"Everything Changes"

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"Everything Changes"

By Linda Lisanti

Chester Cadieux was bitten by the entrepreneurial bug at an early age, learning from his father that if you want to make any "real" money, you have to be in business for yourself. So, at the age of 26, when a former school classmate approached him with the idea of replicating the 7-Eleven model in Tulsa, Okla., he jumped at the opportunity.

After all, the job offer met the three rules the budding businessman had set for himself. It was simple, enabling him to be as smart or smarter than the people already in that business. It required low investment. And lastly, it had little established competition. "This was like somebody handing you the golden goose," he recalled.

Fifty years later, that golden goose -- now known as QuikTrip Corp. -- has laid a lot of golden eggs. With 500 corporate-run stores across nine states and 10,500 employees, the Tulsa-based convenience retailer boasts more than $7 billion in sales annually and holds the No. 40 spot on Forbes List of America's Largest Privately Held Companies.

"Not many companies that are startups last 50 years. One thing this means is that I'm really old," Cadieux joked during an exclusive interview with Convenience Store News in which he reflected on QuikTrip's 50th anniversary, celebrated on Sept. 25.

"I also think it means we're very good at changing. We have changed over and over and over again," he continued. "We listen. More than anything else, it's about listening. We spend a whole lot of time listening to our store-level employees, and people all over the company who have come from the store level, about their ideas for change."

The irony, though, is that QuikTrip's ability to continuously evolve is only possible because of one guiding principle that has not changed since the company's founding in 1958: hire good people and promote from within. This philosophy was put in place by Chester on day one of the venture, and is now being carried on by his son and successor, current company president and CEO Chester "Chet" Cadieux III.

"We have always been consistent in having great people to work at our stores, as opposed to the lowest common denominator, and we always will be. We don't hire people for that store position unless we think they're truly capable of management. We want to see that potential right from the start," Chet explained. "Our ability to keep changing is a function of the people who work here. If you're not changing, they're likely to run you over."

Early Struggles
Surviving 50 years in business has not been without its challenges, of course. Especially in those early years, Chester had his doubts. "I don't know that I ever said we're not going to make it, but there were times I had that pit in my stomach," he admitted.

Ask him about the first-ever QuikTrip store, and he'll bluntly tell you, "it wasn't good."

Neither he nor his business partner Burt Holmes had any retail experience. Used fixtures purchased from a neighborhood grocer made their store look like a 25-year-old grocery store -- not that anyone really knew back then what a convenience store was supposed to look like. In terms of convenience products, "you could get a sandwich at our store if you bought a loaf of bread, some bologna and mayonnaise," he quipped.

At the time, the convenience store business consisted of fill-in supermarket shopping, since supermarkets were only open from 8 a.m. to either 6 p.m. or 8 p.m., and those weren't convenient hours for a lot of people. Like 7-Eleven, QuikTrip was open 7 a.m. to 11 p.m., with one employee working the morning shift and Chester taking over every night.

"That first store struggled," Chester said. "What we didn't understand was that it takes about three years for a convenience store to break even -- even today -- because you have to break peoples' established shopping habits."

Unwilling to accept defeat, the pair opened a second store on an out-parcel of a friend's business. This attempt "wasn't as goofy as the first," but it still wasn't the right setup, according to Chester, who noted they again used supermarket fixtures, but this time, they were new fixtures thanks to financing from their grocery wholesaler.

The new fixtures, however, did nothing to improve results. "The second store's performance was worse than the first. We had built it based on the density of apartments behind it, and what we didn't figure out until later was that they were half empty," he said.

Nine months into the venture, and still financed by their wholesaler, Cadieux and Holmes opened yet another store in hopes the third time would be the charm. This time, instead of emulating a small grocery store, the partners copied Git-n-Go, a c-store chain then owned by a wholesale grocer. This QuikTrip location had an "intelligent layout," with the right space allocation, proper shelving and a big walk-in cooler. The store broke even, Chester said, but he and Holmes still had a negative net worth of $26,000.

"We had the thought process that if you're going to go bankrupt, you might as well go big," he said. So, when the pair received a call from the local dairy owner asking if they would be interested in buying a store originally built for Git-n-Go, Cadieux and Holmes took one look at the number of homes in that area and seized the opportunity.

The first day in operation, the store made money, and it kept making money. Still, it wasn't until several years later with nine stores open -- about two-thirds of which were making money -- that Chester finally felt he was getting it right.

"That was the happiest day of my business career," he said, of when his net worth reached zero.

As the years passed, more stores opened. The chain eventually expanded to other markets, first Kansas City, Mo., then Wichita, Kan. And the rest, as they say, is history.

Striving To Be the Best
The QuikTrip of today is not as risky of an enterprise as it was back then. "We have money," Chet joked when asked how the present company differs from the past. But he quickly added there's some great competition out there, and it's a tough environment to be playing in. "Every year, everybody we compete with gets better, and so do we," he said. "If we don't, someone is going to come in and knock us all off our blocks."

The retailer strives every day to achieve its mission statement "to be the best gasoline, convenience and food retailer in the eyes of our customers, our competitors and our employees." Some days it comes closer than others, according to Chet. "We don't necessarily live up to it every day. It's like a carrot at the end of a long stick that we're always running after. It's a big mission statement, and that keeps us motivated."

Chester added, "On any given day, it's a matter of doing what we're doing right and looking at what we're not doing right. It's not like 'wow' everyday; it's grinding along."

It's clear both father and son share a certain modesty. One would be hard pressed to find many in the convenience industry who wouldn't put QuikTrip among the best in class. But as they always do, the Cadieuxs quickly turn the attention to their employees.

They say hiring the right people and letting them take over when they're ready is far and away the key to their success. QuikTrip has 208 employees that have been with the company for more than 20 years; 29 employees at 30-plus years, and two at more than 40 years. All but one of the chain's 11 vice presidents started at entry level.

"Our industry has a lot of turnover, short- and long-term. We're always evaluating the help we have at any given level, so we have people ready to move up," said Chester, noting the retailer only opens stores at a fast enough rate for people to be promoted. "I think we're better at this than ever because we have better systems in place and more experience."

Six consecutive years on Fortune's annual Best Places to Work list is "a badge of honor that every QuikTrip employee wears," said Chet, who started working in the stores when he was just 16. "Great people are naturally drawn to companies that have talent."

Through economic, cultural and competitive changes, both Chester and Chet agree QuikTrip's people are the reason the company is still standing today.

Looking ahead to the next 50 years, the Cadiuexs said it's impossible to predict what challenges the future holds. And as Chet remarked, "The scariest challenge is always the one you don't see coming." The biggest obstacle the convenience industry faces now is the uncertainty around its top two categories, gasoline and cigarettes. "Fifty years from now, who knows if we'll be using gas or smoking cigarettes anymore?" Chet asked.

The one thing that is a certainty, Chester noted, is that everything changes. Fortunately for QuikTrip, the company has never shied away from change or been afraid to make mistakes.

"We make mistakes all the time. In fact, I think we make more mistakes now than we used to because we can afford it," Chet explained. "Most people in the company can't make a mistake that we can't pay for, and if people are so afraid to make a mistake, then they can't do the best job possible. I hope, though, they don't make that same mistake twice."

Most importantly, Chester said they learn how to do things better through failures.

Currently, QuikTrip is making huge investments in fresh food, an area it lacked in the past. Through QT Kitchens, a commissary initiative launched in 2005, the company is shipping fresh sandwiches, wraps, baked goods and other fresh items to stores every day in six of its eight major markets. And it's building the infrastructure to do the same in its other two markets.

"My hope is that 20 years from now, QuikTrip will be as good at selling food as we are at selling gasoline," Chet told CSNews. "We're spending a lot of money, and I'm confident that with as much effort as we're putting in, it will happen. It took us 30 years to get this good at gasoline. If we can be that good selling food in 20 years, it will be a heroic achievement."

Chet realizes that what QuikTrip is doing now won't be good enough to bring the chain into the next 50 years. Nonetheless, with its historic focus on hiring good people and promoting from within, and its willingness to embrace change, both father and son believe QuikTrip is well positioned to meet the future's challenges head on.

"Look at all the things that changed over the last 50 years, and it seems the pace of change just keeps accelerating. What's true at any company is that people look back at what they were doing a decade or two decades ago and say, 'Can you believe we thought we were smart?'" Chet said. "One thing I know is we're making a lot of mistakes today, and the other thing I know is the people who work here will figure that out and will fix them."