Wisconsin Public Television University Place Entrepreneurship in Society  John McHugh Developing Products That Serve Multiple Interests  September 21, 2001 UP623   cc >> Jeanan Yasiri: This is a course that is offered through the University of Wisconsin School of Human Ecology. I'm Jeanan Yasiri. As we begin our session today, I would like to thank our partners who provide support for this course: the UW Office of Corporate Relations, the UW College of Engineering for their technical support, and financial support, which is provided by the Ewing Marion Kauffman Foundation, which is committed to advancing entrepreneurship in higher education. Additionally, I'd also like to thank our media partners: Wisconsin Public Television and their University Place crew for taping today's lecture. I'm very pleased to introduce our special guest today, John McHugh, president of Corporate Communications with Kwik Trip, a Wisconsin-based corporation based out of La Crosse, Wisconsin. John manages all corporate communications, leadership development, and training for Kwik Trip. And prior to joining Kwik Trip in 2004, he was an instructor and principal at Aquinas High School in La Crosse. He holds degrees from the University of St. Thomas in St. Paul, Minnesota, and the Gregorian University in Rome, Italy. In his free time, of which I know he has very little, but he is very beneficent with his time, he serves as vice president of the Friends of Wisconsin Public Television board. He is president of the board of the Franciscan Spirituality Center and sits on the boards of the Scenic Bluffs chapter of the American Red Cross, the Seven Rivers Alliance for Economic Development, and the La Crosse Promise. 

As we explore entrepreneurial issues in business through the course of this course, I think it's important that we also reflect on how mature businesses, those that have been around for a while, embrace entrepreneurship. And that's one of the topics that I wanted John to come and share with us today. Please join me in welcoming John McHugh. [APPLAUSE] >> John McHugh: Thank you. A couple months ago we had one of our store leaders in Fairmont, Minnesota, Deanna, she was out changing the trash out by the pumps and this elderly gentleman pulled his car up. He got out of his car and he recognized that she was a coworker at Kwik Trip because of her uniform and said, "Hey, can you teach me how to pump gas?" She was real patient with the man and asked him if he was going to pay inside or pay at the pump. And he said I didn't even know I could pay out here, I'm going to pay inside like most people do. So she showed him what button to push on the pump and showed him how to dispense gas in his automobile, and when they were all finished she was just about to leave and he said hey, hang on, I got one more question. How do I know if I need oil in my engine? And she says actually that's a pretty simple process, and she reached over to the driver side door and showed him where the little lever was to pop open his hood. He popped open the hood and then she got in front of the automobile with him and showed him how to put the rod up so that the hood didn't come back on his head and give him a good conk. 

Pulled up the dip stick and showed him how to get a little bit of paper towel from the dispenser and wiped it off and put it back in and said there's a little mark here. We're going to make sure that the black stuff, the oil, comes up to that mark. They checked his oil, it was perfectly fine. And he said hang on, I got a third question. How do I know if I need air in my tires? And she says, well, that's actually a pretty simple process. Why don't you pull over there to the side of our lot. You'll see a little air compressor. It's marked air. You pull over there and while you do that I'm going to back in the store. We have a little air pressure tire gauge. 

I'm going to show you how to use that. So he pulled over. She went into the store and got the tire gauge. Both of them knelt down in the pavement next to the car and spotted the area on the tires where it had the pounds per square inch, told him what that meant, and then showed him how to use the pressure gauge. The little white thing has got to come out to the same number that matches on your tires. They checked all four tires, they were perfectly fine. She got done, and he said, I've got to be honest with you. I know how to pump my own gas. I've always pumped my own gas. Secondly, I know how to check my own oil. 

As a matter of fact, I change my own oil. I've never had to take it to a mechanic to change the oil. Thirdly, I've never had a tire go down because of lack of air pressure. I know what air pressure is in a tire and how to check that. But he said I came here to Kwik Trip to find out if what they say about you is true. That you'll take care of a guest, a customer, if they need it because I found out this week that I have terminal cancer. I'm not going to be here in three months, and my wife of 54 years, she's never had to pump her own gas. She's never had to check her oil. She doesn't have a clue about how to check the air pressure in her tires. And I want to make sure that after I'm gone in three months there will be someone to take care of her when I'm gone. 

And that story of Deanna is one of literally hundreds that we get every year that at Kwik Trip we do the right thing in terms of taking care of people. And as I talk about entrepreneurship this afternoon, you'll find out that a lot of what we come up with really is the result of good people working for Kwik Trip. Our people coming up with great ideas. It's not rocket science, it's our people just coming up with great ideas. A little bit about our company. We started back in 1965 in Eau Claire, Wisconsin. We've had continuous growth since then. We're now well over 400 stores. Now, I'm going to tell you a little bit about our business model because it changed back in 2002. Prior to that, Kwik Trip would be what you would consider a normal ordinary convenience store. 

And in the traditional convenience store world, your sources of income are twofold: cigs and gas. Tobacco products and gasoline. Well, we already knew back in 2002 that if you wanted to be a convenience store business you can't hang your hat on those two commodities for a couple different reasons. First of all, we knew what was happening with tobacco sales, not only in our state but throughout the country, they're declining substantially. Secondly, you don't make a lot of money off of gasoline, contrary to what people might think. The price is dictated to us by our suppliers. We use 31 different areas here in Minnesota, Wisconsin, and Iowa. And if we're lucky we literally make pennies on the gallon. Matter of fact, Monday of this week we didn't even make that. So you can't bank a convenience store industry on those two sources of income. 

So we knew we had to develop an additional stream of income. We've decided to go into the food business. Now here's the model. We don't intend that we're going to replace the grocery store for you. But we know this: the average American family does their major grocery shopping every two weeks. But in between those visits they're going to run out of their basic commodities: eggs, milk, butter, bread, bananas. Those things that you can't keep at home for two weeks. And so in between time, you come to Kwik Trip for the basic commodities. Now the other interesting thing about our business model is this: most convenience stores go off of something that we nicknamed in the industry insult pricing. Which means you need it conveniently and you're going to pay through the nose to get it. 

We're just the opposite. And you're going to find out how we can do this. All of our basic commodities are not only not insult pricing, they're anywhere between 10% to 16% cheaper than what you'll even find at Wal-Mart, let alone your big box retailers of other names. And there's a reason why we can offer those basic commodities so cheaply. So it's not insult pricing. As a matter of fact, your bread, your eggs, your butter, your milk, your bananas, you're much better getting it at Kwik Trip than anywhere else. It's much cheaper for you. A little bit about who we are as a company. We go on a lot of different names. We're Kwik Trip here in Wisconsin and in Minnesota. 

In Iowa we're called Kwik Star. Anybody from Iowa in the room? Oh, sorry, only one of you. We have to go by Kwik Star in Iowa because there's a Quik Trip convenience store with a Q and on the radio you can't distinguish between Quik Trip and a Q and Kwik Trip with a K. So we have to go by Kwik Star in Iowa but it's all of our company. Tobacco Plus stores and Hearty Platter restaurants. We're privately owned. We're not publicly traded on the stock market. We're privately owned by a family that lives in La Crosse. Don and LaVonne Zietlow and their family. Now an interesting story about Don. 

He's our owner and CEO. Back in 1958 he was a truck driver for a grocery firm in La Crosse, Wisconsin. He wasn't making much money. Was hardly making enough to make ends meet. And one night after a good 16-hour shift he was off loading meats into the freezer and kind of mumbling to himself like here I'm doing all the work and all the people who are on corporate alley are doing nothing and I'm actually making all the money for this company and the work I'm doing. And he made a commitment to himself in 1958 that if he was ever in a position where he could share the profits with the people that actually do the work, that's what he would do. Well, the neat thing is that it came to fruition that Don became owner and CEO of our company, and he carried through in that promise. So what it means for us is that 40% of all the pretax profits, pretax, 40% of all of our profits come back to all the coworkers. And that's all of us. Now, he'd say that's okay but then that means Zietlow is still getting 60%. 

That ain't all that great. Well, actually here's how it shakes out. 40% comes back to all of us. 29% of our profits go to Uncle Sam. We have to pay corporate tax just like all of us pay tax. Another 29% is reinvested in the company to build new stores, put on a new dairy plant, new bakery addition. Any math geniuses in the room? How much do I have left? 2%, nice job. 2% of our profits is what goes back to the Zietlow family. And that's the entire Zietlow family. That's Don and LaVonne, that's Vicky, Steve and Scott, and that's the grandchildren, now the great grandchildren. 

So if you do the math and you know what we make as profits, Don Zietlow, our owner and CEO, makes less money now than he worked for Gateway Foods for another person in La Crosse. Makes less money. As a matter of fact, in the last 19 years as our CEO and owner, he's never taken a raise. So one day I said Don, why do you go through the hassle of owning a company making less money than when you worked for somebody else. He said John, my goal is to die broke. That's my goal. He said I don't make the doughnuts that you see at Kwik Trip. I don't deliver the doughnuts that you see at Kwik Trip. I don't sell the doughnuts that you see at Kwik Trip. Why should I make the money? Let's give it to the people that actually make the doughnut, that deliver the doughnut and sell the doughnut. 

When we talk about the Wisconsin Idea and giving back to communities, our owner and CEO certainly has lived that. That's Don Zietlow. A little bit about our business model. Our business model is pretty simple. Three things: people, food, and something we call vertical integration. What does it all mean for us? I'm going to show you a little bit later why people are so terribly important to us. And when I talk about that 40% pretax profit sharing, you've heard companies say that our people are our most important asset. You've heard companies say that. I'm proud to say that I think we actually live by that. So what this practically means is for all of our coworkers last year, they took their base salary and then 9% of that at Christmastime was given in terms of a cash bonus. 

So take whatever you earned last year, multiply that by 9%, that's your cash bonus, your check. And then 5% of your salary was put into your 401K plan. Even if you're a part-timer, we give you that 5% 401K. That's pretty rare for most companies. What that meant is if you had just started out at Kwik Trip working in our store, starting wage, starting position, and you had worked there for a good part of the year, your cash bonus at Christmas time was $1,850. That's not too bad for just working in the convenient store. And then the other piece to it is then we, after five years if you've been with us, we think if you've been with us for five years, you're pretty valuable to our company. You've made a commitment to us. And so we should make a commitment to you. So after your 5th year of service and ever year going forward you get a share of real estate. 

The actual stores at Kwik Trip aren't owned by the Zietlow family, the stores are owned by our coworkers. And the neat thing is if you started at Kwik Trip back in 1989 when we started this benefit, your real estate account balance is now worth $79,000. Now, that's in addition to your 401K and your profit sharing and everything else. You can either keep that when you retire or you can will it to your children. So people are important to us and we really kind of put our money where our mouth is because we think in terms of entrepreneurship if you don't treat your people well, they're not going to come up with great ideas. Food, I'll talk a little bit more about that. And then vertical integration. That means that we control a lot of what's in our stores. There's no middle man. We make it, we ship it, and we sell it. 

Almost 80% of the products that you'll see in a Kwik Trip store are actually made by us in La Crosse, Wisconsin. Our mission statement: serve our customers and community more effectively than anyone else by treating our customers, coworkers, and suppliers as we personally would like to be treated, make a difference in somebody's life. Now, you've been through probably enough business classes and you know that most businesses have a mission statement. And it's usually a plaque on the wall and if you ask any of the coworkers what's your mission statement, they don't have a clue. I'm proud to say that almost 99% of our coworkers know our mission statement. By heart. And here's the reason why. We start every single meeting with our mission statement. Not only do we start our meetings with it but we interview for a fit with our mission statement. If you come to work for Kwik Trip, the first question you're asked on the interview, tell me about the last random act of kindness you did for somebody. 

Second question, tell me how in the last month you made a difference in somebody's life. Third question, how have you treated others as you would like to be treated. Those are the first three questions. And if you can't answer those three questions, we don't think you're going to fit with our culture. Because for us, our most important piece at Kwik Trip isn't selling gasoline and hot dogs. Our most important piece for all of our coworkers, we know this, is that at the end of the day your deepest satisfaction as a human person, your deepest satisfaction, doesn't come from your paycheck. Your deepest satisfaction as a human being comes from the fact that at the end of the day if you've been at work you know that something you did today made a difference in our world. That somebody's life was different because of something you did. And it's not profound stuff but it's just somebody walked in and you could tell they were in a bad mood and because of how you talked to them or smiled at them, you kind of changed their day. That's what we emphasize. 

Now, the best business book that I personally have ever read by Jim Collins, a book called "Built to Last." And in that business book he found out that the companies that are most successful in this country, by most successful I mean 16 times more profitable than the stock market average. Now I don't about you but if I can find out which companies were 16 times more profitable than the S&P averages, I certainly would want to invest in those. And they found out that those companies that were that wildly successful, they had one common denominator. 16 times more profitable than the stock market average because in those companies they had a mission statement that was known and lived by all the coworkers so that a good mission statement isn't fluff but it's important in terms of good business and because it helps your coworkers plug into what's deepest and most important in life. And it isn't always the paycheck. In terms of distribution, this it our large distribution center in La Crosse. We're based in La Crosse. We have a lot of different what's called skus. Those are the technical term for the different products that you have in our stores. We also have our own bakery facility in La Crosse, our own kitchen which makes our own pizza, our own sandwiches, and all of our food is USDA inspected. 

We'll talk a little bit more about that in a bit. We have our dairy. As a matter of fact, because we have our own dairy the milk that was in the belly of the cow this morning about 3:00 or 4:00 AM it ends up at our dairy in La Crosse around 5:00 or 6:00. It gets processed right away today this morning and it takes only about 45 minutes to process it from start to finish, and so that when you go to a Kwik Trip store tonight when we start our evening deliveries at 5:00, the milk that you pick up after 5:00 on a Kwik Trip shelf could very well have been in the belly of the cow this morning at 4:00 AM. Now that's pretty fresh. You can't get much fresher than that unless you live on the farm. Well, it's important for us because what it means is we can offer you a freshness that even the grocery stores can't do. The grocery store is going to buy it from somebody else, that other middle man, who got it from somebody else who got it from somewhere else. We cut out that middle man that's why we can offer it so freshly for you. We also have our ice cream plant. 

We make our own ice cream. It's very good ice cream and here's how you know it's really good ice cream: it has a higher fat content than even Haagen-Dazs. And for ice cream, what makes it so good is the butter fat content. So those of you that are watching your weight this is bad news. For those of you who could care less, you're going to burn it off, you want to make sure that you get Nature's Touch Kwik Trip ice cream because it's got a high fat content. We also manufacturer our own ice, which by the way is one of our most profitable items because it doesn't take much to make ice: water and a little bit of cold air. We have our own convenience transportation fleet. We deliver all of our own products. Now this is important. It's part of what makes us so successful. 

In retail there's a term called shrink and shrink means inventory loss. How much has gone out of the doors of your store that didn't get paid for. And shrink can be a result of theft from customers. It can be a result of theft from people that work for you. It can be a result of the person that was distributing your product as an outside vendor only gave you half of what you were supposed to get but still charged you for all of it. In retail, the average shrink percentage is 2%. So 2% of all the stuff in your store just goes bye-bye. It disappears and you never see any income for it. Our shrink average at Kwik Trip is 0.2%. That's a huge difference. 

Why do we have such little shrink? Well, a couple things. Because we distribute our own product, that driver that's distributing that product is part of our 40% profit sharing. So if he smashes an entire tray of doughnuts, that's part of his profit sharing, that's 40-cents out of every dollars of those doughnuts is going out the window. He doesn't want to see that happen. So because we do our own distribution it means that our drivers have a vested interest to make sure that the product gets there on time, make sure that the product gets there intact, and make sure that all the product gets there, not just some of the product. Food safety. You know, you've heard it in the news. Food safety is a pretty important piece. Because we manufacture 80% of the food that's in our store, we actually have our own food safety lab on site in La Crosse. It monitors all of our facilities. 

Now, to make sure that we're rather objective in this whole process, we've combined with Marshfield clinic in Marshfield, Wisconsin. They help staff the food safety lab so that they give us an objective third party set of eyes to make sure that we're really doing what we're suppose to be doing. Vertical integration. Unlike any other convenient store, we're vertically integrated. That means that we don't buy the doughnuts from anybody else. We don't buy the bread from anybody else. We don't buy the milk from anybody else. We do it all ourselves. We make it, we ship it, we sell it. What this also means is that because we're a large company of 10,000 coworkers, well over 400 stores, anything that a major corporation needs we do in-house. 

So we have our own Kwik Trip credit card so we have our own credit card department. We have our own training department. Our own human resources department. Our own marketing department. Our own store auditing department. If there's anything that a major company needs, we do it ourselves. Now some companies will outsource. Actually, we'll outsource all the IT stuff to another IT company. Or we'll outsource the building of our stores to another company. We do it all internally because we know if we cut out the middle man, that's more profits for our coworkers. 

Our coworkers. I talked about the profit sharing, 40% of the pretax profits. Bonuses. Convenient store investments that's the process by which we get all the real estate. Now does this make a difference for us at Kwik Trip? It certainly does. In the retail industry your average turn over is well over 100%. That means you're going to turn over a lot of people. Some businesses have what's called the churn and burn philosophy. They just want to get bodies in the door. They're going to work you to the death. 

You'll quit. They'll just bring in a new body. Well the problem is that if you do churn and burn philosophy you just keep going through our coworkers so quickly training is expensive and if you really have a good culture and you're looking for good people, it gets harder to find good people. And so you make sure if you get good people, you keep good people. Turn over in our industry is well over 100%. I'm proud to say that ours is less than 24%. In La Crosse at our support center where all those office jobs are, our turn over rate is less than 1%. Once people get to Kwik Trip, they don't leave. And that's important for us because when we get good people we want to keep good people. Even in the current economy. 

We grow by about 700 coworkers every year. We have no history of layoffs in our company since 1965 when we started. No layoffs. Continuous growth. Last year we had well over 100,000 applications for 700 positions because we're known as a good place to work and when you come to work for us we're going to treat you pretty well. Families helping families, it's an internal organization. If in he of you might be familiar with Gallup, the polling agency. They have a neat study called the Q12, the 12 questions. The 12 questions that make a great company and that make a great company a great place to work. And one of the Q12, one of the 12 questions is this: do I have someone at work that cares about me as a person? Do I have someone at work that cares about me as a person? And if you can answer yes to that question you're much more inclined to say that this is a good place to work. 

Well, for us to make sure that this happens we have this internal organization called families helping families where all of us, and it's optional, you don't have to do it, you can have some of your paycheck deducted and it goes into a big pot, and then if you're a coworker and you have a disaster, financial disaster, maybe you're hit with a natural disaster, something's just not going well in your life and you need some additional financial assistance, we help you out. Maybe it's a case where, we had one of our coworkers this last Mayr in La Crosse, her apartment was leveled by a tornado so we paid for a new apartment for her and clothes and everything that she needed. We've had coworkers who had a spouse that maybe had a serious illness and the spouse couldn't work and didn't have Aflac and needed some additional assistance. So we were the internal Aflac for them and gave them the money they needed to buy groceries, paid for gas to get to the hospital and so on. So last year we helped over 150 coworkers with well over $150,000 in donations. It's our internal way of taking care of each other because if your fellow coworkers take care of you, two things will happen: you'll say it's a great place to work and if you feel like you're taken care of at work you're also more creative at work. You come at your business from an entrepreneurial perspective meaning that you'll come up with better ideas for us to do things, how to do things more efficiently. As a matter of fact, in the State of Wisconsin we got the award for a company that does things efficiently and well by the Milwaukee Journal Sentinel. We also care for a lot of other groups, and I'm only going to mention two of them. We literally give out hundreds of thousands of dollars every year to charitable causes. 

Again, that Wisconsin Idea that we give back to the community, but we don't publicize it. You won't ever see a commercial that says proud sponsor of and some cause. Because we think we should give back to the community simply because it's the right thing to do. Not because we get good PR out of the deal or a good name recognition. But for us two of our signature events that we talk about internally is something called the World War II Honor Flight where we take World War II veterans out to Washington, DC, for a day to see the monument dedicated to their honor. As a matter of fact, I was just on our eighth flight this last Saturday. We also do a lot with Special Olympics. That's our other signature cause. We raise a lot of money for Special Olympics. And not only do we raise a lot of money but a lot of us volunteer for Special Olympics as well. 

We were up in Stevens Point this last year for the cause. Because we're a pretty neat company, neat company to work for, we've also had external sources validate that for us. This last year we're rated as the best place to work in the state of Wisconsin by the Milwaukee Journal Sentinel. We're the third best company to work for in the state of Minnesota by the Minneapolis Star Tribune. In Minneapolis/St. Paul, if you know that area, it's a very competitive industry, we're going against companies that have offices out there like Google, Microsoft, a lot of excellent companies. So it says that really what we believe we are I think we really are. We do a lot for the environment. So much so that, you're the first to know this publicly, but in a couple weeks we're going to be recognized in the state of Wisconsin as the most green company in the state of Wisconsin. You might think convenience store? Green? What's up with that? How does that happen? All the new stores that we build are LEED certified. It's a certification that says that how you built this store was with reusable product, renewable product, and it dictates what we use for lighting, what type of lighting we use, how much water we use and recycle. 

As a matter of fact, if you come through a Kwik Trip car wash and if you pay for the more expensive wash and you get your undercarriage washed, you know when you drive over you get the underside all flushed off from the mud and snow, all the water that gets sprayed up on the bottom side of your car, that's recycled water, so much so that every year we recycle enough to fill up 318,000 swimming pools. The motors that we use in our stores, the type of renewable energy, some of our stores now have solar panels on the top. We also buy wind energy from cooperatives. And wherever we typical recycle, reuse, repurpose and so on. We also believe in local suppliers. Whenever possible, most of the food products that we can offer we try to buy locally. This is just a small listing of that. And here's why we think it's important. Food that's grown locally is actually healthier for you. It's better for you. 

We know that. Secondly, it reduces our green footprint. If I only have to go to Stevens Point to get the potato, versus driving all the way out to Idaho to get the potato, think of how much I've saved in terms of fuel costs. That's important for us. Now, a lot of times they think convenience store, not good, not healthy food. As a matter of fact, some of you might be familiar with an author by the name of Michael Pollan who's written a lot about food, and he has this wonderful line in one of his books: advice, he says, don't ever buy your food for your body where you buy the fuel for your car. Bad news. Don't ever buy convenience store food. It's awful for you. Now, we at Kwik Trip, we actually partner with Gundersen Lutheran Hospital in La Crosse for something called the 500 Club where we have a listing of well over 30 some items in our store that are under 500 calories and very good and healthy for you. 

Part of the reason is we sell a lot of fruits, a lot of fresh vegetables. As a matter of fact, we go through 17 semi loads of bananas a week. Bananas is one of our signature items. They're always 38 cents a pound. And here's the reason why we can offer them so cheaply. We have our own banana ripening facility even in La Crosse where we ripen all the bananas. You may not know this but if you were to take a banana off the tree when it's green and you just leave it sit on your counter and hope that it ripens, it won't. It will turn kind of this greenish/grayish color. You actually need an additional ethylene gas pumped in there. And that's the natural gas that a banana releases as it ripens. 

And if you add that additional little bit more of ethylene, that's how it gets it's yellow flavor or yellow color on the outside. So that's pretty important for us in terms of local. One last story about how we think what we do at Kwik Trip is important from a people perspective. Our perspective of how we're successful in a business model isn't simply that we're vertically integrated, that we cut out the middle man, it really is about how we treat our people. We think a good company will be successful regardless of what you sell, what product you develop, what product you deliver, if you treat your people well. That's really our lynchpin for us. And for us it's helping our people understand that when they do every day makes a difference. This is my all time favorite Kwik Trip story. Do I still have time? When I first moved to La Crosse back in 1993 I met this wonderful old couple by the name of Genevieve and Ralph. Anybody from La Crosse here? Oh, good. 

Do you know State Street in La Crosse? That's where they lived. And I'd go visit Gen and Ralph once a month. And I'm going to be honest with you and tell you why I'd do this, and this is going to sound bad. Every time I'd show up, Gen would make me this wonderful home cooked breakfast. You know the kind where the eggs are fried in the bacon grease. It's only a good breakfast if it's clogging your arteries. So she'd make me eggs over easy, bacon, toast, sweet breads, all kinds of stuff. So I'd stop there between 10:00 and 11:00 in the morning. It was such a great breakfast, I didn't eat the rest of day. So like most of us, if you got fed that well, you'd probably stop by once a month as well. 

This went on for a couple years. Finally one day I stopped in and Gen served me the breakfast, she served me the toast but there was no butter on jam on the toast. And for Gen who was a tremendous cook I knew that wasn't normal. I could tell that something was up. But you know if you're a guest at somebody's house you're not going to say, hey, by the way, you forgot the butter and the jam, it's a little dry here. I didn't say anything. The next month I stopped by and Gen served me the eggs, I always liked my eggs over easy. The eggs were over and they were very easy. It's not even white yet, it's still clear. And I had to work to slime those babies down. 

But again you're not going to say to somebody, hey, by the way, can you put those back in the frying pan a little bit, not done yet. I didn't say anything. The third month I stopped by, and Gen knew I was coming, it was never an unannounced visit, and I walked into the kitchen, nothing was ready and Gen was walking around in a tizzy and she said I don't have anything ready. I don't remember how to turn on the stove. Well, it was the beginning stages of Alzheimer's. Well, we got the stove on that morning and breakfast made, and afterward Ralph would always walk me out to the car. And Ralph said you know, John, you can stop by once a month for a visit but if it's okay with you I'm going to stop having Gen make you breakfast because it's getting a little dangerous. She's starting to lose it. I said, Ralphy, no problem, I'll stop by once a month, don't worry about feeding me. So then I'd stop by once a month and Gen and Ralph would always be seated at the kitchen table next to each other. 

On the opposite side of the table was a small television set that was also a built-in VCR unit. Remember when those used to be a little bit more common? Well, they were always watching the same thing. They were always watching the Chicago Cubs on WGN. And here was the reason why. They had grown up in Chicago, then moved to La Crosse after they got married. Kind of lost touch with their Cubs. And then after they retired in the mid-'80s they found out they could get cable television in La Crosse. And with cable television in La Crosse you also get WGN, so now you can watch the Cubs every time the Cubs play. Well, I don't follow professional baseball all that much so I was never really attentive to the game. I always had to just tell them to turn it down so I could talk to them. 

They had it so loud. Until I was there in the November and they were watching the Cubs game. And I'm pretty sure they don't play professional baseball in November. Especially the Cubbies, usually they're long gone and out of it by then. [LAUGHTER] I didn't say anything. And then I stopped by in December and I noticed that they were watching the Cubs game again. But because my curiosity had been piqued in November, I noticed that it was the same game that they had been watching the previous month. So Ralph again would always walk me out to the car, and before I left I said hey, Ralphy, can I ask you a question? "Are you watching the same Cubs game every time I show up?" "Huh, are we watching the same Cubs game every time you show up? We watch the same Cubs game every single day." "Ralph, why do you do that?" He said, "Well, we used to watch the Cubs live on WGN, but on the days in which the Cubs would lose, Gen would be in this awful foul mood the whole rest of her day. She'd be cantankerous. She wouldn't fall asleep at night. 

She'd toss and turn." Those of you who have ever known someone with Alzheimer's you know that their mood swings can be very dramatic and triggered by just the least little thing. So Ralph said what I did is I taped a game in which the Cubs are losing, and in the bottom of the ninth inning they come from behind and they win. And frankly, Gen doesn't remember that it's the same game every day. She thinks it's a new game. But at the end of the afternoon when the game is all done she's in this wonderful mood. She's happy. She falls asleep at night. She's content. If that's what I have to do every day so that I can keep her at home and not put her in the nursing home, I'm willing to do that. He says I got the whole game memorized. 

I know exactly how long the commercial break is going to be so that my bathroom break doesn't miss anything. That conversation was the first week of December. 10 days later Genevieve had down hill quickly and passed away. And I knew that Ralph was going to be lost without her because so much of his life the last couple years had been spent taking care of Gen. So I just made this personal commitment then instead of stopping by once a month, I'd stop by once a week. In fact, I stopped by the Friday right after the funeral that week and we're sitting in the kitchen, it's that kind of uncomfortable experience where you don't know what to say to somebody. And Ralph looked at me and said you know what? We need to go back to the old days like when we used to eat together. We need to start eating together again. And I panicked because I thought I don't want to be a guinea pig for this 83-year-old guy who just now decides he's going to learn how to cook. Well, he could tell I was nervous and he said no, no I got it all figured out. 

And he gets up, he walks over for the refrigerator, opens up the refrigerator, opens up the vegetable crisper and pulls out of the vegetable crisper a package of our Kwik Trip twin ham sandwiches. Now frankly, and I probably shouldn't say this because I'm the PR spokesperson and this is being taped, but it's not the best thing we sell in our stores, folks. It's a dry bun, thin slice of ham, thin slice of cheese. Out of everything we sell, of all our food options, it isn't the be all end all, it just isn't. So he rips open the sandwiches, two in a package, puts one in front of my spot, one in front of his. Goes back to the refrigerator, pulls out a bottle of mustard, and opens up the mustard cap and reveals the fact that it's got that dried mustard snot. Now his dried mustard snot has been on there so long it's purple. So I'm thinking to myself please wipe that, wipe that off. He doesn't, opens up the top of my sandwich, squirts it all over, shuts it. Squirts it all over his. 

Puts the mustard back and says "I got these for you because I know you love ham sandwiches." I don't. I don't where the guy ever got this from. [LAUGHTER] Well, it became this tradition that every Friday I would stop at Ralph's and we would share a package of Kwik Trip twin ham sandwiches. This went on for six weeks. So finally at the end of the sixth week I thought I've been mooching off this guy for a couple weeks. Before I left I said, Ralphy, next week my treat. Before I come over I'll stop at Kwik Trip, and I'll pick up the twin ham sandwiches, with the idea in the back of my mind that maybe I could get something other than ham sandwiches. And he blew up at me. Now you got to put this in context. Ralph was a mild mannered guy. 

He blew up at me. He said don't you dare go get those sandwiches. I know you're always coming on Friday so on Thursday I go down to our Losey Boulevard store and I get those sandwiches. Don't you dare go get those. And I couldn't tell where the energy was coming from. And then he got real teary eyed and he said and I go down there and I chat with all the ladies who are working in the store. And then he just broke down and he said and then when I go to the register to pay for my sandwiches, the lady that's working the register, she always asks me how the Cubs are doing. And he just broke down. That conversation with Ralph was the first week of February. On February 14th, Valentine's Day, he was at home. 

His daughter Mary went to check on him before work and she walked in and Ralph was in the kitchen, hands on his hips. And Mary said, dad, what's the matter? Do you know what today is? No. It's Valentine's Day today. And do you know this would be the first time in 53 years I'd be without my sweetheart on Valentine's Day. He said I'll be darned if it's going to be the first. I'm going to be with Gen today. Mary left for work. Got a call later that afternoon. 4:15 sitting in his La-Z-Boy chair in his living room, Ralph Madison passed away. So strong was his love for his bride of 53 years, couldn't be without her on Valentine's day. 

Now, the last eight weeks of Ralph's life, when he went to the Kwik Trip store, did he get something more than just twin ham sandwiches? The lady working the register, do you think it was pure accident that she asked about the Chicago Cubs? Nope. And these are the kind of stories that we tell among all of us at Kwik Trip to know that what we do is more important than selling gasoline and hot dogs. It's about making a difference in somebody's life. And in your job, and I don't care where it is or what you do, if you know at the end of the day you made a difference in somebody's life, that's what brings job satisfaction and that's what makes a good company a great company. And if you don't believe me, read Jim Collins' book "Built to Last." Thanks. Questions, comments, concerns, rebuttals. [APPLAUSE] >> The students know this is their opportunity to ask questions. I see a gentleman way at the end and so I'm going to sneak past over here. Thank you, John. >> Don't ask me anything real tough. 

I don't know everything.  >> Hey, John. >> Hi. >> I'm Bryan and I actually worked with Kwik Trip for four years, but one of the reasons why I had to leave was because there aren't any stores around, well, in Madison. And could you kind of explain why there aren't any in any metropolitan areas like, you know, I can't think of any in the city limits of Milwaukee and Minneapolis. And one of the things I think about that is whenever I was an employee our store leader talked about how we just missed the S&P ranking, I don't remember for what, but the reason why was because there wasn't enough diversity. And obviously I'm sure you guys have thought about that, but wouldn't that kind of help that? >> Yeah, excellent, excellent comments. First of all, thanks for your four years of service. We don't have stores in any of the major metropolitan areas. Milwaukee, St. Paul, Minneapolis, Madison, and there's several different reasons for that. 

One is that if anything you know about real estate, land in an inner-city is terribly expensive. It's a little cost prohibitive for us, number one. Number two, and I don't think it's as much as an issue here in Madison as it is in some of our larger markets. Sometimes those inner-city areas, especially at night, can be unsafe areas. And we've made a commitment that we will never put our coworkers in a situation that for them is unsafe. So if we have an area that demographically could be higher crime, we won't build there. As a matter of fact, we did have a store here in Madison some time ago and it had a huge crime problem and we closed it for the sake of safety. We just won't put our coworkers in that area. So cost and safety are important for us. And in terms of diversity, we tried to get on the Fortune 100 list of the best companies to work for, and that's the national list of the 100 best companies, this last year we missed it by about that much. 

And one of the reasons, frankly, is diversity. We don't have as much diversity as they would like. Interestingly enough, our diversity in our stores in our company mirrors exactly the demographics of Wisconsin. We know the studies. And we operate throughout Wisconsin, and those of us who are from Wisconsin know that we're still pretty homogeneous in a lot of ways. So our diversity as a company mirrors our state, but it's not as much as what you'd get on some of the coasts. So how we change that? Boy, if you've got so suggestions, I'll bring them back to the office because we're wondering how to do that. We actually have recruiters going out, and hopefully once we get some of that diversity going then that will start to mushroom, but right now we don't do too well in it. I don't have an answer for you. Excellent questions. 

>> Question right here. >> Hi, my name is Kora. I am a marketing and supply chain major, but before I ask my question I just want to say, really good speaking job. I laughed and teared up all in the half hour, hour, that you spoke. Quick question for you though, with the vertical integration that you talked about, since I'm a supply chain major I kind of thought about that, you run a really high risk of shortages and if a threat or something happened, like for instance weather ruined something or something like that, how do you proactively manage that risk? >> Excellent question. Our supply chain management is such that we work off of automatic replenishment at Kwik Trip. So when you buy a product at Kwik Trip and it gets scanned in the register, within seconds the corporate office knows that on the next truck another one of those packages of twin ham sandwiches needs to get sent back on the next truck. So we do automatic replenishment for that. We also have backup plans and usually we don't have to utilize them too much, but let's say, for example, the weather is bad in some of our fuel distribution trucks can't get to a site. We have contracts with outside suppliers in that specific area that to distribute a load of fuel. 

So every now and then, it's going to be pretty rare, if you ever pull past a Kwik Trip and you see a big fuel truck and it doesn't have a Kwik Trip logo on the side of it, you can go oh, shoot, poor John, because what that means is we're paying a lot more money for it because we have to pay for the distribution cost, we got it from a different supplier, but we have those backup plans in case. And it usually happens because of inclement whether. This last year in terms of fuel and store out-of-stocks, I think we only had about 17 instances for the entire year, and most of those were primarily weather-related. And sometimes, like this summer, we did a huge promotion on ice and water. And what we sometimes have to do is send an entire truck to an area just with ice and water in addition to all of our other products. Excellent question. >> Hi, John. You talked a lot about altruism in the company, and I was just curious, how do you plug into that as the VP of communications? I know that there's a lot of discussion in management about how you feel about your mission in the company as well. >> Excellent question. We operate by a code of ethics at Kwik Trip and our number one code is honesty and integrity. 

And the neat thing for me is that I would never talk about it publicly or even train on it internally in our company if it didn't start from the top. Our owner, Don Zietlow, is probably one of the most ethical human beings that you can imagine. He's very altruistic. So that anything that I say or do gets reinforced from the top. Now you know that there's a lot of companies where the person at the top isn't altruistic, doesn't have good ethics, and then it becomes problematic. So it gets reinforced from the very top on down. Not only does it get reinforced, but when Don finds out one of our stories about one of our coworkers going above and beyond to do the right thing, we celebrate it internally. That letter then gets published for all of our coworkers to see that week in the retail insider. You might remember that. At our year-end meetings, we meet with all our coworkers the first two weeks of December, you remember those as well, and we'll share a video story of that coworker, and that coworker who did the right thing also gets a little gift card for a recognition company called OC Tanner worth about $75. 

They can go on and select a prize, a present from us saying thanks for being altruistic and doing the right thing. So it gets rewarded as well, but it starts from the very top with us. >> Hi, my name is Natalie and you talked a lot about coworkers coming up with ideas, I was wondering if you could just share one. >> Sure. Excellent question, Natalie. I don't know if you ever get to take a peek at a Kwik Trip but the milk is delivered in these red totes, red plastic totes. Well, 10 years ago, the red plastic totes were solid pieces of plastic, if you will. A couple things about that, it takes a lot of plastic to make that and a solid piece of plastic isn't as strong as a honeycomb design, if any of you have engineering backgrounds. So one of our coworkers said why don't we make our milk totes so that they're honeycomb designed. They're stronger, they'll be able to hold more weight, and it uses much less plastic. 

So that would be an example of a bright idea. Now in terms of that entrepreneurial spirit, for our coworkers we have what's called a bright idea submission online. So you can submit that bright idea and all those bright ideas go to the right department. If your bright ideas are implemented then at the year-end meetings we talked about you get a hundred dollar bill. We call you up on stage and say here's the great thing you did, you helped the company, here's a hundred bucks. So at all of our meetings there's always a handful of people that come up for bright ideas. >> Hi, I'm Laura and I'm just wondering what made you make the switch from being a principal to working at Kwik Trip? >> Excellent question, Laura. I was recruited by Don Zietlow. He wanted somebody to do public speaking and additional training for Kwik Trip. And in terms of our question in the back, that ethics piece was real important to Don, so he wanted somebody that has an ethical perspective as well. 

And I used to teach a lot of that, kinds of things. So he had heard me speak on different occasions and said, hey, would you be inclined to come work for us. And I'm going to honest with you, I was hesitant because as a teacher, especially in a parochial school system, I always thought corporate America, big bad corporate greed, I don't want to go work for that kind of establishment. But then I went down to Don's office and he talked about the fact that we're not traditional corporate America. Our profits come back to all of our coworkers. Nobody gets treated with special privileges here. Don, himself, drives a stripped down Toyota Tacoma pickup truck. You will not find in the parking lot at Kwik Trip a spot reserved for CEO. He park at the end of the lot where all the rest of us park. None of us wear ties. 

It's an environment where, some you might be familiar with the term servant leadership, that we really are as leaders we're really here to take care of our coworkers, fellow coworkers, and take care of the community. That's the model that they follow and because they follow that model it did fit my perspective so it didn't feel like going to corporate America, if you will. Excellent question. >> Hi, my name is also Natalie. I was wondering if you could explain a little bit of kind of your day-to-day activities that you do with the company. >> For me personally, Natalie? >> Yes. >> No day is the same. I get called out to do speaking engagements like this. So as a matter of fact, tomorrow I'm going to be giving a real similar talk at the University of Saint Mary's in Winona, Minnesota. I also handle the large, we call it the large corporate complaint calls. 

So if somebody calls Kwik Trip and they have some huge major complaint, I'm the guy that has to handle that. Some days successfully, some days not. I do all the coordination of all of our training departments at Kwik Trip. We have 10 trainers who are training our people. I help come up with that curriculum, help write that curriculum, help deliver that curriculum. I will also do the public face of Kwik Trip whenever we're on the news. So if channel 19 or channel 8, whatever, says, hey, we need to do an interview, I'm the one that gets sent out for that. So no two days are the same. That's part of the reason why I love my job, love what I do. And they also, because Kwik Trip is very philanthropic, they're the ones that give me the business time to do what I do. 

For example, Jeanan and I sit on the Wisconsin Public Television friends board together. That obviously takes time away from my regular job, but Don Zietlow, he was the one that came to me and said, John, would you be willing to do this because we think Wisconsin Public Television is a huge asset in this state. We would like to commit not just money but also some personnel resources to that cause. So they give me time and energy to do that as well. To give back to the community because we receive so much as a company. >> I'm glad you mentioned that at the end, John, because so much you what you shared with us today is your corporate face, but we know that you give back personally as well as professionally so very much. I know the students join me in thanking you for being with us today. [APPLAUSE]