Wawa: Best Workplace
“Most family businesses don’t survive the third generation,” notes Maria Aspan in her compelling profile of convenience-store chain Wawa in the June 2018 Inc. Yet board chair Dick Wood, 80, “is comfortably watching his multi-generation company thrive.”
Thrive would be an understatement. Wawa — a household word in most of Pennsylvania and the five other states where it operates, though largely unknown elsewhere — has grown steadily to nearly 800 stores and about 30,000 employees. Privately held, it doesn’t release detailed financial data, but it claims $10 billion in annual revenue.
The company has a starring role in Inc.’s “Best Workplaces” feature this year, partly because it is 41% owned by its employees through an ESOP. The value of a share of stock has increased from $900 in 2003 to almost $10,000 today.
That growth has made millionaires out of numerous long-term employees. Cheryl Farley started part time at Wawa in 1982. “In April, she retired from the IT department at age 58—and promptly embarked on a busy schedule of birding trips around North America; cruising Alaska and the Caribbean; and visits to fellow Wawa retirees, some of whom built beach houses with ESOP earnings.”
The founding Woods, like most company-owning families, had their share of disagreements about the direction and structure of the 54-year-old enterprise. “Wawa ownership was mostly split between two separate family trusts, and one trustee started trying to force a sale or an IPO,” writes Aspan. “In 1998, the company sold a stake to an investment group controlled by the McNeil family—the Tylenol heirs—who, within five years, tried to force Wawa to go public.”
But Dick Wood, then CEO, had established an ESOP in 1992. Employees transferred funds from their 401(k) accounts to the ESOP, and Wawa bought out the McNeil’s interest. Wawa stayed privately owned and is likely to remain so. Current CEO Chris Gheysens says he’s “publicly, on the record,” not interested in going public.
The company has also faced challenges relating to its ESOP. A recent lawsuit brought by a number of employees alleged that the company had cashed them out of the ESOP at below market value. Wawa settled the suit for $25 million and declined to comment to Inc. The fact that the company is an Inc. Best Workplace suggests that the ESOP has worked well for most.
Wawa operates in a fiercely competitive and fast-evolving marketplace. It has been growing rapidly. It has opened up new geographical areas, including Florida. It is trying to make its fare more appealing to upscale urban consumers—more kale—while it maintains its traditional suburban base of gasoline and sandwiches.
Tough duty, no doubt. But it may have a built-in advantage that other chains lack: a committed workforce with an ownership stake.