there.”
The eventual loyalty offer will likely
not be a discount program designed to
boost fuel volumes or store sales, Ghey-
sens says. Instead, its core purpose is to
help Wawa better know its customers:
what they are buying, when, their prefer-
ences and how the company can adjust
its strategies to better serve them. “That’s
the value we see,” he says. “But we’re being
cautious on this. We do not want to mess
with the brand, and we don’t want to
mess with the experience.”
“Once you begin down that path, you
can’t retrench,” agrees Stoeckel. He cites
the business book “Firms of Endearment,”
which profiles companies that have won
share of heart, which became share of wal-
let. (See sidebar on p. 59.) “So much of our
brand is winning the share of heart of our
stakeholders: our customers, associates,
vendors, communities we serve. And that’s
really what we stay focused on. And we
do it one customer at a time, one store at
a time.”
While Wawa has made foodservice a
driving element in its BOS, this doesn’t
mean it has given up the center of the
store. “The key to success will be to
continue to grow market share and key
convenience categories,” says Stoeckel.
“We’re not going to give that business
away.” Wawa dominates its competition
in number of ATM transactions and
embraces tobacco and gasoline as traffic
drivers, he says.
Stoeckel acknowledges that competi-
tion from c-store retailers and other chan-
nels is especially fierce, and that it is tough
to differentiate in that part of the store.
“We think we can best differentiate our-
selves with the overall brand experience,
through our culture and people,” he says.
“But beyond that, where we can create our
own blue ocean is really in the foodservice
side of the business, and that’s been our
legacy, that’s been our history.”
Ready, Set, GoSo much of the story about Wawa’s
growth in the past two decades has been
about getting the timing right. From
introducing a full-service espresso offer
to entering a new market, the company
has accepted misfires and delays—as frus-
trating as they can be at the time—as a
long-term positive. This is especially true
of its delayed entry into Florida.
“We’ve crystallized our vision in terms
of what we want to be longer term, and
we used the opportunity to really look
at the future, look at where we were
headed, and developed a much more
“Our core purpose is to simplify the customer’s daily life.”
C S P September 201262
motivational and solid game plan than what we had before,”
says Stoeckel, who points out that had Wawa built the new stores
a couple of years ago as it originally intended, they would not
look like the fast-casual-to-go concept of today.
Ned Bowman, executive director of The Florida Petroleum
Marketers & Convenience Store Association (FPMA), Tal-
lahassee, Fla., attended Wawa’s Orlando grand opening and
was impressed by the crowds, the cleanliness of the site, its
“Floridian” feel and its food offer. He says the appeal of the state
to retailers such as Wawa (an FPMA member) is obvious.
“There’s a reason people want to come to Florida: It’s the third-
largest gasoline market,” he says, citing that the degree of competi-
tion has encouraged retailers to up their retail game. Beyond
major and mid-tier oil, key c-store retailers in the Orlando and
Tampa markets include RaceTrac, 7-Eleven, The Pantry and, soon,
Thorntons, which announced plans to open 15 to 20 stores in the
Tampa-St. Petersburg-Clearwater area in the next three years.
While the state’s unemployment rate (8.6% as of press time)
is slightly higher than the national average, it is on a downward
trend. In addition, population growth is on an upward track,
allowing the state to pick up two congressional districts in the
last reapportionment.
“The Florida market is a very competitive gasoline market,
and shoppers today, with the way the economy is, are looking
for convenience and value,” says Bowman. “Our convenience
marketers offer a very competitive gasoline market, and a lot of
them offer pretty good foodservice quality.” He believes Wawa’s
fresh and made-to-order hoagie offer will be its key competitive
differentiator.
“Ninety-eight percent of competition is self-created,” says
Jim Fisher, CEO of Houston-based IMST Corp., a site selection
and development firm. Fisher says Orlando and Tampa may
have several sizable retailers, but he likes Wawa’s edge on the
operational side. “[Wawa] sees the potential of where they can
operate very successfully based on the competitive environment.
If there were strong operational companies in those markets, no
one would go.”
Fisher ponders if and how Wawa would backfill its core
markets, but to succeed in Florida, he says, the company must
bring “numbers”—in terms of a full executive team, as well as
volume. “And they will get them,” he predicts.
On the restaurant side, Wawa has already tussled with Panera
Bread, Dunkin’ Donuts and Starbucks in its core markets. It
expects more of the same in Florida, in the wake of those com-
panies announcing southern expansions. Competition from
“When you leap 1,000 miles, you have to re-create the whole business.”
C S P September 201264
Firehouse Subs and Jimmy John’s, also
with sizable Florida footprints, were part
of the reason Wawa introduced bread
baking in the stores. Indeed, as much as
the fast-casual-to-go model offers Wawa
a chance to ultimately make the competi-
tion irrelevant, it needs to respond in the
meantime.
“We have to compete against a lot of
different competitors—gas, food, tradi-
tional c-store—and you have to be on the
top of your game to differentiate your-
self in each one,” says Gheysens. “[Aside
from] the consumer perspective, there’s
also the real-estate perspective: We’re all
fighting for the same corner.” Wawa is
banking on its fortified balance sheet to
provide flexibility and fuel its offense as
competition heats up.
“When the company gets into a busi-
ness, it gets in it to win,” says Kim Lop-
drup, a Wawa board member and senior
vice president of business development
for Darden Restaurants, whose brands
include Red Lobster and Olive Garden.
He points out that one of the com-
pany’s six key values is “passion for win-
ning.” This is obvious with fuel, in which
Wawa has earned a reputation not only
for its aggressive pricing but also its mar-
ket efficiency; it owned 1.7% of all the
motor gasoline sold in the United States
in the first quarter of 2012, for example,
despite having an outlet share of only
0.28%, according to figures from the Oil
Price Information Service (OPIS). The
organization continually ranks Wawa as
No. 1 in its efficiency rating for gasoline,
defined as gallons by location.
Consider coffee: Wawa ranks as
the eighth-largest coffee retailer in
the United States based on units sold,
despite the fact that it has stores in
only six states, and it averages more
cups of coffee per site than Starbucks
or Dunkin’ Donuts. Also, its merchan-
dise sales are about 10 times the c-store
industry average.
“Like our advertising says, ‘There’s
no place like Wawa,’ ” says Lopdrup. “As
long as we execute our concept well in
the new market, we have great confi-
dence that we’ll be highly successful.” n
“Where we can create our own blue ocean is really in the foodservice side of the business, and that’s been our legacy.”
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