Issue #88: $5 Sizzli, Hashbrown, & Coffee
Wawa Deep Dive
One of the under-the-radar trends recently has been the rise of regional c-store chains connected to gas stations. These types of establishments have been around for a while, but over the past five or so years, a certain few have separated themselves from the pack. Caseys, Circle K, Sheetz, Wawa, to name a few. Each one probably warrants its own breakdown, but I am going to start with the one near and dear to my heart and my Philly roots: Wawa. If you know anyone from Philly, they LOVE Wawa. The data backs it up too. According to Dunhumby, a leading retailer data trend reporter, Wawa is one of the top three convenience stores in their rankings, partly due to their brand affinity. Before we dive into what makes them so special, let’s review their (fascinating and unorthodox) history:
1803 - Wawa starts as an iron foundry, a factory that produces iron-related products
1890 - The owner of the foundry, George Wood, takes an interest in the dairy business and starts dairy farming
1902 - The family began processing the milk and selling it to the public, where it was very popular due to how clean their farming processes were, and the home delivery
1964 - With the rise in supermarkets and automobiles, home delivery of milk was on the decline, so the first Wawa Food Market was opened to sell their milk
1977 - Wawa began sharing ownership of the company with its associates through profit-sharing plans
1992 - Wawa formalized its associate ownership with its ESOP, awarding stock to associates annually based on the prior year's service
Late 1990s - Wawa pulls out of New York and Connecticut markets
2012 - Wawa expands to Florida
2023 - Wawa expands to Ohio and Kentucky
2026 - Currently, Wawa has 645 convenience stores (with over 365 offering gas) across Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and Florida
As you can see from its history, Wawa has systematically built up an empire. What makes it special, in my opinion, is two things. First, it’s the assortment. Wawa features made-to-order food, snacks, beverages, and some fun private-label food. In terms of made-to-order food, the quality and freshness stand out, and they were one of the first retailers in their segment to really focus on this. Secondly, the customer service stands out. In a survey of over 30k people, Wawa stood out for its communication quality, professional competence, range of services, and customer focus. There is a tangible elevation in the service at a Wawa compared to its competitors. Plus, the locations are generally open long hours, if not 24/7, in areas that do not have many options with those hours. From a labor standpoint, their operations and square footage allow for 1-2 people to operate the store during non-peak times.
Going forward, it will be very interesting to see what Wawa does expansion-wise. Clearly, it will focus on methodical growth, but the markets it focuses on will be very interesting to follow. After pulling out of going further north in the 1990s by getting out of CT, most of the focus of expansion has been on the mid-Atlantic and the Midwest. However, I do believe there will be an opportunity to re-enter New York and New England. The closest competitor is Cumberland Farms, which has a loyal following, but seriously lags in quality. Bullish on family-run (ish) retailers. See Wegman’s.
Foxtrot’s newest location
Foxtrot Announces Second Net New Location
In the spring of 2024, Foxtrot, a next-generation convenience store/bodega, which raised a lot of VC money, abruptly closed its doors. This sudden closure was three months after opening its 33rd location and five months after merging with Dom’s Kitchen. Later in 2024, Foxtrot ended up filing for bankruptcy, which saw its original founder enter back into the picture. All non-Chicago locations were closed, plus seven Chicago locations were reopened. All the locations that reopened were the original Foxtrot location. Last year, a new location opened in Chicago, marking the eighth location and the first that was not an OG location. Now, almost a year later, a ninth location will be opening in a new development in the Lincoln Park neighborhood, scheduled to be built by May 2027. Clearly, something is working with the revitalized concept. I have not gotten the chance to walk one recently, and I was always bullish on the concept, but had a hard time with the capital strategy and the lack of density of products in the store. The store was too spread out for retail. Luckily, both of those are very fixable. It will be interesting to see what happens next. In theory, Foxtrot is reaching its maximum locations in Chicago soon. Will it expand beyond Chicago again?
Walmart Pulling Out of Chat GPT Deal (Kind Of)
As discussed in previous issues, Walmart has been partnering with OpenAI to enable commerce within the ChatGPT ecosystem. In a special pilot for certain users, since November, users have been able to do the end-to-end purchase solely within the ChatGPT ecosystem. All other users are directed to Walmart’s website. As I have shared before, I am hesitant that people are ready for full commerce transactions within chatbots. It seems that Walmart agrees. Based on an interview with one of Walmart’s VPs, it is not happy with the results, and therefore the commission. Here is a fascinating quote from Walmart:
Conversion rates—the percentage of users following through with a purchase of an item shown to them by ChatGPT—have been three times lower for the selection sold directly inside the chatbot than those that require clicking out, according to
With the rise in Anthropic/Claude, OpenAI has been on a tough streak recently. This announcement just adds to it. Ultimately, I do think chatbots will have a big impact on shopping, but not the complete purchase; humans will still choose to be involved for many purchases. Simultaneously, there will be a rise/reversion back to retail, as people gravitate more towards experiences and the physical world.
Summary: Playably gamifies the marketing process, so instead of traditional discounts, people are seeing a competition or game.
My Take: With the rise in AI tools bringing the cost of many marketing tools down, there is a danger that brands will over-market. Tools that are able to enable more personalized marketing, while being less intrusive, will win out.
Founder(s): Michael Berk, John Cheng
Funding: Y Combinator
Additional Links:
Pepsi is now in the restaurant game in Europe (read more here)
CookUnity, the meal delivery service, now has reached $750M ARR (read more here)
Lowe’s shares more about how it personalizes its AI assistant to different customers (read more here)
How retailers are leveraging private label brands to compete with national brands (read more here)
Express Checkout partners with Faire to share an update on the beauty and wellness industry (read more here)
Starbucks and Pepsi expand their partnership by adding Poppi to starbucks retail stores (read more here)
Large CPG brands are sitting on boatloads of capital that they are waiting to deploy to purchase CPG startups (read more here)
Check out the behind the scenes of emerging CPG founders at expo west (read more here)
Meta signs ten year lease for a Fifth Avenue retail location (read more here)
NRF is forecasting 4.4% retail growth for this year (read more here)
Events:
Friday, March 27, 7:00 PM - 10:00 PM - Glimpse Launch Party 2026 (sign up here)
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