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Magazine | Okiecentric

Store No. 27 and the Making of QuikTrip

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Posted 12.06.10

Autumn. 2010. 1946 South Harvard. Tulsa, Oklahoma.

I’m slouched in my car in the parking lot of QuikTrip counting customers; this wasn’t the Pakistan assignment I’d hoped for. At the northwest corner of 21st and Harvard, Store No. 27 hums round the clock, guarded by sixteen gas pumps standing at rigid attention like soldiers. A tall monument exhibiting the familiar QT logo looms above me, hubristically. Catty-cornered across the intersection is Burger Street, to the east is Arby’s, looking a bit anemic these days, on the southwest corner is the now abandoned May’s Drug Store building, soon to be the home of a CVS Pharmacy. The midday traffic around me is furious.

In 30 minutes 108 people have entered the store. That’s a customer every 16 seconds, if my friend’s calculation is correct, a near stampede by retail standards. And you can’t help but notice that the people going into the store are not the same people coming out of the store. This struck me as strange. Maybe there’s a story here after all.

Spring. 1958. 5th and Boston.

Fresh out of the Air Force and financially strapped, Chester Cadieux was threading his way through a throng of businessmen and shoppers in downtown Tulsa to make a sales call on a customer.

“Chester, you look awful.”

“You don’t look too good yourself, Holmes.”

The two men walked over to the Tower Grill to get reacquainted. Burt had seen a 7-11store in Dallas and thought a scaled-down, bantam grocery could work in Tulsa. Chester hated his job as a print salesman and wanted to be more like Burt, who’d already started up several businesses. He’d never forgotten years before his dad telling him, “Son, if you want to make real money, go into business for yourself.”

The late fifties were heady times in Tulsa. Still considered the Oil Capital of the World, Tulsans were confident of the future. Downtown teemed. Its buildings were masterpieces of deco architecture. Teenagers were printing a literary journal filled with contributions from famous poets, Ginsberg, Kerouac, et cetera. The GI Bill was turning veterans into ambitious college graduates and entrepreneurs. Tulsans had money and were spending it. They dined at restaurants like Bishop’s and the Louisianne; they watched movies in ornate theaters with carmine velvet curtains and grand names, like the Ritz and Orpheum, the Rialto and Majestic; they took pride in their world-class museums, Philbrook and Gilcrease. It must have been unthinkable these good times could end. But they did.

Summer. 1958. 5204 South Peoria Avenue.

Chester and Burt huddled in the back room of their small grocery store, sitting on a couple of wooden crates, trying to figure out ways to save their newly-minted business.

Things had not gone as planned. Eight days after opening their door, the city unexpectedly closed down Peoria to fix a drainage problem. Rain water was pooling under the Skelly overpass, choking off the store’s access to the traffic they’d depended upon. The swarms of motorists Chester and Burt had envisioned stopping in to buy crackers and sardines, Wonder Bread, lunch meat, soda, beer, and lots of Vigo dog food, were not going to happen, at least for the foreseeable future. Plus, a few days before opening their store, an established wholesale grocer had launched its first outlet in Tulsa, featuring an ambiance that shamed the cobbled together, used-fixture look of Quick Trip. Out front a portable sign hollered:

“Help!”

With a scrappiness that would distinguish QT for the next fifty years, the plan was revised. Instead of marketing to motorists, Chester sold his sundries to pedestrians, to the construction crews re-building Peoria, to the laborers walking to and from the nurseries that once lined the loamy banks of the Arkansas River. A worried man with a wife and two children to support, he knocked on the door of every house in every neighborhood within walking distance. Eventually, Peoria re-opened and traffic returned. Store No.1 survived.

Thus began a legendary narrative in the annals of entrepreneurialism. On their crates, fretting over how to keep the door open, Chester and Burt could not have imagined that fifty years later they’d be the acclaimed pioneers of an industry so new it didn’t even have a name yet. They also couldn’t have predicted they would forever change the look and feel of thousands of street corners across the country. Chester Cadieux and Burt Holmes are Tulsa’s most fabled entrepreneurs. QuikTrip is to Tulsa what Coors is to Colorado, what Budweiser is to St. Louis. In terms of achievement, they tower above the oil barons who came before them, the river boat gamblers of the 20’s and 30’s, whose risky bets and philanthropy built our downtown. Constructing a vertically integrated organization like QuikTrip is a far heftier entrepreneurial feat than drilling holes in the ground. Half a century may seem like a long time by today’s standards, but it should be remembered QuikTrip is not a dot.com company. It takes bricks and mortar to build a national chain of convenience stores. From this perspective, fifty years is fast.

Nighttime. Fall. 2010. Store No. 27.

With the closest other stores located at 47th and Yale and a couple in Brookside, No. 27 is pretty much the default QT for the midtown area. This is where I gas up, which is what I’m doing now, protected from the rain by the brightly-lit, generously sized canopy that covers the island. (Because of their additive package, QuikTrip has the best gasoline in town.) The rain reflects the reds of brake lamps. At night, looking through the large glass window that frames the activity going on inside, is almost cinematic, like watching a motion picture. Unlike other stores QT does not attach advertisements on their store front window. This is not for aesthetic reasons, it’s so the staff can surveil the goings on outside and keep their customers safe.

In the early years, Quick Trip sold everything, from hunting and fishing licenses to women’s wigs and replacement tubes for black and white television sets. A long three years and four stores later QT attained a zero net worth. Chester later recalled this event to be the high point of his career. In 1962, gross store sales broke the million dollar mark. By 1970 QuikTrip had dropped the “c” and was running 90 stores. By 2008 QT had over 10,000 employees, with stores in 211 cities and divisions in eight states. It was generating, per store, an average of 1.3 million dollars in annual state and local taxes, and pumping as a company 6.5 million gallons of gasoline daily.

***
So how does a business go from selling women’s wigs in 1958 to pumping 6.5 million gallons of gasoline a day fifty years later, from one store in 1958 to 561 stores in 2010? Chester would tell you they did it by doing everything wrong–the first time.

A less facetious answer might be that QuikTrip survived because of Chester Cadieux’s philosophy of life. To Chester business was warfare. A student of evolution, he’d embraced the teachings of Darwin. By carefully mentoring a corporate-wide respect for the adage that only the fittest survive, Cadieux secured the future of QuikTrip. This weltanschauung has powered QuikTrip, like a soft but steady drumbeat, through five decades of growth, and continues to do so. It fuels their “employees first” policy. It’s the fire behind QT’s restive drive to innovate, to discover what works best, and to take calculated risks. It’s the obsession behind their pain-staking attention to fact and detail.

Individuals are more likely to survive as a loyal members of a group, than not. Knowing this, Chester made a shrewd decision early on. He committed his company to its employees. He hired employees on the basis of their people skills, and put them first(1). He paid them generously and promoted from within. There is no overstating how revolutionary and risky this decision was. It was incomprehensible, at the time, to believe an enterprise could grow, let alone thrive, around the heretical notion that employee compensation was more important than profits and the bottom-line. He reviewed the reports of publicly-held convenience chains annually, and was acutely aware how costly this policy was. But each time he visited a competitor’s store, a Git-n-Go, a 7/11, he saw the unlit lack of pride in the eyes of their employees. He knew his decision would pay dividends in the long run.

QT considers its employees to be living extensions of its brand, and treats them accordingly. Hiring is centralized.
The turnover rate is 14%, not the triple-digit figure customary in the retail sector. QT’s package of benefits is designed to strengthen the bond between employee and brand. Full-time hires get regular medical insurance, together with a reimbursement plan, from day one. The time-off policy is liberal and flexible. Not only do employees get from 10 to 25 vacation days a year, depending on tenure, plus 10 days of sick pay, they can buy two extra weeks off, and request an additional 10 days, without pay, no questions asked. Rather than calling in sick on the morning of an absence, an employee can just request in advance a day off, giving management a heads-up opportunity to re-staff without a disruption of service.

The improbable success of this revolutionary philosophy slowly differentiated QT from the competition. It’s consistently listed as one of Fortune Magazine’s “100 Best Companies to Work For”. Its management and employment practices are studied around the world, from Europe to Asia. In the expansive, tranquil entrance hall of QT’s campus headquarters–with a large pond in the back where employees can break to fish in–hangs a large banner that announces the mission of QuikTrip: “To provide opportunity for employees to grow and succeed.”

***
By all accounts, Chester was and is liked by most everyone, customers, employees–even competitors. As in the early days of aviation when enemy pilots would wave when they encountered each other in the sky, relationships among competing CEOs in the new convenience industry were equally civil. There’s a revealing encounter Cadieux relates in his book between himself and Cliff Wheeler, then the president of Southland Corporation. The two men found themselves on the same plane after having attended the 2nd Annual National Association of Convenience Stores Convention. Maybe out of a sense of paternal affection–Chester was still in his twenties–Wheeler rose from his first class seat to join Cadieux in coach. “Fly over potential locations and look for corners where the pavement is dark from high traffic”, Wheeler counseled. Chester took this advice to heart. Over the years Cadieux turned the science of site analysis into an art form.

Evolution definitely favors those who are risk-takers and innovaters over couch potatoes. QuikTrip’s innovational history runs the gamut, from fly swatters and feather dusters (Chester’s main tools in the early days), to QT’s eventual taming of all the commercial possibilities of computer science. The risks QT has taken over the years range from the mundane, the signing of a contract to purchase their first outdoor sign, to the historic, like their decision to enter the retail gasoline market.

Three early cases in point: QuikTrip’s earliest technological innovation came while the convenience industry was still in its infancy. Computers did not exist in 1969. But there was the RS-100, a Radio Shack product Bill Gates would later claim to be his favorite computer. The RS-100 eventually enabled QT management to link-up its stores with the company’s mainframe IBM 4341 computer. The efficiencies generated by this early computer network sparked a determination at QT to exploit fully all the applications of computer technology. Soon QT began customizing its own software. How to keep up with increasing volume: they needed a faster register. But there were none to be found. So QT combined a register with a PC, and customized the screen. Then they interfaced the POS (point of sale) register with the gasoline pumps, greatly increasing the convenience of both QT store employees and their customers. Later, the CRIND (Card Reader in Dispenser) system would further reduce transaction time for its gasoline customers. QuikTrip is a textbook case of how to harness the power of computing.

Not all innovations are technological. QuikTrip was the first convenience store chain consistently to operate 24/7, the first to build its own kitchen to sell fresh deli sandwiches, the first to guarantee gas, the first to widely proprietize high demand offerings, like Koolies and an array of energy drinks with catchy names, and foremost of course, to offer their own branded Quit’n Time beer, launched by the fantastically popular Lamar ads.

Risk is inherent in every strategic decision a business makes, hiring risks, expansion risks, site location risks, product risks, and so on. QuikTrip manages risk superbly. 10 applicants are interviewed for every position so that only the most personable employees will be hired. Complex algorithms ensure only the best store sites are identified. No other corporation–convenience store chain or not–can equal QuikTrip in the science of site analysis. Unlike employee compensation issues, site selection is all about the bottom line. Though their stores add jobs and reduce crime, community impacts are exogenous to the equation. Even risks gone wrong are smartly managed. In 1970, QuikTrip signed an agreement to merge with Shopeze, a chain of 28 c-stores in Kansas. In doing its due diligence QT discovered Shopeze had used deceptive accounting practices to prepare its financial statements. When QuikTrip refused to close the merger Shopeze sued. Rather than risk costly litigation in Kansas, QT management sensibly decided to close the merger. Shopeze became the Wichita Division of QuikTrip. Former Shopeze employees were re-trained, and the stores were spiffed up. What seemed like a bad decision became a victory.

Evolution also promotes those who pay attention to detail. Convenience stores, generally, have a poor reputation for cleanliness. It is not unusual to see trash cans brimming over with litter. Floors are sticky, restrooms filthy, counters dirty, windows smudged, the service slow and apathetic. By contrast, QuikTrip stores are always immaculate, and the service frighteningly efficient. The stores are cleaned every 30 minutes using only QuiKTrip approved cleaning products. No other convenience store chain obsesses more over cleanliness than QuikTrip.

If you’re blindfolded and taken to a QT location, immediately upon opening your eyes you would instantly know you were in a QuikTrip. Uniformity of design and product placement, together with a keen awareness of how people move through the spaces of the store, is a key element of convenience, as it reduces the amount of time a transaction will take. The goal is to handle a customer every 20 seconds; if more than three people are in line, another register is opened, and if more than six people are queued up a third register is opened.

In the name of the highest traditions of intrepid journalism (and also because MM ordered me to do it), I wanted to get to the bottom of why products are placed where they are. I figured an interview with the architectural firm that designed the new mini-mart stores might be a good place to start, but for some reason it was abruptly cancelled, which only piqued my curiosity. What invisible logic lies behind these decisions? I also needed to know why the people coming out of the Store No. 27 were not the same people going in. Luckily, I had a chance to interview a casually dressed Burt Holmes, I knew I had to be a little careful; a worried friend warned me that Burt has no patience for frivolous talk, so after we introduced ourselves and sat down, I got right to the point.

“Burt, why does QuikTrip put stuff where it does? And why, at Store No. 27, are the people going in not the same ones coming out? Is that just No. 27, or does that go on in all the stores?”

Burt looking at me with what I interpreted to be a new respect began fidgeting around with papers on his desk. I’d hit a nerve. A good journalist asks the hard questions.

“Maybe that’s because most people are right-handed. I don’t know,” Burt said. I didn’t know this and found it a little disturbing, because I’m right-handed but always go to the left.

“That’s what I’ve always heard, too. But Burt what goes into figuring out where everything goes? It’s not just random, is it? I wasn’t able to interview the architect.”

“Let’s be clear about this.” He smiled, leaned back in his chair, “Architects do what they’re told. They have no control over product placement. Those decisions are made in-house.”

A good journalist, does not let an interviewee off the hook.

“Got it. Thanks.”

These mysteries were not going to be solved so easily. It was time to return to Store No. 27 and see for myself.

Fall. 2010. Store No. 27.

Back in front of Store No. 27. I had, of course, been to QuikTrips before, but only as an ignorant consumer. Now I’m wise to the sly tricks used by retailers to befool and condition their customers. I gripped the polished steel, sparkling glass door with both hands, felt emboldened to have observed how perfectly weighted it was, how comfortably rounded was its handle, not too little, not too big, slightly smaller than a chin-up bar. There’s no telling how much talent and money went into getting that just right. As I pushed it open, a soft and pleasant whooshing sound gently suctioned me into the store. Instead of darting off to the left, I stood there to relish the moment. I was in a rainbow. Hundreds of boldly designed products sang and danced around me. Equally bedazzled customers glided about the store, as if on invisible magic carpets. Bags crackled. Fountains gushed. Ice plunked. Registers rang like church bells. But it was the blended aromas of hot dogs, fresh donuts and toasting tortillas mingling in the air that must’ve done me in. I remember groping my way half way around the store, drifting clockwise, past 12 cappuccino steamers, 6 coffee urns with 12 flavor additives to choose from, 24 fountain dispensers with 100% filtered water and ice, but that’s it. When I came to the doctor was bent over my bed reassuring me that I was going to be fine. No it wasn’t my doctor. It was the bemused face of Troy K, the Store Manager who has been with QT since 1988, ringing me up. As I was leaving Store No. 27, I was pretty loaded down with purchases, pretty lost in thought trying to remember what I had bought. Just as I got to the door, a sprightly silver haired man, wielding a fly swatter and a feather duster, leaped out of nowhere to open the door for me.

QuikTrip is a national chain, with all the economic power of a national chain. Local politicians continue to be seduced by the big box promises and frequently use public funds to lure them, but neglect the greater losses that occur when the local business base is undermined. Like Wal-Mart, when QuikTrip opens a store, its commercial impact on surrounding mom-and-pop operations can be devastating. Something as innocuous as tweaking a new product line can threaten to put the small businesses around it at risk. Yet, because QuikTrip has managed its public relations image closely, like everything else, and because each store seems so small and unobtrusive and–well convenient–it’s impossible to think of QuikTrip as a national chain. But if you rounded up all the stores together, you could fill a shopping mall twice the size of Tulsa’s largest retail outlet, Woodland Hills Mall.

***
Sitting on the bumper of my car fumbling through my purchases. What had I been thinking? As the effects of sensory overload began to wear off, I looked up and across the street.

The Bouakadakis family founded Jim’s Coney Island in the early 1950’s. It is now owned and operated by the third generation of the founding family, two brothers, Mike and Billy Pagonis. Except for the color TV tuned to whatever channel a customer might want to watch, the calm and retro atmosphere of this restaurant has not changed since it opened. A faded blue-green Pompeian trompe l’oeil scene graces the wall. Billy works the grill. He always asks if you want jalapenos on your dog. Unlike Chester, who was unavailable for an interview, Billy, a young man with an easy Grecian manner, was eager to talk.

“I’ve lost a lot of my noon construction customers. I just can’t compete with ball park dogs. They can sell their dogs two for two. My dog is $1.40. I can’t compete with that.” He adds, “But heck, those guys are my friends. Burt comes in all the time. Orders two coneys and a salad.”

While QT hurts Jim’s Coney Island’s bottom line, no steamboat is about to sink this raft.

Two doors down from Billy is Amy, a Korean owner/operator of a Daylight Donut franchise, who’s not as established as Never On Sunday. No customers were in her store when I interviewed her. Wearing a crisp white baker’s cap and apron, she appeared weary and was quick to point out that her donuts were prepared fresh daily, starting early in the morning by her and her husband who doesn’t speak English. When I told her QT was also now offering fresh pastries, her mood darkened. She was unwilling to talk with me further. On the other side of 21st is Blazing Pepper’s, which is on its way out of business. Up Harvard to the north, Pizza Hut was closed for whatever reason, but if they were still open you can be sure QT’s tasty new, low priced pizza and lasagna offerings would exact a pound of flesh.

If you multiply the affect No. 27 is having on the mom-and-pop stores in its neighborhood by 558, you begin to get the ambivalent picture of QuikTrip’s success. QuikTrip has won the c-store wars in the Midwest and elsewhere, but its dominance of the convenience space has not been without costs. The invasion of national chains, like Lowe’s, Home Depot, and Wal-Mart, have ruined countless small businesses in Oklahoma and across the country. Study after study show independently owned retail stores generate greater benefits for the local economy than do national chains: independent merchants return more dollars to the local economy than do homogenous national chains(2).

Fall. 2010. Store No. 27.

I’ve solved the customer transfiguration mystery. It’s not black magic, nor is it an optical illusion. It’s pretty straightforward really. Going into the store we’re harried by our wants, we’re frowning and walking fast. Coming out of the store we are possessed of the symbols we desire. Our gait is slowed. We are satisfied and refreshed. QuikTrip has turned the phenomenal complexity of satisfying the individual cravings of hundreds of thousands of consumers every day into a simple set of convenient transactions. They’ve created a dazzlingly complex, reverse running Rube Goldberg machine of a business process and made it look as simple and happy as a Puckerberry Freezoni, made a complicated process look easy. QuikTrip knows what we want and how to give it to us.

I’ve come to a new understanding about QuikTrip, not the organization, but No. 27. It is not just a convenience store, or 4600 sq. ft. building. It’s also the comforting idea of knowing it is always near at hand, a port in a storm. When the rest of the world has run out of oil, QT will still be pumping gas.


1. see “Creating the Living Brand,” by Neeli Bendapudi and Venkat Bendapudi, Harvard Business Review, May, 2005.
2. For example, in 2002, CivEc completed a study for the Austin Independent Business Alliance. Read the report at www.ci.austin.tx.us.sbdp.