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By Linda Lisanti
The cover story of Convenience Store News' Aug. 6, 2007, issue offered an exclusive, industry-first look inside Kwik Trip's new $14 million food commissary, and research and development facility in La Crosse, Wis. The project was touted as both a reflection of how far the company's foodservice business had come, and an assurance of greater sales and profits for the future. "Five years from now, this will be our greatest return-on-investment," Kwik Trip President Don Zietlow told CSNews at the time. He and other chain executives believed foodservice could generate as much as half or more of the retailer's total profit in the coming years.
When CSNews first toured the new 60,000-square-foot commissary in 2007 -- just three weeks after its grand opening -- less than half of the total floor space was in use. But executives said it wouldn't be long before the chain grew into the facility, given their plans to expand into several new proprietary foodservice offerings.
Today, those plans have been realized. Nearly two years since moving into the facility, both the volume and quality of products prepared by Kwik Trip's commissary has increased significantly. The facility is operating at 75 percent capacity with 115 employees -- up from 100 in 2007 -- manning two full production shifts and a third-shift sanitation team, said commissary director, Jill Thompson.
"We're filling out. We haven't had to knock down any walls yet, but maybe next year," she said, noting six to seven production lines operate on any given day.
The commissary currently prepares two varieties of chili, eight different soups, nine varieties of pizza, 16 kinds of sandwiches and two types of salads for daily delivery to Kwik Trip's more than 350 c-stores in Wisconsin, Minnesota and Iowa.
One of the major benefits of the new commissary is being able to make products previously prepared for Kwik Trip by a third-party supplier -- the new soup/chili production line is an example. The commissary is outfitted with two 1,000-gallon kettles, one 200-gallon kettle and a 100-gallon kettle, allowing the retailer to save costs by bringing these products in house.
"That was a big one to get through," Thompson said of the soups.
Aside from the new soup/chili line, other recent additions to the commissary include a 2-ounce cheese plank production line. Cheese planks are similar to string cheese, but wider and flatter. Kwik Trip also expanded its pizza line to include a thin crust variety, and all commissary-made sandwiches but one are now hand-wrapped with cellophane instead of machine wrapped as before. "It gives a fresh, homemade -- not made in a factory -- appearance to consumers. It looks like it was made in a deli," she explained.
A new label and brand name completes the look. As part of a total modernization of its private label food offerings, Kwik Trip replaced its generic, company-branded labels with a new label branded Kitchen Cravings. Most commissary-made items, except for its Cheese Mountain pizza, carry the new name, said Steve Loehr, vice president of operations support for La Crosse, Wis.-based Kwik Trip.
The new Kitchen Cravings label features earth tones, such as light greens and browns, which mimic the colors used in its latest store remodels. This new identity is another extension of the retailer's theme of "Making it Fresh for You."
While highlighting the freshness of its commissary-made products is still a key focus, Kwik Trip is combating these tough economic times by also playing up its value proposition -- more so than ever before, said Loehr. Every Wednesday is Dollar Days, when the chain's stores offer a slice of pizza, soup, roller grill items or sandwiches for $1 each. "We see sales increase 50 to 150 percent for that day's item," he added.
In addition, Kwik Trip is beginning to move on plans it made in 2007, when Loehr said the company wanted to take a page from British retail powerhouse Tesco in developing products to hit all consumer levels: low, middle and high-end.
The chain has done so with its pizza, introducing a smaller version with a thinner crust retailing for $5.99 and a special for $4.99, compared to its original premium pizza that sells for $7.99 to $10.99, depending on toppings. A similar tiered approach is being applied to sandwiches, with wedges offered as the lower-end alternative and cellophane-wrapped sandwiches serving as the higher-end option.
Such value strategies -- coupled with consumers trading down from middle-range restaurants to c-stores -- is leading to increased sales and profits.
Close to 40 percent of annual profit now comes from foodservice, and Loehr believes getting that figure above 50 percent is possible.