Kwik Trip Business Model Vertical Integration Foundation | Local


Knowing the origin of the fruits and vegetables packaged at Kwik Trip gives kitchen operations manager Bob Karr a sense of security.

“Before, everything was pre-packaged,” Karr said. “Now it’s a fully integrated process.”

The production operation went in-house a year ago and is the final chapter in Kwik Trip’s embrace of vertical integration as a defining business model. Customers can buy a Snickers bar or a bottle of Pepsi at Kwik Trip, but most of what’s on sale at a typical Kwik Trip store is handled by the company itself.

Kwik Trip production manager Brad Clarkin said vertical integration is “fundamental” to the way Kwik Trip does business.

“We produce it, we ship it, we sell it,” Clarkin said.

The entire process takes place at Kwik Trip’s 130-acre manufacturing campus in La Crosse. In addition to kitchen operations, where prepared meals (cheeseburgers, pizzas, salads, take-out, etc.) are prepared, Kwik Trip operates its own confectionery bakery, bread and bun bakery, and dairy.

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The operations produce a substantial amount of food and drink. On a recent Thursday, for example, the kitchens brought out 25,000 sandwiches, 14,000 salads, 50,000 burritos, 7,000 parfaits, 30,000 takeout and 26,000 cups.

Karr said inventory ships as soon as it’s produced. He said if anything is produced on a Thursday in La Crosse, it will be on a store shelf by Saturday morning.

“It’s less than two days from when we arrive to when it goes to retail,” Karr said. “We want to get everything from raw to retail as soon as possible.”

The dairy is also a very busy place. Dairy operations manager Jeremy Nickelatti said the Kwik Trip facility is “more than double the size of an average Class I dairy” with 15 truckloads of milk arriving daily. All milk comes from four dairy co-ops in Wisconsin and Minnesota located within 250 miles of La Crosse.

He said milk is never kept in a silo for more than 72 hours and is often processed faster than that.

“He can go from a cow to a table in 24 hours,” Nickelatti said.

Vertical integration goes beyond milk and other dairy products. The dairy already manufactures its own gallon and half-gallon containers and will manufacture the smaller containers in-house by the end of August when a 45,000 square foot expansion is complete.

At the Confectionery Bakery, Bakery Operations Manager Jamie Gay oversees the production of a wide variety of baked goods, from cookies to muffins to donuts. Glazes are shipped fresh daily and appear on store shelves the same day they are made.

The production lines produce 400 Glazers, 240 cookies and 130 muffins every minute, and more than 43 million Glazers were produced in 2021.

Gay said a group of motivated employees is key to keeping the product line moving.

“We have daily improvement meetings to talk about what we did yesterday and what we’re doing today,” she said. “We are always in continuous improvement and what we need to do to improve safety and make things more efficient. We have many good workers here. They care about their job.

Clarkin said vertical integration gives Kwik Trip a competitive advantage over other convenience stores.

“At the core, it’s all about quality,” Clarkin said. “We can get our hands on quality. We own it.”

He said vertical integration also has distribution benefits and has allowed Kwik Trip to alleviate many of the recent supply chain bottlenecks.

“We can be faster. We can react faster based on customer demands and needs,” he said.

Distribution is key to Kwik Trip’s fresh produce sales policy, Clarkin said. Kwik Trip is limited to stores where trucks can deliver its products in one day.

Clarkin said Kwik Trip has yet to reach the maximum extent of its geographic footprint. It already operates more than 800 stores in nearly 400 communities in Wisconsin, Minnesota, Iowa and Illinois and will add a fifth state when Kwik Trip opens two stores in Michigan’s Upper Peninsula later this year. The company also plans to open 25 new stores in Wisconsin, nine in Minnesota and nine in Iowa in 2022.

Clarkin said the East Dakotas could be added in 2023.

“In 2023 you will see us expanding into the I-29 corridor of the Dakotas,” he said. “It will be a good new market.”

Take-out meal

As Kwik Trip expands geographically, it also expands its fresh food offering. The company recently made a major dip in the takeout market.

Meals are individually wrapped with cooking instructions on the label and include offerings such as chicken penne, macaroni and cheese, fettuccine alfredo, turkey dinner with mashed potatoes and gravy, spaghetti and meatballs and beef stroganoff.

“It’s a segment of our business that we didn’t have two years ago,” Clarkin said. “It’s definitely something new — we work with crude protein. It’s something no one in our industry has been able to do, but there’s a demand for it.

“Our story is that we try a lot of new ideas.”

Clarkin said the launch of take-out meals and fresh produce processing required a 120,000 square foot addition that includes a fry line, a grill line and a sous vide line. He said there is still room for future expansion on the current campus, and the company is committed to maintaining production at La Crosse.

“I would say as retail continues to grow, we are absolutely aware of how we can support that growth from La Crosse, Wisconsin,” he said.

Kwik Trip dates back to 1965, when the company was founded by Don Zietlow, who is still president and CEO. The company employs 33,000 people (4,200 at the La Crosse production plant) and remains a private, family business.

Clarkin attributes Kwik Trip’s growth to providing consumers with choices not found elsewhere in the convenience store industry.

“There’s definitely a different feel to it,” Clarkin said. “You maybe don’t enjoy it as much until you get out of the zone and then you come back and say, ‘Man, I missed that.


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