Wawa is undergoing a huge expansion, from grain bowls to fair-trade coffee to catering

By Ellie Silverman, | Philadelphia Inquirer | Apr 08, 2019 | 9:46 PM

Rachel Toner blended together mint syrup and cream, poured it into a cup, and topped the bright-green drink with whipped cream. But before Toner, a product development specialist, was really done, she added three rainbow pieces of candy in an arrangement mirroring a three-leaf clover.

“She’s so creative, who would think to do that?” remarked her co-worker at Wawa, Katie Delinski, an assortment manager for fresh beverages.

This was the Good Luck Mint smoothie, part of Toner’s creation of limited-time offers and a secret beverage menu. Toner tries to tap into the younger consumer, Generation Z, by prioritizing visual appeal along with taste in her new recipes.

For those who live or grew up in Pennsylvania, Wawa’s fandom is well-known. The sight of the red sign and signature goose draws its most loyal patrons in for coffee and Sizzli breakfast sandwiches each morning or for create-your-own hoagies all day.

But as Wawa undergoes its massive expansion of a record 63 stores this year and the remodeling of 59 more, the 840-store chain continues to evaluate its product offerings and how to best serve the changing tastes and attitudes of consumers.

Whether that is creating smoothies with Instagram in mind or rolling out small-batch, specialty grade coffees through its Reserve line, Wawa leaders said the company has made changes to better meet the rising standards of customers.

“The health and wellness trend is a big difference,” said Lynn Hochberg, the director of product innovation who has been with Wawa for almost 24 years. She also said people not only want to know more about what they are putting in their bodies, but they are also more educated about different types of food. “A few years ago I would never have suggested we roll out harissa and call it harissa instead of a spicy red pepper spread.”
Wawa grew by an average of 8 percent per year from 2009 to 2018 and surpassed $12 billion in revenue last year.

There are more Wawas in New Jersey than in Pennsylvania (251 to 236), but the company said it expects Florida, which has 167 stores, to surpass each state by the end of 2021.

The traditional offerings of convenience stores previously had been milk, eggs and less healthy foods such as ice cream, soda and other packaged goods, according to a 2019 report from Euromonitor International, a market research provider. But the product assortment across this industry has changed to reflect an increasing number of consumers seeking out healthy snacks, the report states.

The market of convenience stores in the U.S. is expected to grow 8 percent from $26.5 billion to $28.7 billion from 2018 to 2023, according to the Euromonitor.

Hochberg’s team noticed Mediterranean bowls popping up in cities around the country so they are testing new ingredients. At first, Wawa tried grain bowls in four stores and expanded to 30 for a pilot, the company explained. Now, in the Wawa stores that have added custom salads to its established touch-screen ordering, grain bowls will be rolling out next week.

The team is also working on increasing “clean” products by removing all artificial colors, flavors and preservatives from Wawa branded products. Wawa developed a clean ice cream label, with flavors such as Wawa’s own cold brew coffee, that is already in Florida and will be coming to the Mid-Atlantic market this summer.

But as much as Wawa is investing in its food operation, it still serves as a gas station in more than 600 of its locations. Its expansion in Florida also included the launch last year of Wawa’s own oil barge, called an articulated tug barge, that carries about 8 million gallons of fuel to serve about 30 percent of the chain’s supply in the region, indicating the company’s long-term investment strategy in this market, Wawa CEO Chris Gheysens said. In January, the company announced plans to hire up to 1,000 associates across the state.

In the next 10 years, Gheysens said, Wawa could double its store count. But that’s just a guess. He’s waiting to see where the customers and their preferences lead him and his company.
“We’re trying to be innovative,” Gheysens said in an interview during the South Street Philadelphia store’s grand opening last month. “We’re sort of that small hometown Philadelphia company, but I think people get a sense we’re growing.”

‘Almost erroneous to call them a convenience store’

A white board in the Wawa test kitchen lays out some of those identified trends in categories such as food, keto/paleo and beverage, and lists items such as vegetable noodle or rice, spaghetti squash, and cold brew with protein. Hochberg said she saw hummus on toast during one of her market research trips and suggested the kitchen give that a try on a recent day.

“One of the biggest things we’ve seen are how quickly things are changing,” Hochberg said. “It used to take years and years before something would go from a mainstream restaurant to us.”

There’s been an evolution in the convenience store market, with retailers pivoting from gasoline and cigarettes to becoming food service providers.

But Wawa isn’t part of this modern rush, said David Portalatin, NPD Group’s food industry advisor. It always included food service, which set it apart from its industry peers.

Wawa’s coffee performance, Portalatin explained, could be measured against retailers such as Starbucks and Dunkin’; its hoagies against Subway, Panera and Jimmy John’s; and gas against any other fuel provider.
Although McDonald’s, Dunkin’ and Starbucks are the major players for coffee market share overall, Wawa takes the lead in its core markets, Portalatin said.

“Technically the industry looks at Wawa as part of convenience retail,” Portalatin said. “It’s almost inaccurate. What they do so transcends most of what convenience retailing does. It’s almost erroneous to call them a convenience store.”

Wawa serves more than 700 million customers annually, brews more than 225 million cups of coffee, builds more than 125 million hoagies, and dishes out more than 88 million breakfast sandwiches, company spokeswoman Lori Bruce said in an email. Wawa has 34,000 associates and its employees own 40 percent of the company through an employee stock ownership plan.

Wawa has delivery services in close to 200 markets, largely through third parties such as GrubHub, UberEats and DoorDash. It’s also testing catering services, Gheysens said, though the company has not yet determined an official rollout. The catering kitchen is under the store at 13th and Chestnut and serves Philadelphia. Starting early next month, all stores will have a smaller catering menu with hoagies, some sides, coffee, and doughnut and bagel boxes; customers can place the order in store and pick it up there.

‘Putting people first’

Wawa’s recent partnership with award-winning chefs Michael Solomonov and Steve Cook to create the limited edition “Broad Street Meatball” hoagie could elevate the company’s reputation for fresh food. But it also emphasizes the company’s commitment to charitable giving — something Gheysens said is part of Wawa’s culture and mission.
The hoagie will be sold at Center City Wawa locations and at Solomonov’s and Cook’s restaurant, The Rooster, in April. Proceeds up to $10,000 of this hoagie bought at Wawa will go to the Broad Street Ministry, a church and social services agency that helps people experiencing homelessness and those in poverty.

On Wawa Day on April 16, the company’s annual celebration of its founding, it will mark 55 years in retail and five years of the Wawa Foundation, which donated $66 million to various causes. The chain will also give out free coffee, any size, that day.
‘Putting people first’

Wawa’s recent partnership with award-winning chefs Michael Solomonov and Steve Cook to create the limited edition “Broad Street Meatball” hoagie could elevate the company’s reputation for fresh food. But it also emphasizes the company’s commitment to charitable giving — something Gheysens said is part of Wawa’s culture and mission.

The hoagie will be sold at Center City Wawa locations and at Solomonov’s and Cook’s restaurant, The Rooster, in April. Proceeds up to $10,000 of this hoagie bought at Wawa will go to the Broad Street Ministry, a church and social services agency that helps people experiencing homelessness and those in poverty.

On Wawa Day on April 16, the company’s annual celebration of its founding, it will mark 55 years in retail and five years of the Wawa Foundation, which donated $66 million to various causes. The chain will also give out free coffee, any size, that day.

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