Cult of Convenience: Chester Cadieux


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Here is an excerpt from our book, Intelligent Fanatics Project: How Great Leaders Build Sustainable Businesses:

Cult of Convenience: Chester Cadieux

Cult of Convenience: Chester Cadieux

QuikTrip

“Back when I had 10,000 bucks, I put 2,000 of it into a Sinclair service station, which I lost, so my opportunity cost on it’s about 6 billion right now. A fairly big mistake—it makes me feel good when Berkshire goes down, because the cost of my Sinclair station goes down too.”

—Warren Buffett, The Oracle Speaks

In 1951, Warren Buffett and his friend from the National Guard purchased a Sinclair service station. In those days, a service station consisted of a few pumps out front, an on-site repair garage, and limited offerings, if any, inside. The technology of the 1950s pump made it necessary for attendants to provide a full pump service, and even when technology allowed for self-service in the 1960s, it was not legally allowed in many states until the 1970s. Warren Buffett and his partner had limited options in competing against the Texaco station next door. Buffett competed head to head and learned the hard way the need for a competitive advantage in business.

In 1958, seven years after Warren Buffett’s foray into gas retail, another young man, Chester Cadieux, was looking to go into business for himself. He wanted to find a business with low operating costs in an industry with little competition. He ran into an old acquaintance from school, Burt B. Holmes, who was setting up a bantam store—the early incarnation of today’s convenience store. Initially named Quik-Trip (later QuikTrip), the store was cast in the mold of a store called 7-Eleven that Holmes had observed in Texas. Cadieux’s investment was $5,000 out of the total $15,000. Like Warren Buffett, he had no clue what he was getting into. Unlike Buffett, however, Cadieux eventually was able to compete against gas retailers.

Fortunately for Chester Cadieux, QuikTrip was one of three thousand bantam stores in operation in the United States, providing longer hours of operation than supermarkets. For this convenience, customers were willing to pay a higher price. QuikTrip was struggling, its losses and debt growing with the addition of two locations. However, the limited competition allowed Chester and the company to make a number of mistakes in the beginning. Chester eloquently described the situation: “An idiot could make money in this business in the ’60s and ’70s, and many did.”

A few lucky breaks allowed the company to survive, and proper leadership allowed it to eventually compete against major oil retailers. Like other intelligent fanatics, Cadieux learned from his early mistakes and worked diligently to learn and to compete against any competitor.

Cadieux’s competitive advantage over larger rivals was his focus on employees and innovation. Both characteristics were rooted in Chester’s personal values and were apparent early in QuikTrip’s history. He would spend a large part of his time—roughly two months out of the year—in direct communication with QuikTrip employees. Chester said, “Without fail, each year we learned something important from a question or comment voiced by a single employee.” Even today, QuikTrip’s current CEO and son of Chester Cadieux, Chet Cadieux, continues to spend four months of his year meeting with employees.

In 1984, when QuikTrip had grown to roughly two hundred stores and had started to get into gas retailing in a big way, Chester Cadieux sent the following memo to employees, demonstrating QuickTrip’s values:

QuikTrip customers expect and deserve well-groomed employees who give them fast, friendly service. They also expect and deserve attractive, clean, well-merchandised stores. Just as there are minimum standards for customer service, appearance, and store operation, there are minimum acceptable standards in the management of our employees. QuikTrip employees expect and deserve intelligent, positive, considerate, factual supervision. They do not deserve to work for an asshole. I am more tolerant of poor operation than I am of poor treatment of employees.
I am writing this memo not as a threat or because I perceive we have a problem, but as a result of a discussion held in one of our Management Committee meetings. Everybody seemed to understand what the minimum standards of customer service, employee appearance and operation were, but there was no clear definition of minimum acceptable human relations skills. Some failed to realize that the way we get results is just as important as the results.

Because of different personalities and experiences, we handle employees differently and I would not try to teach one set method. I would just say that we cannot tolerate obnoxious, oppressive, abusive, tyrannical despots (assholes).

Please be sure that you always treat your employees the way you want to be treated. That is the minimum expected standard of management at QuikTrip.

At the time, QuikTrip had yet to formalize its corporate values on paper. However, that memo was a good primer for what was to come. QuikTrip had worked, and still does, to acquire employees who are ambitious and fit the high standards set for them. Treat employees well and incentivize them properly, and employees will provide exceptional service to the customer. Amazing customer service leads to customer loyalty, and this is hard to replicate, especially by competitors who don’t value their employees. Exceptional employees and a quality corporate culture have allowed QuikTrip to stay ahead of competition from convenience stores, gas retailers, quick service restaurants, cafes, and hypermarkets.

Other savvy convenience store operators in different regions of the United States saw QuikTrip’s success early on and borrowed many of Chester Cadieux’s ideas. For a number of years, Chester was on the board of two different convenience store chains headquartered in different parts of Pennsylvania, Sheetz, Inc. and Wawa, Inc. Both were, and continue to be, family-owned convenience stores with the long-term vision and audacity to listen to Cadieux and follow his advice. Chester also looked to both Sheetz and Wawa, which had their own strengths where QuikTrip had been weak, for guidance over the years.

Steve Sheetz, who helped run Sheetz with his brother, Bob, and to grow the company for many decades, called Chester Cadieux his mentor. He said, “He taught me about capacity. Chester spoke a different language. He talked about the average age of his store facilities. No one talked that way back then.” Steve also confirmed that Chester’s main objective was always about employees: “I remember him telling me that the main objective of his company was to provide an opportunity for his employees to grow and succeed. Well, I called B.S. on that, but what I learned was that the leaders at QuikTrip, they live that purpose every day.”

By following Chester Cadieux’s principles, and even exceeding QuikTrip’s fanatical focus on innovation in areas such as made-to-order food, Sheetz has grown from a handful of stores in the 1960s into $6 billion in annual revenues and 510 stores today. Sheetz is not far behind QuikTrip—it is the 59th largest private business in the United States, the 19th largest convenience store in the United States, and is listed at number 181 on the Forbes America’s Best Employers list.

The other Pennsylvania convenience store, Wawa, borrowed many of Cadieux’s ideas, too. Wawa’s CEO from 1981 to 2004, Dick Wood Jr., looked to Chester Cadieux as a mentor and once said, “I admire Chester Cadieux the most of anyone in the [convenience store] industry.” Wawa’s success is not a surprise, because Dick heeded Chester’s advice in many matters and followed QuikTrip’s focus on employees.

After Dick Wood stepped down as CEO of Wawa in 2004, Howard Stoeckel ran the business until 2014. Stoeckel said of Cadieux, in his book The Wawa Way:

My mentor was Chester Cadieux, the founder of Tulsa, Oklahoma–based QuikTrip. He was a Wawa board member for more than twenty-five years. (I spent seventeen years on the QuikTrip board in turn.) Chester was instrumental in our decision to close outdated stores and, even more important, in our adoption of the mega-gasoline offer in 1996. To quantitatively appreciate the magnitude of these strategies, within ten years we were selling more than a billion gallons of gasoline, and while we operate more than 640 stores today, we have opened well over 1,000. Chester is just one example of the fine leadership our board has always provided, adding enormous value to everything they touch at Wawa.

Wawa has grown into a dominant force in and around Philadelphia and throughout New Jersey, and recently expanded into Florida. Wawa currently has 706 stores, annual revenues of roughly $9 billion, and is listed as Forbes’s 123rd best employer in America.

Sheetz, Wawa, and QuikTrip all have similar characteristics, which can be traced back to Chester Cadieux and his leadership values at QuikTrip. When three stores in the same industry, separated only by geography, utilize the same strategies, have similar core values, and achieve similar success, then there must be something to their business models. All could have been identified early, when their companies were much smaller, with qualitative due diligence.

You can read Chester Cadieux’s story in our book, Intelligent Fanatics Project: How Great Leaders Build Sustainable Businesses. Become a Member and we’ll send you the eBook-Kindle version for Free.


This is a companion discussion topic for the original entry at https://intelligentfanatics.com/cult-of-convenience-chester-cadieux/