Wawa Inc. History

Address:

260 Baltimore Pike
Wawa, Pennsylvania 19063
U.S.A.

Telephone: (610) 358-8000
Fax: (610) 358-8878

Private Company
Incorporated: 1968
Employees: 10,000
Sales: $838 million (1995)
SICs: 2026 Fluid Milk; 2099 Food Preparations, Not Elsewhere Classified; 5194 Tobacco & Tobacco Products; 5411 Grocery Stores

Company History:

With 515 outlets in 1996, Wawa Inc. was one of the largest privately held convenience-store chains in the United States. These 24-hour-a-day stores were located for the most part in suburban areas of the five mid-Atlantic and New England states in which the chain operated. All but about 50 were within 90 miles of Philadelphia, however, and the majority were in New Jersey. They emphasized high-quality delicatessen and salad-bar items and low-price cigarettes. The company also was engaged in dairy and wholesale cigarette businesses.

Textile and Dairying Origins

Wawa's origins go back to 1803, when the Millville Manufacturing Co. was founded. This enterprise operated textile mills in several states, including major plants in southern New Jersey. In the late 19th century Millville owner George Wood became interested in dairy farming, and he imported cows from Guernsey in the Channel Islands of the United Kingdom. A Philadelphia resident, Wood had bought a summer home for his family in Wawa, a suburb west of Media, in 1890, and he established a small plant there to process his dairy products. (Wawa is the word for goose in the native American Lenni Lenape language, and a goose appears on the corporate logo.) Pasteurization was unknown then, but using strict sanitary methods, Wood produced a raw milk, Certified Wawa Milk, that was recommended as safe by many Philadelphia doctors.

By the 1960s Millville Manufacturing had ceased operations, and consumers were buying milk from supermarkets rather than relying on Wawa Dairy Farms for home delivery. Deciding to counter the supermarket trend, Grahame Wood, Jr., grandson of George Wood, opened the first Wawa Food Market in Folsom, Pennsylvania.

Featuring brand-name milk, butter, and ice cream from the dairy, it was an immediate success. Two more stores were added by the end of the first year of operation. The 1968 edition of Dun and Bradstreet's Million Dollar Directory listed Wawa Dairy Farms as having 250 employees and $9 million in annual sales. In that year Wawa Dairy Farms and Wawa Food Markets merged into the Millville Manufacturing Co., whose principal assets consisted of real estate in southern New Jersey, to form Wawa Inc.

With the added resources of Millville's real estate, Wawa's number of stores reached 40 by the end of 1968 and 80 by the end of 1970. Some of these were operating around-the-clock by the late 1970s. By the end of the decade sales had reached $140 million a year, and the number of employees had grown to 2,200. Grahame Wood was chairman and chief executive officer, and Richard D. Wood, Jr., a cousin, was president.

In 1977 Wawa began testing a paperless cash-access system at 12 Pennsylvania stores. Customers who presented a Provident National Bank card to a Wawa clerk and entered their personal security number on a separate keyboard could withdraw up to $25 a day from their bank accounts. ATM services were developed in later years, and all Wawa stores had ATMs by 1995.

Convenience with a Wholesome Image

Traditionally the best-selling convenience store items have been gasoline, beer, and cigarettes. Only a very few Wawa stores sold gasoline, however, and none sold beer (as much a reflection of local zoning prohibition as corporate philosophy), lottery tickets, or sex-oriented magazines. Even cigarettes were restricted to displays behind smoked glass. Instead Wawa specialized in high-quality perishables, including lunchtime sandwiches, and became the first convenience store operator to offer fresh, prepackaged entrees.

The typical convenience store customer was seen as a young blue-collar male, but Wawa found it could do well among working women as well by keeping its stores neat and clean and by carrying a much greater selection than most of its rivals. These goods included produce&mdashsent from most convenience stores--and a large selection of delicatessen items. In 1985 the company began test-marketing Lite Bite salads, its first product directly targeted to working women. These salads were made in the stores themselves and prepared from Wawa's own produce. Wawa reported sales of about $360 million in 1986 and was opening some 50 locations a year in the late 1980s. Sales per store, which averaged $11,000 a week in 1979, had jumped to $20,000 a decade later.

Wawa's stores, which averaged 3,000 square feet, contained--in contrast to most of its competitors--no aisle or countertop displays. "The conventional merchandising wisdom in a convenience store is to get the customer to buy something she didn't really walk in to buy," Frederic Schroeder, Wawa's vice-president for marketing, told a Chain Store Age Executive reporter in 1987. "But our No. 1 aim is to get the customer in and out quickly. Architecturally, we made the checkout area remote from the sandwich/deli area. This is more labor-intensive, but we feel it makes it much more comfortable for the consumers to shop our stores. We also removed the beverage area from the deli, also to make it easier for customers to get in and out of our stores."

In terms of Wawa's merchandise mix, Schroeder went on to say, "We started putting much more emphasis on poultry in our deli area, and on offering lower-sodium foods and foods with a lower fat content. We also continue to promote our produce heavily, and we've added more single-serve fruit juices.... Our studies show that in our stores we have over 85 percent of what is available in the average supermarket, and approximately 70 percent of this is selling for comparable prices."

In order to stimulate slow dinnertime business, Wawa tested in 50 stores during 1989-1990 a Fresh Buffet line of chilled entrees, priced from $2.99 to $3.99. Working in partnership with Key Fresh, a division of Keystone Frozen Foods, Wawa offered customers these items in a special refrigerated case, set at very precise temperatures. Shelf life from day of manufacture was approximately ten to 14 days, which translated to about seven days at store level if delivered promptly. A freshness indicator showed how long a package had been in the case. The first six items were chicken Mexican, chicken Oriental, chicken Mornay, beef teriyaki, and two types of lasagna. Wawa found that the buyers tended to be women and customers with higher incomes than typical convenience store patrons. This line was dropped, however, in favor of promoting the more profitable sale of hoagie sandwiches and cigarettes.

By the end of 1990 the Wawa chain had grown to about 485 stores in Connecticut, New Jersey, Pennsylvania, Maryland, and Delaware. This period was, however, a difficult one for Wawa. According to Ralph Wood, company profits declined from about 1987 to mid-1991, and the number of customers actually fell in 1989 and 1990. Better management was one reason credited for the subsequent turnaround: the turnover of store managers dropped from 30 percent in 1987 to under ten percent in 1991.

Wawa in the 1990s

In 1991 prepared foods (as opposed to packaged items) were accounting for 25 percent of Wawa's sales, with the average gross margin per location, after spoilage, 55 percent. The biggest sales and profit category was deli, mostly sliced meats and cheeses and including local favorites such as hoagie sandwiches. Wawa also was selling a line of low-sodium deli meats and cheeses. Women accounted for about 40 percent of the chain's customers.

Wawa's deli facilities were making more than 50,000 sandwiches a day in 1992, when it had the hoagie declared the official sandwich of Philadelphia through a promotion that secured 30,000 signatures to support the designation. On Hoagie Day--May 6, 1992--the company celebrated by building a 500-foot-long sandwich. Wawa stores were making 174,000 hoagies each week for their customers. Two years later, the company celebrated its 30th anniversary as a convenience store enterprise with a promotional blitz. Because its start-up coincided with Ford Motor Company's introduction of the wildly popular Mustang, Wawa gave away one 1960s Mustang a day for 30 days.

Wawa began a program of eliminating ozone-layer-depleting chlorofluorocarbons (CFCs) in 1988. Wawa-owned refrigerated units like walk-in coolers and deli/dairy cases in its stores were being slowly replaced or converted, with completion of the project scheduled for 1996. The company was installing scanning in all of its stores by the end of 1995 and had installed personal computers and software from Park City Group at each of its locations.

In the early 1990s Wawa's expansion slowed to some 20 store openings a year. Instead the company emphasized remodeling, at $300,000 per store. Although store size stayed about the same, sometimes the company had to buy the lot next door to increase parking for the growing number of customers, who brought the weekly sales level per store to $35,000 in July 1994.

To gauge its customer service, Wawa had what it called its 155-second rule, denoting the average time a customer was in a convenience store. All operations in a Wawa store were geared to get the customer in and out during that time. To meet this standard, the company was working on better ordering systems for the deli sections, speeding up the checkout process, and possibly using telephone and fax ordering to spread out preparation time. It also recognized the need to add more counter space for customers.

An Associated Press survey of Wawa's stores in 1996 found yuppie favorites like kiwis, mineral water, pasta salad, cappuccino, and yogurt available along with the predictable cookies and candy bars in its stores. Some of the larger ones had installed espresso bars where customers could order their coffee with frothy, steamed milk or one of 20 kinds of Italian syrup. Wawa also offered its own special coffee blend, which had become its leading ready-to-serve around-the-clock product. The company was also developing an English-muffin-based line of breakfast sandwiches. In order to compete better with fast-food outlets as well as supermarket chains, Taco Bell burritos and Pizza Hut personal-pan pizzas had been added to the deli counters, and a downtown Philadelphia food court that opened in 1994 offered fast food only in a choice of Taco Bell, Pizza Hut, or two Wawa house formats--Hoagie Time or Coffee Time.

Wawa's plans, as of 1994, called for 1,000 stores by the year 2000, spending $5 million to $6 million per year over a six-year period. To meet its stores' growing demand for milk and juice, the company also was expanding its dairy and warehouse operations. The land behind the dairy would be used for a new refrigerated warehouse, and additional storage silos were also planned. The remodeled dairy, doubled in capacity, would offer the latest in state-of-the-art computerized processing, new equipment for solution recovery, and recycling of solvents. "We also want to make our dairy more visitor friendly," Richard Wood told a reporter. "When everything is finished, we hope to offer tours to schoolchildren."

At least ten more Wawa stores were expected to be selling gasoline by the year 2000, on larger properties than its current superstores, which averaged about 5,000 square feet. The company felt that getting into the gas business was necessary to compete with oil-company convenience store chains like Sun Co. Inc.'s A-Plus. Wawa had gas pumps in about 30 outlets during the 1970s but dismantled them in all but two outlets by the early 1980s because profits were too low.

Wawa Inc. History

Company History:

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