Kwik Trip, which already dominates the convenience store market in suburban Dane County with its low prices and customer-friendly amenities like no-fee ATMs, is expanding its presence in Madison, announcing Wednesday that it is buying PDQ Stores.
“This gives us a presence inside the Beltline and that fits perfectly with where we want to be,” said David Niemi, a spokesman with La Crosse-based Kwik Trip, which signed an agreement to acquire the assets of Middleton-based PDQ, which includes 15 company-operated convenience stores in Madison, another eight in the area, 11 elsewhere in Wisconsin and one in California.
A purchase price was not announced because it was a private sale, according to Niemi. PDQ is employee-owned and has four major shareholders who approved the deal after conferring with the employees, Niemi said. Kwik Trip is owned by the Zietlow family.
A competitor offered a gloomy outlook at best for the other convenience stores in Madison because of Kwik Trip’s low prices for inside sales.
“(Kwik Trip) is a huge company. We can’t compete with them. It’ll be tough for everybody else to do business in Madison,” said Farooq Shahzad, president of Capitol Petroleum, which owns 17 Petro Marts in Madison — one more than Kwik Trip will own in the city after the PDQ sale is finalized.
Kwik Trip currently has 337 stores in Wisconsin. Its only presence in Madison is a store that doesn’t sell gasoline on the UW-Madison campus, a full-service store at the American Center and a Tobacco Outlet, which is also part of the Kwik Trip organization, on Sherman Avenue. It has 19 other stores in the county.
It also has another 147 stores in Minnesota and 82 in Iowa. The stores are called Kwik Star in Iowa because a chief competitor in that state is called QuikTrip. The company, which does about $5 billion in gross sales annually, employs about 19,000 workers, Niemi said.
The acquisition of PDQ includes licenses to sell alcohol for each store, which was a key part of the deal, according to Niemi. Kwik Trip’s policy is to open stores only where the company can sell all of its many products, including alcoholic beverages. That had been difficult in Madison — as well as in Milwaukee — because of the policies of both cities to limit new licenses to sell alcohol, Niemi said.
About 1,000 new jobs will be created after the sale is finalized because the company will double and sometimes triple the amount of employees that PDQ employs at each of its stores, Niemi said. Most of those jobs — which include kitchen work, loading and unloading, and product demonstrations that aren’t part of the PDQ blueprint — will be part-time.
None of the current PDQ employees are assured of a job with Kwik Trip, but all are encouraged to apply for jobs with the company, Niemi said.
The company, which hopes to finalize the sale in October, also plans to spend $30 million to $35 million to “re-image” all of the PDQ stores into Kwik Trip stores, according to Niemi. The majority of PDQ’s stores will get an interior facelift that includes new shelving, while the smaller ones will be remodeled. The company plans to have the entire project finished by mid- to late October, he said.
A PDQ spokesman did not return calls asking for a comment on the sale.
PDQ has been around for 65 years, and Kwik Trip for 52 years, and they have enjoyed success as family-owned operations with similar business mindsets, according to Niemi. For instance, Kwik Trip and PDQ both like to build two stores across from each other on one street so customers don’t have to make tough turns in traffic to get in and out.
“It’s a good fit for us,” Niemi said.
Sam Jacobson opened the first PDQ — called Tri Dairy — in 1949, added a second one 13 years later and, following a suggestion by his wife, Mary, changed the name to PDQ, which was short for “Pretty Darned Quick,” a popular phrase from the World War I era, according to the company website. In 2009, Jeff Jacobsen sold PDQ to the employees.
The John Hansen family founded Kwik Trip in Eau Claire in 1965. It was co-owned by the Hansen and Zietlow families starting in 1972, and the Hansens sold their interest to the Zietlows in 2000.
Fast-growing Kwik Trip, which has opened 200 stores since 2013, has developed a strong reputation for luring customers inside with its fresh and hot food, coffee and beverages and a number of other products at prices that are usually the lowest in the area.
“I choose between Kwik Trip, PDQ and Kelley’s Market where I live because there isn’t a grocery store nearby and Kwik Trip’s prices are more on the fair side,” said Ryan Johnson, 43, who lives on the North Side near the town of Westport border.
Kwik Trip, which regularly rates high in consumer surveys, has the lowest prices because the company’s campus in La Crosse includes a kitchen that makes soups, salads, pizzas and other hot food, as well as all the bread and buns under its labels, along with a warehouse where more than 6,000 different products flow through to its stores.
Many of Kwik Trip’s stores include large walk-in beer coolers, wood fixtures, tile floors and other amenities to give it an upscale look. They also include customer-friendly touches such as free and easy-to-use air compressors for inflating tires.
That is a business weapon that has no peers in this area and creates a gap in prices that will lure customers away from the city’s other convenience stores, according to Capitol Petroleum’s Shahzad.
“We have to pay a commission to a third party for the products we sell, and Kwik Trip avoids that. So they can undersell, they’ve got the free ATM, they do things we can’t afford to do. He’s going to kill the little guys,” he said.
Shahzad said Capitol Petroleum turned down “a very good” offer from Kwik Trip to buy all the Petro Marts about a month ago.
“They want to add 50 stores a year. That’s what they told me,” Shahzad said. “I think this time they offered PDQ too much money that couldn’t be refused.”